M/S Khoday Distilleries Ltd vs Commissioner Of Income Tax & Anr

The Supreme Court examined whether the allotment of rights shares by a company constituted a 'gift' under Section 2(xii) of the Gift-tax Act, 1958. The Court held that the allotment did not involve a transfer of existing property, thus not attracting gift tax, as the shares were issued for consideration and did not meet the criteria of a deemed gift under Section 4(1)(a). The judgment of the Karnataka High Court was set aside, favoring the appellant company.