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Issues:
Assessment of gift-tax for the year 1971-72; Exemption claims for agricultural land gift for marriage and educational expenses; Valuation differences between assessee and Gift-tax Officer; Appeal against exemption granted under section 5(1)(xii) of the Gift-tax Act; Enhancement of exemption limit by Commissioner of Income-tax (Appeals) to Rs. 25,000; Questions referred to the High Court regarding education expenses exemption. Analysis: The judgment pertains to the assessment of gift-tax for the year 1971-72, where the assessee gifted agricultural land to his minor daughter for marriage and educational purposes. The Gift-tax Officer valued the land at Rs. 1,10,600, differing from the assessee's valuation of Rs. 50,000. The Officer determined the taxable gift at Rs. 4,35,260, granting exemption of Rs. 5,000 for educational expenses but not for marriage expenses as the daughter was a minor. The Commissioner of Income-tax (Appeals) raised the exemption limit to Rs. 25,000, considering a reasonable sum of Rs. 2,000 per year for the daughter's education over 20 years, totaling Rs. 40,000. This amount was derived from the value of the land providing the educational expenses. The Tribunal upheld this enhancement of exemption under section 5(1)(xii) of the Act. The High Court addressed the questions referred by the Tribunal, which questioned the adequacy of Rs. 2,000 per annum for the daughter's education and the restriction of the exempted gift amount to Rs. 25,000. The Court found these questions interconnected and analyzed the facts comprehensively. It observed that the initial exemption of Rs. 5,000 was low, and the enhancement to Rs. 25,000 by the Commissioner of Income-tax (Appeals) was justified based on the educational needs of the daughter. The Court agreed with the Tribunal's decision on the exemption limit, stating that the factual matrix supported the increase to Rs. 25,000. Therefore, the Court upheld the Tribunal's determination of the exemption under section 5(1)(xii) of the Act as legally sustainable. In conclusion, the High Court answered both questions affirmatively, stating that Rs. 2,000 per annum was sufficient for the daughter's education costs, considering the circumstances of the case. Additionally, the Court upheld the restriction of the exempted gift amount to Rs. 25,000, disposing of the tax case with no order as to costs.
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