1997 (11) TMI 51 - HC - Income Tax

Summary

Issues:
1. Interpretation of "gift on the occasion of the marriage" under section 5(1)(vii) of the Gift-tax Act, 1958.
2. Validity of a promise made by the assessee to his daughter at the time of her marriage and its fulfillment through a settlement made 14 years later.

Analysis:
The High Court of MADRAS addressed the first issue concerning the interpretation of the term "gift on the occasion of the marriage" under section 5(1)(vii) of the Gift-tax Act, 1958. The court considered previous judgments and established that the relationship between the gift and the marriage event, rather than the timing of the gift, was crucial. Referring to the case of CGT v. Dr. Mrs. Neelambal Ramaswamy, the court emphasized that if the gift was linked to the marriage event or its reason, it would fall under the said expression. The court examined a gift deed where the donor had promised to make a gift for the support and maintenance of his daughter at the time of her marriage. The court found that the promise made at the marriage event was fulfilled 14 years later, and since the gift was associated with the marriage event, the assessee was entitled to exemption under section 5(1)(vii) of the Act.

Moving on to the second issue, the court analyzed the validity of the promise made by the assessee to his daughter at the time of her marriage and its fulfillment through a settlement made years later. The court noted that the gift deed explicitly mentioned the promise made by the donor to provide support and maintenance to his daughter at the time of her marriage. The court accepted the Tribunal's finding that there was a genuine promise made by the assessee at the marriage event, and the subsequent gift was in fulfillment of that promise. Considering the lack of contradictory evidence from the Revenue, the court upheld the Tribunal's decision that the assessee was entitled to exemption under section 5(1)(vii) of the Act based on the valid promise made at the time of his daughter's marriage.

In conclusion, the court answered both questions of law in favor of the assessee and against the Revenue. The judgment highlighted the importance of the relationship between the gift and the marriage event, rather than the timing of the gift, in determining eligibility for exemption under the Gift-tax Act. The court found no fault in the Tribunal's decision and ruled in favor of the assessee, emphasizing the fulfillment of a valid promise made at the time of the daughter's marriage.