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Interpretation of section 5(1)(vii) of the Gift-tax Act, 1958 regarding exemption for gifts made to relatives dependent upon the donor for support and maintenance on the occasion of marriage. Analysis: The case involved a dispute regarding the interpretation of section 5(1)(vii) of the Gift-tax Act, 1958, concerning the exemption for gifts made to relatives dependent upon the donor for support and maintenance on the occasion of marriage. The question raised was whether married daughters-in-law of a Hindu undivided family karta could be considered relatives dependent upon him and whether gifts made to them after marriage were eligible for exemption under the Act. The Assessing Officer initially denied the exemption, stating that the daughters-in-law were not dependent on the assessee at the time of marriage. However, the Appellate Assistant Commissioner and the Tribunal allowed the claims, emphasizing that the gifts were made on the occasion of marriage and that dependence for support and maintenance included the daughters-in-law of the Hindu undivided family. The Tribunal referred the matter to the High Court for opinion. The High Court analyzed the provisions of section 5(1)(vii) which require two conditions to be met for exemption: the gift should be to a relative dependent upon the donor for support and maintenance, and it should be on the occasion of the relative's marriage. The Court highlighted that the term "dependent" refers to individuals relying on the donor for basic necessities like food, shelter, and clothing. It further explained that the word "relative" should be understood broadly, but it does not include prospective relatives. The Court emphasized that a daughter-in-law is not a dependent before marriage, and therefore, gifts made to her after marriage cannot qualify for exemption under the Act. The Court cited a similar view taken in a previous case, emphasizing that the purpose of the legislation would be defeated if gifts to prospective relatives were considered exempt. In conclusion, the High Court ruled in favor of the Revenue, stating that the conclusions of the lower authorities were incorrect. The Court held that gifts to daughters-in-law, even after marriage, did not meet the criteria for exemption under section 5(1)(vii) as they were not dependent at the time of marriage. The judgment highlighted the distinction between actual dependents and prospective relatives to uphold the legislative intent behind the provision.
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