1985 (11) TMI 17 - HC - Income Tax

Summary

Issues Involved:
1. Interpretation of the phrase "on the occasion of the marriage" under section 5(1)(vii) of the Gift-tax Act, 1958.
2. Validity of the gifts made by the assessee to her son and daughter.
3. Applicability of exemption under section 5(1)(vii) of the Gift-tax Act, 1958.
4. Timing of the gift in relation to the marriage event.
5. Dependency status of the son for the purpose of exemption.
6. Assessment year applicability for the exemption.

Detailed Analysis:

1. Interpretation of the Phrase "On the Occasion of the Marriage":
The court examined the interpretation of the phrase "on the occasion of the marriage" under section 5(1)(vii) of the Gift-tax Act, 1958. The Revenue contended that this phrase should mean "at the time of the marriage" or "immediately preceding the marriage." However, the court disagreed, stating that if the gift was associated with the event of marriage or if the reason for the gift was the marriage, it would be covered by the expression "on the occasion of the marriage." The court referred to A. C. Sampath Iyengar's textbook, which explained that the phrase conveys an association with the event rather than a strict time constraint.

2. Validity of the Gifts Made by the Assessee:
The assessee, a lady doctor, made two gifts nearly 11 months after the marriages of her daughter and son. The Gift-tax Officer and the Appellate Assistant Commissioner initially rejected the exemption claim, interpreting the phrase to mean gifts must be made at the time of the marriage. However, the Tribunal accepted the assessee's explanation for the delay and held that the gifts were intended at the time of the marriage, thus qualifying for exemption.

3. Applicability of Exemption under Section 5(1)(vii):
The court upheld the Tribunal's view that the gifts were associated with the marriage event and thus qualified for exemption under section 5(1)(vii). The court emphasized that the relationship between the gift and the marriage is the relevant factor, not the exact timing of the gift.

4. Timing of the Gift in Relation to the Marriage Event:
The court noted that the gifts were made nearly 11 months after the marriages but were intended at the time of the marriage. The Tribunal found the delay satisfactorily explained due to certain unfortunate events in the family, including the death of the assessee's younger son shortly after the marriages. Therefore, the timing did not disqualify the gifts from exemption.

5. Dependency Status of the Son:
The court addressed the issue of whether the son was a dependent for the purpose of exemption. The authorities below found that the son was a student and dependent on the assessee. This finding was a question of fact and could not be contested further.

6. Assessment Year Applicability:
The Revenue argued that the exemption could not be claimed in the assessment year 1972-73 since the marriages took place in June 1970, suggesting it should have been claimed in the assessment year 1971-72. However, the court did not permit this argument as it was not raised at any earlier stage of the proceedings.

Conclusion:
The court concluded that the Tribunal was correct in holding that the assessee was entitled to exemption under section 5(1)(vii) of the Gift-tax Act. The gifts were associated with the marriage event and the delay in making the gifts was satisfactorily explained. The court answered the question referred in the affirmative and against the Revenue, awarding costs to the assessee.