1978 (8) TMI 21 - HC - Income Tax

Summary

Issues: The judgment involves questions under the Gift-tax Act and general Hindu law regarding the taxability of gifts made to married and unmarried daughters in a Hindu Undivided Family (HUF) during a partition deed in the assessment year 1971-72.

Gifts to Married Daughters: The Tribunal accepted the claim that gifts made to the married daughters were exempt from gift-tax u/s 5(1)(vii) of the Gift-tax Act, as the value of the properties allotted was below the specified limit. The Tribunal rightly directed verification if the gifts were intended on the occasion of the daughters' marriages, emphasizing that such arrangements need not be formalized immediately but can be reflected in subsequent legal documents like a partition deed.

Gifts to Unmarried Daughters: The judgment clarified that provisions made for unmarried daughters' maintenance and marriage in a partition deed by an HUF do not constitute gifts u/s 2(xii) of the Gift-tax Act. The court held that such provisions are made to fulfill the family's legal obligations towards the unmarried daughters, and hence, cannot be considered voluntary transfers without consideration. The court affirmed that these provisions are not subject to gift-tax as they are made to discharge existing legal obligations, not as voluntary gifts.

Conclusion: The Tribunal's decision to exempt both gifts to married and unmarried daughters from gift-tax was upheld by the court, emphasizing that the provisions made in the partition deed were in line with the Hindu law obligations of the HUF towards its members. The judgment concluded by rejecting the income-tax case without any order as to costs.