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Issues:
1. Exemption under section 5(1)(vii) of the Gift-tax Act for a gift to the daughter. 2. Exemption under section 5(1)(xii) of the Gift-tax Act for a gift to the son. Analysis: Issue 1: Exemption under section 5(1)(vii) for a gift to the daughter The case involved a reference regarding a gift of land by the assessee to his daughter on the occasion of her marriage. The Tribunal held that an oral gift was made at the time of the marriage, even though possession was delivered later and a registered deed was executed subsequently. However, the High Court disagreed, stating that a promise to make a gift cannot be considered an oral gift in legal terms. As possession was delivered much later after the marriage, the gift could not be considered to have been made on the occasion of the daughter's marriage. Therefore, the High Court ruled against the assessee, stating that section 5(1)(vii) of the Act was not applicable to the gift to the daughter. Issue 2: Exemption under section 5(1)(xii) for a gift to the son Regarding the gift to the son, the High Court addressed several points. Firstly, it interpreted the term "children" in section 5(1)(xii) to mean any issue of the assessee capable of receiving education, irrespective of age. The Court cited legal precedents to support this interpretation. Secondly, it discussed the extent to which gifts must be proven as reasonable for education purposes to qualify for exemption. The Court emphasized that gifts for education must cover all necessary expenses related to the child's education, not just tuition fees. Additionally, the Court clarified that gifts for maintenance should be distinguished from gifts for education. In this case, the Court found that the entire gift to the son could not be considered solely for education purposes. Therefore, the Court suggested a rough division of the amount to allocate part for education and part for maintenance. Finally, the Court ruled that section 5(1)(xii) was applicable to the gift to the son only to the extent of Rs. 27,000. The High Court answered the questions related to the son's gift in favor of the revenue, highlighting the importance of distinguishing between gifts for education and maintenance under the Act. In conclusion, the High Court's detailed analysis of the issues surrounding the gifts to the daughter and son provided clarity on the application of sections 5(1)(vii) and 5(1)(xii) of the Gift-tax Act, emphasizing the legal requirements for claiming exemptions based on the nature and purpose of the gifts made by the assessee.
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