2001 (2) TMI 272 - AT - Income Tax

Summary

Issues:
1. Whether the gift made by a mother to her daughter at the time of marriage is exigible to gift tax under the Gift-tax Act.
2. Whether the obligation of parents to maintain an unmarried daughter includes the duty to provide for marriage expenses and whether such gifts are taxable under the provisions of the Gift-tax Act.

Issue 1 Analysis:
The appeal by the Revenue challenged the cancellation of a gift-tax assessment by the Dy. CGT (Appeals) regarding a gift of 75 sovereigns of jewellery from a mother to her daughter at the time of marriage. The Revenue argued that the transaction should be taxable under the Gift-tax Act as no consideration was passed. The first appellate authority accepted the assessee's contention that the gift was made to fulfill the legal obligation of maintaining her daughter, thus not constituting a taxable gift. The authority referred to legal obligations towards the daughter and relevant decisions to support the decision.

Issue 2 Analysis:
The dispute revolved around whether the gift of jewellery by a Hindu mother to her daughter for marriage expenses is taxable under the Gift-tax Act. The departmental representative argued that the gift was voluntary and not to fulfill a legal obligation, citing a Kerala High Court decision. In response, the assessee's representative highlighted the obligation of parents under the Hindu Adoptions & Maintenance Act, 1956, to maintain and provide for the marriage expenses of unmarried daughters. Legal provisions and court decisions were referenced to support the argument that such gifts are part of parental obligations and not voluntary taxable gifts. The Tribunal upheld the order of the Dy. CGT (Appeals), emphasizing the legal duty of parents to maintain unmarried daughters and provide for their marriage expenses as part of maintenance, thus dismissing the Revenue's appeal.

The judgment extensively analyzed the legal obligations of parents towards unmarried daughters, the definition of maintenance under relevant laws, and the customary practices regarding gifts for marriage expenses. The decision reaffirmed that gifts made by parents to fulfill their obligations towards unmarried daughters, including providing for marriage expenses, are not taxable under the Gift-tax Act. The judgment referenced legal provisions, relevant court decisions, and the absence of evidence to suggest the gift was against customary practices or demands, ultimately dismissing the Revenue's appeal.