1982 (10) TMI 80 - AT - Income Tax

Summary

Issues:
- Exemption u/s 5 (1) (xii) of the GT Act limited by the GTO
- Contention over the extent of exemption for educational purposes
- Reasonableness of the gift for education purposes
- Interpretation of the gift deed and donor's intention
- Consideration of financial status and educational plans of the donee

Analysis:

The judgment by the Appellate Tribunal ITAT COCHIN involved an appeal regarding the limitation imposed by the GTO on the exemption u/s 5 (1) (xii) of the GT Act for the assessment year 1978-79. The assessee, a retired individual, had gifted property and cash to his son for educational purposes, claiming full exemption. The GTO restricted the exemption to Rs. 10,000, which was upheld by the AAC.

The assessee argued before the Tribunal that the entire gift should be exempted, emphasizing the planned educational path for the son, including M.Com., L.L.B., C.A., and M.B.A. abroad. The assessee contended that the gift was reasonable considering the circumstances, family background, and educational expenses estimated at the time of the gift.

On the revenue's behalf, it was argued that the exemption under the clause is limited to gifts for the education of the donor's children, subject to reasonableness. The revenue highlighted the donee's academic performance, current education status, and dependency on parents for support. They contended that the exemption granted was reasonable based on these factors.

The Tribunal analyzed the gift deed, donor's intention, and the reasonableness of the gift for educational purposes. It noted that the gift was not exclusively for education but also for general needs. The Tribunal considered the financial status of the donor, the nature of education planned, and the anticipated expenses. Ultimately, the Tribunal held that the assessee was entitled to exemption up to Rs. 30,000, modifying the AAC's order and directing the GTO to adjust the assessment accordingly.

In conclusion, the appeal was partly allowed, with the Tribunal emphasizing the importance of assessing the reasonableness of gifts for educational purposes based on various factors, including the donor's intention, financial capacity, and educational plans of the donee.