1988 (7) TMI 97 - AT - Income Tax

Summary

Issues:
Deduction under section 5(1)(vii) of the GT Act, 1957 for gift of gold ornaments and silver articles to daughters-in-law.

Detailed Analysis:

1. Deduction under Section 5(1)(vii) of the GT Act:
The appeals were filed by the Department against the order of the Ld. AAC for the assessment years 1980-81 and 1981-82 regarding the deduction of Rs. 10,000 under section 5(1)(vii) of the GT Act, 1957. The assessee-HUF made gifts to daughters-in-law and claimed exemption under this section. The Gift-tax Officer denied the claim stating daughters-in-law were not dependent on the assessee at the time of marriage. The Ld. AAC allowed the claim, emphasizing that daughters-in-law had to be dependent on the assessee for support and maintenance, as is customary in joint Hindu families. The department argued against this decision, but the Ld. AAC's reasoning was upheld.

2. Interpretation of 'Occasion' and 'Dependent':
The definition of 'occasion' was discussed, emphasizing that it does not necessarily mean the same date as the event. The term 'dependent' was also analyzed, with reference to the Expenditure Tax Act and a Supreme Court case. It was concluded that the opinion of the Supreme Court in defining 'dependent' should be applied in the context of the Gift-tax Act.

3. Requirement of Dependency and Relative Status:
The judgment clarified that the Gift-tax Act does not mandate the donee to be wholly and mainly dependent on the donor for support and maintenance, unlike the Expenditure-tax Act. Additionally, the Circular No. 1-59/GT dated 27-2-1959 of CBDT was cited, indicating that male or female dependents can be considered relatives of an HUF for the purpose of exemption under section 5(1)(vii).

4. Decision and Conclusion:
The Tribunal held that the gift to the extent of Rs. 10,000 was allowed as a deduction, dismissing the department's appeals and rendering the cross objections supporting the Ld. AAC's order irrelevant. The judgment emphasized the customary practice in joint Hindu families and the interpretation of relevant legal terms to justify the allowance of the deduction for the gifts made to daughters-in-law.