1989 (5) TMI 116 - AT - Income Tax

Summary

Issues:
1. Whether the expenditure incurred by the assessee on the marriages of her granddaughters and the air-ticket for another granddaughter constitutes a gift for the purpose of Gift-tax Act.
2. Whether the legal obligation to perform marriages of granddaughters shifts the burden of gift to the assessee.
3. Interpretation of the definition of "gift" under the Gift-tax Act and its application to the case at hand.

Detailed Analysis:
1. The case involved the assessment of whether the expenses incurred by the assessee on the marriages of her granddaughters and the air-ticket for another granddaughter constituted a gift under the Gift-tax Act. The IAC of Gift-tax treated the expenditure as a gift, leading to an appeal by the assessee. The Assessing Officer argued that there was no legal obligation on the assessee to bear the marriage expenses, shifting the burden of gift to her. The Commissioner of Gift-tax (Appeals) upheld the assessment order.

2. The assessee contended that there was no gift involved in the expenditure for the marriages and the air-ticket. The Assessing Officer relied on Hindu Adoptions and Maintenance Act, 1956, to establish the legal obligation for marriage expenses. However, the Tribunal held that gratuitous expenditure without transferring any property does not constitute a gift. It was determined that there was no transfer of property to the granddaughters, and the expenses did not amount to a gift in this regard. The legal obligation to perform marriages did not imply a gift by the assessee.

3. The Tribunal analyzed the definition of "gift" under the Gift-tax Act, emphasizing the requirement of a voluntary transfer of property from a donor to a donee without consideration. It was established that in this case, there was no transfer of property to the granddaughters through the marriage expenses. However, the cost of the air-ticket for one granddaughter was considered a gift as it involved the transfer of a property. The Tribunal concluded that the total value of the gift was only the amount spent on the air-ticket, not the entire expenditure on the marriages.

In conclusion, the Tribunal partly allowed the appeal, holding that while the expenditure on the marriages did not constitute a gift, the cost of the air-ticket for one granddaughter was considered a gift under the Gift-tax Act. The assessment order was modified accordingly to reflect the value of the gift as the air-ticket amount only.