1984 (1) TMI 134 - AT - Income Tax

Summary

Issues Involved:

1. Valuation of gifts given by the assessee to his daughter on the occasion of her marriage.
2. Exemption of the gifts from gift tax under Section 5(1)(vii) of the Gift Tax Act.
3. Consideration of gifts as a discharge of moral and legal obligations under Hindu Law.

Issue-wise Detailed Analysis:

1. Valuation of Gifts:

The facts of the case reveal that the assessee gave his daughter, D. Subbalaxmi, 70-6-0 tolas of gold jewelry, 1045 tolas of silverware, and a fixed deposit of Rs. 16,800 on the occasion of her marriage. The assessee valued these gifts at Rs. 66,290, while the Gift Tax Officer (GTO) valued them at Rs. 71,202. The GTO's valuation included Rs. 40,187 for gold jewelry, Rs. 13,685 for silverware, and Rs. 16,800 for the cash gift.

2. Exemption from Gift Tax:

The assessee contended that the entire value of the gifts was exempt from tax under Section 5(1)(vii) of the Gift Tax Act, as they were given in consideration of marriage. The GTO, however, allowed only Rs. 10,000 as exempt, considering the rest as taxable gifts amounting to Rs. 68,202. The Appellate Assistant Commissioner (AAC) later deleted the addition of Rs. 61,200, accepting the assessee's argument that the gifts were customary and in consideration of marriage.

3. Discharge of Moral and Legal Obligations:

The assessee relied on the Andhra Pradesh High Court's decision in CGT vs. Chandrasekhara Reddy, which followed the Supreme Court's principles in Kamala Devi vs. Bachulal Gupta. It was argued that a Hindu father has a legal and moral obligation to give his daughter in marriage and to provide for her maintenance, which includes marriage expenses. The AAC accepted this view, noting that the assessee had no sons and only two daughters, and had given similar gifts during the marriage of his second daughter.

The Tribunal considered various precedents, including decisions from the Andhra Pradesh High Court, Calcutta High Court, and Madras High Court, which recognized the legal and moral obligation of a Hindu father to provide for his daughter's marriage. It was noted that the obligation to maintain an unmarried daughter includes marriage expenses, and such provisions are not liable for gift tax if they discharge a legal obligation.

The Tribunal also referenced Section 20(1) of the Hindu Adoptions and Maintenance Act, 1956, which states that a Hindu is legally bound to maintain his legitimate children, including unmarried daughters, and this maintenance includes marriage expenses.

Conclusion:

The Tribunal upheld the AAC's decision, agreeing that the gifts given by the assessee were in consideration of marriage and were customary in his community. The Tribunal dismissed the department's appeal, confirming that the gifts were exempt from gift tax under Section 5(1)(vii) of the Gift Tax Act, as they were made to discharge the assessee's legal and moral obligations. The Tribunal emphasized the importance of community customs and the specific circumstances of the assessee's family in reaching this conclusion.