1979 (1) TMI 158 - AT - Income Tax

Summary

Issues:
1. Claim of exemption under section 5(1)(xii) of the Gift-tax Act for gifts made for educational purposes.
2. Determination of reasonableness of the gifted amounts.
3. Verification of the purpose of the gifts and the utilization of the gifted amounts for educational expenses.
4. Evaluation of the bona fides of the claim for exemption.

Analysis:
1. The appeal pertains to the asst. yr. 1974-75, involving an individual non-resident assessee who made gifts to her daughters. The gifts were claimed as exempt under section 5(1)(xii) of the Gift-tax Act for educational purposes, totaling Rs. 40,000. The Department disputed the claim, arguing that no evidence existed to prove the gifts were used for education. The GTO rejected the exemption, leading to an appeal by the assessee to the AAC.

2. The AAC granted the exemption, emphasizing the bona fides of the claim and the absence of evidence contradicting the purpose stated in the return. The Revenue appealed, contending that without proof of utilizing the gifts for education, the exemption should be denied. The counsel for the assessee argued that the gifts were reasonable considering probable educational expenses and highlighted the lack of adverse inference due to the husband's role as legal guardian.

3. The Tribunal analyzed the reasonableness of the gifts based on the educational pursuits of the donees. It was observed that the amounts were appropriate for nursing studies and general education. Details provided by the assessee confirmed the ongoing education of the donees, although no funds had been withdrawn for educational purposes. The absence of a formal document for the gifts did not invalidate the claim for exemption.

4. The Tribunal upheld the exemption, emphasizing that the gifts were intended for education as stated in the verified return. The lack of control over the gifted amounts post-transfer and the consistency of the claim with the donor's past gifting behavior supported the assessee's position. The Tribunal concluded that the assessee was entitled to the exemption under section 5(1)(xii) of the Gift-tax Act, dismissing the appeal by the Revenue.