1989 (3) TMI 181 - AT - Income Tax

Summary

Issues Involved:
1. Whether the presentation of 320 grams of jewellery by the assessee to her daughter at the time of her marriage qualifies as a gift subject to gift-tax under the GT Act.
2. The applicability of Section 20 of the Hindu Adoption and Maintenance Act concerning the maintenance obligations of parents towards their children.
3. The inclusion of the value of the jewellery in the assessment for the purpose of aggregation for the assessment year 1984-85.

Issue-wise Detailed Analysis:

1. Presentation of Jewellery as a Gift Subject to Gift-Tax:
The primary issue is whether the presentation of 320 grams of jewellery by the assessee to her daughter at the time of her marriage constitutes a taxable gift under the GT Act. The GTO treated the jewellery as a gift without consideration and assessed it to gift-tax, determining the taxable gift at Rs. 28,520 after exemptions. The AAC confirmed this order. The assessee argued that the jewellery was presented as part of the maintenance obligation and customary practice during marriage, not as a gift. The Tribunal concluded that the jewellery presented was an expenditure incidental to the marriage and a legal obligation of the mother, thus falling outside the purview of the GT Act. Consequently, the assessment for the year 1981-82 was cancelled.

2. Applicability of Section 20 of the Hindu Adoption and Maintenance Act:
The assessee contended that under Section 20 of the Hindu Adoption and Maintenance Act, she had a legal obligation to maintain her daughter, which includes expenses for marriage. The Tribunal examined Section 20, which mandates parents to maintain their children, including unmarried daughters, until they can maintain themselves. The Tribunal referred to the Punjab and Haryana High Court's decision in Wali Ram Waryam Singh vs. Smt. Mukhtiar Kaur, which emphasized that the obligation to maintain an unmarried daughter extends beyond her minority if she cannot maintain herself. The Tribunal found no evidence that the daughter could support herself, thus affirming the mother's obligation to maintain her, including marriage expenses. The Tribunal concluded that the jewellery given was part of this obligation and not a taxable gift.

3. Inclusion of Jewellery Value in Assessment for Aggregation:
For the assessment year 1984-85, the value of the jewellery assessed in 1981-82 was considered for aggregation purposes. Since the Tribunal concluded that the jewellery presented was not a taxable gift but a maintenance obligation, the amount of Rs. 28,520 was excluded from the computation for aggregation in the assessment year 1984-85.

Conclusion:
The Tribunal allowed both appeals, ruling that the presentation of jewellery was an expenditure incidental to marriage and a legal obligation of the mother, not a taxable gift under the GT Act. Consequently, the assessments for the years 1981-82 and 1984-85 were modified accordingly.