2002 (9) TMI 20 - HC - Income Tax

Gift Tax Act, 1958 - value of the gifted property - taxable gift -exemption under section 5(1)(vii) of the Gift-tax Act - respondent-assessee is an individual owning about 30 acres of rubber estate in Punalur. Out of the above, he had gifted one acre of rubber estate to his daughter at the time of her marriage Held that the obligation of the Christian father to maintain his daughter obviously ceases when he has given her away in marriage and once the marriage takes place, the obligation to maintain her is that of her husband - In view of the finding rendered by the Tribunal that the gift in question is not exigible to tax under the Act, the question of valuation was not considered by the Tribunal. Now that this question is answered against the assessee, it is necessary to direct the Tribunal to consider the question of valuation.

Summary

Issues:
1. Whether the property gifted can be viewed as a gift under the Gift-tax Act?
2. Whether the assessee is entitled to exemption under section 5(1)(vii) of the Gift-tax Act?

Analysis:
1. The case involved a dispute under the Gift-tax Act, 1958, regarding the gifting of one acre of rubber estate by the assessee to his daughter at the time of her marriage. The assessing authority disagreed with the declared value of the gift and assessed it at a higher value, leading to a tax demand. The assessee argued for exemption based on a custom in the Marthoma Syrian Christian community and previous court decisions. The Tribunal held that the gift was not taxable as it was made to fulfill an obligation towards the daughter's marriage, discharging the father's responsibility. However, the Revenue contended that the gift was taxable, citing previous court decisions and rejecting the notion of an ongoing obligation post-marriage for a Christian father.

2. The Tribunal's decision was challenged based on the reversal of a similar case by the High Court and the interpretation of the Christian father's obligation post-marriage. The assessee presented evidence of a community custom and relied on previous court decisions supporting exemption. The court referred to past cases involving gifts by Christian fathers and the cessation of maintenance obligation post-marriage. It was concluded that the gift in question was taxable under the Act, aligning with the principles established in previous judgments. The court directed the Tribunal to reconsider the valuation of the gifted property, which was not addressed earlier due to the Tribunal's ruling on taxability.

Conclusion:
The court ruled against the assessee, determining that the gifted property was subject to taxation under the Gift-tax Act based on precedents and legal interpretations regarding the obligations of a Christian father post-marriage. The Tribunal was instructed to reevaluate the property's valuation, emphasizing the need for a comprehensive assessment in line with the Act's provisions.