9911796707
TMI Blog1998 (3) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... tesan and Rs. 10,000 to Sri R. Prabhu are not eligible for exemption under section 5(1)(xiii) or section 5(1)(xiv) of the Gift-tax Act, 1958 ? and 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the gift made to the assessee's daughter is not exempt under section 5(1)(vii) of the Gift-tax Act, 1958 ?" The assessee is an individual who carried on the business of automobile workshop at Salem with a branch workshop known as "Koti Engineering Works". During the assessment year 1976-77, the assessee made certain gifts, viz., machinery valued at Rs. 65,721 to his brother, A. Venkatesan, who was an experienced automobile mechanic and who had been in employment of the assessee since 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he had his training as an automobile apprentice and he was employed in Simpson and Company Ltd. He thereafter joined the assessee's workshop some time during the previous year relevant to the assessment in the year 1961-62 and the quantum of remuneration payable to Sri Venkatesan in the assessment of the assessee came up for consideration in an appeal filed by the assessee before the Income-tax Appellate Tribunal for the assessment year 1964-65. The Tribunal held that the payment of annual salary of Rs. 9,000 to Sri A. Venkatesan who happened to be a skilled mechanic could not be taken as unreasonable. It was also found that the said A. Venkatesan was employed only up to the assessment year 1975-76 and he was getting Rs. 11,750 and taking i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee also recorded a finding that the brother and son of the assessee, after getting gifts from the assessee started their own business and the gifts were made by the assessee to assist them for setting up their own business and due to the close relationship of the assessee with the donees. It is this order of the Tribunal which is the subject-matter of challenge in the first question. In so far as the second question is concerned, the assessee made a gift of Rs. 15,000 to his daughter, Smt. Chadurvedinayaki. The assessee had performed the marriage of his daughter in September, 1971, and the gift was made on September 29, 1975. The assessee claimed exemption in respect of the marriage gift under section 5(1)(vii) of the Act. The Gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tesan and Prabhu on account of the close relationship of the assessee with the donees. On the other hand, Mr. C. V. Rajan, learned counsel appearing for the Revenue, supported the order of the Income-tax Appellate Tribunal. We have carefully considered the submissions of learned counsel appearing for the assessee and learned counsel appearing for the Revenue. It is seen that the Tribunal has rendered a categorical finding that there was absolutely no evidence to show that the gifts were made to those donees in consideration of their past services. The assessee has not established anywhere that it was his practice to make gifts to the employees when they leave the services. The Tribunal has considered the case of A. Venkatesan, when the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness and, therefore, the assessee was not entitled to claim exemption having regard to his close relationship with those donees. Learned counsel for the assessee in his fairness has not pressed the claim for exemption on account of the gifts under section 5(1)(xiv) of the Act. In view of the finding of the Tribunal, we hold that the assessee is not entitled to claim exemption on the gifts made to both A. Venkatesan and R. Prabhu either under section 5(1)(xiii) or under section 5(1)(xiv) of the Gift-tax Act, 1958. We, accordingly, answer the first question referred to us in the affirmative and against the assessee. In so far as the second question is concerned, it relates to the gift made by the assessee to his daughter on the occasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made a gift of Rs. 15,000 to his daughter, i.e., nearly after four years after the marriage of his daughter. In view of the peculiar facts and circumstances of the case, we are of the opinion that the case of the assessee is acceptable that the gift has been made by the assessee on the occasion of the marriage. This court in CGT v. Dr. Mrs. Neelambal Ramaswamy [1987] 164 ITR 369, has taken the view that the expression "on the occasion of the marriage" under section 5(1)(vii) of the Gift-tax Act, 1958, should not be given any restricted meaning and if the gift made was associated with the event of the marriage or if the reason for the gift or the immediate cause thereof was the marriage, it would be covered by the said expression. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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