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TMI Blog1989 (2) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... from the class of relative dependent upon the assessee for maintenance and support ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in finding that for the purpose of section 5(1)(xii), only the intention of the donor is material and not the actual utilisation by the donee ? (4) Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that 'we are satisfied that the assessees have established that the gifts have been made for the education of the children' based on sufficient materials ?" ITR No. 255 of 1989 is filed against R. A. No. 431 (Coch)/1981 in GTA No. 8 (Coch)/1979 and ITR No. 270 of 1982 is filed against R. A. No. 432/Coch/1981 in GTA No. 9 (Coch)/1979. The respondents in both the cases are assessees under the Gift-tax Act. In ITR No. 255 of 1982, it is the husband and in ITR No. 270 of 1982, it is the wife. The gifts were made to the three children by their parents, the respondents in these references. The respondents in the two referred cases, the husband and the wife, respectively, made gifts to their three daughters in the accounting period relevant for the assessment year 1977-78. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Tribunal passed a common order dated July 27, 1981, and held that both the assessees are entitled to the relief contemplated under section 5(1)(vii) of the Act in the sum of Rs. 10,000 for each assessee out of the amount gifted to Kumari Arora Fernandez. The Tribunal held that even though the daughter, Kumari Arora Fernandez, has income of her own, the fact of such income would not exclude her from the class of relatives dependent upon the two assessees for maintenance and support. Regarding the exemption pleaded by the two assessees in respect of the gifts made to the other two daughters, in the sum of Rs. 10,000 each, the Appellate Tribunal held that what is required under section 5(1)(xii) of the Act is not the actual utilisation by the donees for the purpose of education but the intention of the donor-assessees that the gifts are made for the education of their children and, on facts, the Tribunal held that they are satisfied that the assessees, in the instant case, have established that the gifts have been made for the education of the children. The gifts made by the assessees of Rs. 10,000 to each of the donees were considered to be reasonable for the purpose of the educat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments, it may be said that the gifts on the occasion of marriage of a relative shall be exempt up to a maximum limit of rupees ten thousand, if the, relative has been dependent on the assessee and it will be immaterial whether the relative was having sufficient income for livelihood or not. Citing the above passage with approval, the Appellate Tribunal held that even though the daughter, Kumari Arora Fernandez, has income of her own, the fact of such income would not exclude her from the class, of relatives dependent upon the two assessees for maintenance and support. With great respect to the earned author, we are unable to endorse the above view as representing the correct law on the subject. The plea of the assessees was one of claiming exemption under section 5(1)(vii) and section 5(1)(xii) of the Gift-tax Act. It is settled law that the person who claims exemption should establish it. A statutory provision affording exemption should be strictly construed-Union of India v. CTO [1956] 7 STC 113, 123 (SC) and Kedarnath Jute Manufacturing Co. Ltd. v. CTO, AIR 1966 SC 12, 14. Bearing these basic principles in mind, is it permissible to say that Kumari Arora Fernandez, who has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of each case : what is the nature and quantum of the income of the relative who is said to be dependent upon the assessee ; is the said relative dependent upon the assessee for support and maintenance, in the sense that the relative is dependent upon the assessee for provision of the necessities and conveniences of life ; is the income of the relative only insignificant or trivial or insufficient to meet the requirements and conveniences of life, like food, shelter, clothing, education, medical care, etc. ; these aspects should be evaluated. Unless it is established that the income of the relative is such that it will not be sufficient or significant to meet the above essentials of life, the said relative cannot be said to be dependent on the assessee for support and maintenance. The matter has not been viewed from this perspective by the Appellate Tribunal. We are unable to endorse the statement of the law by the Tribunal that even though the daughter, Kumari Arora Fernandez, has income of her own, the fact of such income would not exclude her from the class of relatives dependent upon the two assessees for maintenance and support. The Tribunal should first find out w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment by way of capital in the business, will cease to be one for the education of the children. The intention of the donors-assessees is very relevant. They have effected the gifts for the education of their children. In what form the gift-the property-should be and in what way it should be utilised by the donees for the purpose of their education are beside the point. The sole question that will arise for consideration is whether the intention of the donor-assessee in making the gift was for the education of his children. When once such an intention on the part of the donor-assessee is established, the manner of utilisation of that amount, in whatever form or manner, will not in any, way derogate from the purpose of the gift and entitlement to exemption.
In this view of the matter, we concur with the conclusion of the Appellate Tribunal that the assessees are entitled to the exemption of the entire gift of Rs. 20,000 made by each one of them to the two daughters, under section 5(1)(xii) of the Gift-tax Act.
We answer the latter part of question No. 1 and questions Nos. 3 and 4 in the affirmative, in favour of the assessees and against the Revenue. X X X X Extracts X X X X X X X X Extracts X X X X
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