COMMISSIONER OF GIFT TAX Vs. V SUNDARAM ACHARI

JUDGEMENT

(1.) THIS is a reference under Section 26(1) of the Gift -tax Act, 1958 (for short 'the Act'), at the instance of the Revenue. The following questions are referred for decision of this court :

(2.) THE brief facts necessary for decision of this case are as follows. The respondent -assessee is a goldsmith. He gave 51 sovereigns to his daughter, Jayalakshmi, at the time of her marriage, the value of which came to Rs. 73,174. Pursuant to a notice issued by the Gift -tax Officer, the assessee filed a nil return. The assessee contended that he has given the 51 sovereigns to his daughter at the time of her marriage as a part of his obligation under the Hindu Adoptions and Maintenance Act, 1956 (for short 'the Adoption Act'), and therefore, there is no gift exigible to tax under the Act. This was not accepted by the Gift -tax Officer, who noted that the assessee gave a sworn statement before the Assistant Director, Income -tax (Investigation), Kottayam, wherein he had stated that he gave 51 sovereigns to his daughter, Jayalakshmi, at the time of her marriage, and observed that the above statement clearly proved that the entire 51 sovereigns were gifted at the time of marriage. He, accordingly, assessed the sum of Rs. 73,174, representing the value of 51 sovereigns, to gift -tax after giving the exemption available under Section 5(1)(vii) of the Gift -tax Act. Being aggrieved by the said order, the assessee filed appeal before the Deputy Commissioner of Gift -tax (Appeals), who, by his order dated August 30, 1994, allowed the said appeal. In appeal by the Department, the Tribunal confirmed the same. Hence, this reference.

(3.) LEARNED counsel appearing for the assessee, on the other hand, submits that reasonable expenses of and incidental to marriage provided in Section 3(b)(ii) of the Adoption Act necessarily includes gold ornaments, given at the time of marriage of the daughter for being worn by her on the occasion of the marriage. Counsel also submitted that it is customary among Hindus to give gold ornaments to the daughter on the occasion of the marriage, which is a necessary expense to be incurred by the father according to his capacity, and therefore, the giving of gold ornaments at the time of marriage of a daughter is a legal obligation of the father under the provisions of the Adoption Act. It is in these circumstances, learned counsel submits that there is no gift involved in such a transaction. Section 20 of the Hindu Adoptions and Maintenance Act, 1956, reads thus :