COMMISSIONER OF GIFT TAX Vs. CHANDRASEKHARA REDDY

JUDGEMENT

(1.) IN this case, at the instance of the revenue, the following question has been referred to this High Court for its opinion :

(2.) THE facts leading to this reference are as follows : THE assessee transferred 10 acres and 54 cents of wet land in Nellore district to his only daughter, C. Vijayalakshmi, he having no son, in consideration of her marriage. THE betrothal had taken place on October 15, 1966, and the marriage took place on March I, 1967, and on January 1, 1967, i.e., during the period between the betrothal and the marriage, the assessee transferred 10 acres and 54 cents of land to his daughter. Before the Gift-tax Officer, the assessee contended that this transfer did not amount to a gift as contemplated by the Gift-tax Act, as the appropriation of joint family funds for the purpose of marriage of an unmarried daughter would not constitute a gift. This contention was rejected by the Gift-tax Officer, since the assessee was assessed as an individual in the income-tax records. He, however, held that the assessee, in his capacity as father, had made the gift in consideration of the marriage of the donee and granted exemption under Section 5(1)(vii) besides the basic exemption under Section 5(2) of the Gift-tax Act and determined the taxable gift at Rs. 43,000. He came to the conclusion that the value of the lands conveyed by the assessee to his daughter was Rs. 63,000 at the date of the conveyance. THE assessee carried the matter in appeal and before the Appellate Assistant Commissioner it was contended on his behalf that he had got 27 acres of wet land on a partition between himself, his brother and his father on August 29, 1957, and that his correct status was that of Hindu undivided family, though due to ignorance of law, he erroneously declared his status as an individual for the purpose of income-tax. It was further contended on his behalf that, whether the assessee's properties were his separate properties or joint family properties, he was under a legal obligation to perform the marriage of his daughter; that the transfer was only a provision made in discharge of that obligation ; and that, therefore, there was no gift at all attracting liability to gift-tax. THE assessee also disputed the valuation of the lands. THE Appellate Assistant Commissioner held that the question regarding the correct status of the assessee was irrelevant since a Hindu father, having separate properties or joint family properties, is bound to look after his children and also perform the marriage of his daughters. But he held that the law does not cast an obligation on him to make a gift of certain properties to his daughter who is being married. THE Appellate Assistant Commissioner upheld the assessment made by the Gift-tax Officer as well as the valuation adopted by him.

(3.) SUB-section (xii) of Section 2 of the Gift-tax Act defines "gift" to mean the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth. The rest of the definition is not material for the purpose of this judgment. Section 20 of the Hindu Adoptions and Maintenance Act provides for maintenance of children and aged parents. Under SUB-section (1) of the said section, a Hindu is bound, during his or her lifetime, to maintain his or her legitimate or illegitimate children and his or her aged or infirm parents. SUB-section (b) of Section 3 defines :