Commissioner of Gift Tax vs Dr. (Mrs.) Neelambai Ramaswamy

V. Ramaswami, Offg. C.J.

At the instance of the revenue, the following question was referred for the opinion of this Court: Whether, on the facts and in the circumstances of the case, the gifts made by the assessee to her son and daughter were entitled to exemption u/s 5 (1)(vii) of the Gift-tax Act, 1958?

The assessee is a lady doctor at Salem. On 7-6-1970 her daughter was married and on 8-6-1970 her son was married. By two settlement deeds executed on 26-5-1971, the assessee settled property valued about Rs. 9,000 in favour of her son and daughter-in-law and another property valued at Rs. 74,000 in favour of her daughter and son-in-law. In the gift-tax proceedings, the assessee claimed exemption of Rs. 20,000 u/s 5(1)(vii) of the Gift-tax Act, 1958 (''the Act'') in respect of these two gifts. The GTO rejected the claim as he was of the view that the gift was not made on the occasion of the marriage. The AAC also took the same view and held that the expression ''on the occasion of the marriage'' means ''at the time of the marriage'' and since the gifts were made nearly eleven months after the marriages, he confirmed the disallowance of exemption. The assessee took the matter in appeal to the Tribunal. The Tribunal was of the view that the expression ''on the occasion of the marriage'' is capable of meaning ''in relation to the occasion of the marriage'', and that the delay in making the gifts was satisfactorily explained and in that view held that the exemption to the extent of Rs. 9,000 in relation to the gift in favour of the son and to the extent of Rs. 10,000 in relation to the gift in favour of the daughter were to be sustained.

The learned counsel for the revenue strenuously contended that the expression ''on the occasion of the marriage'' could only mean at the time of the marriage or immediately preceding the marriage and it could not be interpreted as meaning ''any time subsequent to the marriage''. Section 5(1)(vii), which is the relevant provision, reads as follows:

(1) Gift-tax shall not be charged under this Act in respect of gifts made by any person-

(i) to (vi) ****

(vii) to any relative dependent upon him for support and maintenance, on the occasion of the marriage of the relative, subject to a maximum of rupees ten thousands in value in respect of the marriage of each such relative;

We are unable to agree with the learned counsel for the revenue that the expression ''on the occasion of the marriage'' in this provision will have to be given any such restricted meaning as is contended by him. If the gift was associated with the event of marriage or if the reason or immediate cause for the gift was the marriage, we are of the view that it will be covered by the expression ''on the occasion of the marriage''. The relationship between the gift and the marriage is, thus, the relevant factor and not the time of making the gift. In the text-book Three New Taxes by A.C. Sampath Iyengar, Vol. 2, we find the following passage:

''On the occasion of the marriage''.-The gift that is exempted from charge under this clause is ''on the occasion of the marriage''. Though the word ''occasion'' has reference to the time of the marriage, it conveys the idea of association with the event-vis., the marriage event. The expression ''on the occasion of is not equivalent in meaning to the phrase ''on the same date as''. The words ''on the occasion of marriage'' do not mean ''on the day of marriage''. They would mean either at or about the time of the marriage, with the implication that the coincidence in time was designed and not accidental. Accordingly, the donation may precede the marriage, for instance, to purchase dress, furniture, jewels, etc., in preparation for the marriage, or it might be made even after the celebration of the marriage, in order to meet the expenses which have been incurred before or during the marriage but which have not yet been paid or discharged.

In our opinion, this is the correct approach to the question of exemption provided for in section 5(1)(vii). In Ideal Life Assurance Co. Ltd. v. Hirschfield (1943) 1 All ER 563, which is cited in the passage quoted above, the provision considered was with reference to the benefits u/s 25 of the War Damage Act, 1941. In order to get the benefit under that provision one of the conditions to be satisfied was that the mortgage must have been created ''on the occasion of and ''in connection with'' the acquisition of the interest in the premises which was the subject matter of the mortgage or on the occasion of and in connection with the execution of the works for the benefit of the premises. The expression ''on the occasion of was considered as not equivalent in meaning to the phrase ''on the same date''. In fact, we find that one of the meanings given for ''occasion'' in Chambers'' Twentieth Century Dictionary is ''requirement''. If we give the meaning ''requirement'' for the word ''occasion'' in the section, it may also be interpreted as saying that it is as part of the requirement of the marriage that the gift is made. Without reference to any of these citations, almost on identical facts, the Andhra Pradesh High Court in Commissioner of Gift Tax Vs. Bandlamudi Subbaiah, took the same view. In that case, in pursuance of an arrangement on the occasion of marriage of the daughters to give them property, some allotment of property was made in the subsequent partition in favour of three married daughters. The point was considered with reference to these gifts given to the three married daughters u/s 5(1)(vii). The learned Judges observed:

...It is not unoften that a HUP announces gift of certain properties, generally lands in an agricultural State like Andhra Pradesh, on the occasion of the marriage of the daughter. The gift deed or settlement deed might not have been executed simultaneously with the marriage or the announcement. Later when the family itself splits up on account of partition, what had been agreed upon or announced would be reduced to writing in the partition deed. If really there was an arrangement on the occasion of the marriage of the daughter to give her some property, certainly it would come within the scope of clause (vii) of section 5(1) of the Gift-tax Act, even if the arrangement was reduced to writing much later either in the form of a partition deed or in the form of a settlement or gift deed....

The learned counsel for the revenue cited an earlier decision of the Patna High Court in Commissioner of Gift Tax Vs. M.S. Rao, . In that case, the assessee''s daughter was married in May 1963 and the deed of gift was executed on 28-9-1964. The question for consideration was, whether the claim for exemption made by the assessee u/s 5(1) (vii) in respect of this gift was in order. The learned Judge observed:

I think, there is no difficulty in answering the first question in favour of the revenue. The Tribunal seems to be labouring under a wrong notion of law that a promise made by the assessee on the occasion of the marriage of his daughter to make a gift of land to her in future was an oral gift. A promise to make a gift can never be termed as oral gift in the eye of law. If it would have been found in this case that possession of the land was delivered to the daughter on the occasion of her marriage, one could say that oral gift of the land was made coupled with delivery of possession on the occasion of the marriage, although in the eye of law there was no gift or, in any event, the gift was not complete until a registered document was executed by the donor. But even delivery of possession was given about eleven months after the marriage of the daughter. Only one document was executed by the assessee in September 1964 covering all items of properties gifted to his wife, daughter and son. In such a situation, it was not possible to hold that the gift to the daughter was on the occasion of her marriage. As I have said above, the only basis of this finding in the judgment of the Tribunal is the assessee''s promise to make a gift to his daughter. This could not be held in the eye of law to be a gift to the daughter-even oral gift on the occasion of her marriage. I would, therefore, answer the first question in the negative, against the assessee and in favour of the revenue and hold that, on the facts and in the circumstances of the case, section 5 (1)(vii) of the Act was not applicable to the gift in question in favour of the assessee''s daughter.

With great respect to the learned Judges, we are unable to share this view. In fact the observations of the Supreme Court in Guramma Bhratar Chanbasappa Deshmukh and Another Vs. Malappa, on the general law governing HUF are against this view of the Patna High Court. In paragraph No. 18 of that judgment, the Supreme Court observed:

The legal position may be summarised thus : The Hindu law texts conferred a right upon a daughter or a sister, as the case may be, to have a share in the family property at the time of partition. That right was lost by efflux of time. But it became crystallised into a moral obligation. The father or his representative can make a valid gift by way of reasonable provision for the maintenance of the daughter, regard being had to the financial and other relevant circumstances of the family. By custom or by convenience, such gifts are made at the time of marriage, but the right of the father or his representative to make such a gift is not confined to the marriage occasion. It is a normal (moral?) obligation and it continues to subsist till it is discharged. Marriage is only a customary occasion for such a gift, but the obligation can be discharged at any time, either during the lifetime of the father or thereafter. It is not possible to lay down a hard and fast rule, prescribing the quantitative limits of such a gift as that would depend on the facts of each case and it can only be decided by Courts, regard being had to the overall picture of the extent of the family estate, the number of daughters to be provided for and other paramount charges and other similar circumstances. If the father is within his rights to make a gift of a reasonable extent of the family property for the maintenance of a daughter, it cannot be said that the said gift must be made only by one document or only at a single point of time. The validity or the reasonableness of a gift does not depend upon the plurality of documents but on the power of the father to make a gift and the reasonableness of the gift so made. If once the power is granted and the reasonableness of the gift is not disputed, the fact that two gift deeds were executed instead of one, cannot make the gift any the less a valid one.

It may be seen from this that, though by custom or convenience, such gifts are made at the time of marriage, where it is considered as an obligation, it continues to subsist till it is discharged and that obligation can be discharged at any time either during the lifetime of the father or thereafter. The only consideration, therefore, would be whether the gift was considered to be a marriage gift or associated with the marriage and if that is satisfied, then certainly it will come u/s 5 (1)(vii).

In this case, as seen from the facts and the gift deed also recited to that effect that the gifts were intended at the time of the marriages itself but that could not be made earlier to 26-5-1971 because of certain unfortunate events that had happened in the family. The marriages took place on 7-6-1970 and 8-6-1970. It is not denied that on 15-7-1970 the younger son of the assessee died. The Tribunal found that the cause for the delay in making the gift, if any, was also satisfactorily explained. Since the gifts were intended even at the time of the marriage and, thus, associated with the marriage itself, we are of the view that they will come squarely u/s 5 (1) (vii).

In fact, it is the contention of the learned counsel for the assessee that the entire gift will not be one contemplated under the Act and it cannot be treated as a gift within the meaning of the Act as the settlement deed itself is in discharge of an obligation of the HUF in relation to the daughter or son who are members of the family and, therefore, it is not a gift at all. In this connection, he also referred to the decision of this Court in CGT v. M. Radhakrishna Gade Rao (1983) 143 ITR 260 and of the Calcutta High Court in Commissioner of Gift Tax, Central-I Vs. Basant Kumar Aditya Vikram Birla, But since the assessee had claimed or restricted her claim to the exemption u/s 5(1)(vii) alone and had not claimed the entirety as not liable for gift-tax, it is not necessary for us to go into that question fully.

The learned counsel for the revenue wanted to urge that in any case this exemption could not be claimed in the assessment year 1972-73 with reference to the execution of the settlement deed on 26-5-1971; but, if it is treated as one ''on the occasion of the marriage'', the marriages having taken place on 7-6-1970 and 8-6-1970, it could have been claimed only in the earlier assessment year 1971-72. We cannot permit him to raise this question because it was not raised at any stage and that is not a ground urged either before the GTO or the AAC or before the Tribunal. The learned counsel for the revenue also contended that so far as the gift in favour of the son is concerned, it is one executed not only in favour of the son but also in favour of the daughter-in-law and daughter-in-law is not one of those who can be called a relation dependent upon the assessee for the support and maintenance and for that reason, the share of the gift to the daughter-in-law should not have been exempted u/s 5 (1)(vii). This point also was not urged before the authorities below and, therefore, it could not be permitted to be urged here. On the question whether the son was a dependent on the assessee, the authorities below found that he was only a student in a college and he was a dependent. That is a question of fact and that could not be canvassed here. For the foregoing reasons, we are of the view that the Tribunal is right in holding that the assessee is entitled to exemption u/s 5 (1)(vii). Accordingly, we answer the question referred in the affirmative and against the revenue. The assessee will be entitled to her costs. Counsel''s fee Rs. 500.