Commissioner of Gift Tax vs Mrs. Johna Austin

G. Sivarajan, J.—The following question of law is referred u/s 26(1) of the GT Act at the instance of the Revenue.

"Whether, on the facts and in the circumstances of the case, and also in the light of the observation of the Kerala High Court in its Full Bench decision Commissioner of Income Tax Vs. P.M. Paily Pillai, "there is no legal obligation on the part of Christian father to maintain or educate his minor children", the Tribunal is right in law and fact in holding :

(i) Christian father is under a legal obligation to maintain his daughter ?

(ii) Maintenance of a daughter includes getting her married;

(iii) A reasonable amount paid at the time of marriage cannot be considered a gift liable to gift-tax;

(iv)''The property worth Rs. 1,50,000 transferred by the assessee to his daughter is not liable to gift-tax ?"

The matter arises under the GT Act, 1958 (for short ''the Act''). The assessment year concerned is 1989-90. The respondent-assessee gifted away 8.14 acres of land at Perinad (Ranny) to her daughter as per a registered deed. The valuation of the property shown in the gift deed is Rs. 50,000. The assessee filed a return of gift showing the value of the gift at Rs. 1,50,000. The GTO completed the assessment accepting the valuation of the property shown by the assessee and after granting deductions determined the taxable gift at Rs. 1,20,000 and raised a demand of Rs. 32,250. The assessee thereafter filed an application for rectification u/s 34 of the GT Act contending that the transaction is not at all exigible to gift-tax. The assessing authority rejected the same. Aggrieved by the said order the assessee filed appeal before the Dy. CGT(A), Trivandrum, who by his order dt. 16th May, 1994, allowed the same relying on the decision of the Tribunal in the case of Smt. B. Indira Devi v. GTO 1992 KLJ TC 5. The Department took up the matter in appeal before the Tribunal. The Tribunal dismissed the said appeal relying on its own order in Indira Devi''s case. It is against the said order of the Tribunal the above question has been referred.

The learned standing counsel for the Revenue submitted that the decision relied on by the Tribunal in Indira Devi''s case was reversed by this Court in Commissioner of Gift-tax Vs. Smt. B. Indira Devi, and that another Division Bench in Commissioner of Gift-tax Vs. M.C. George, followed the same. The standing counsel relying on the said two decisions submitted that the transaction in question is exigible to gift-tax as held by the assessing authority.

Sri N. Venkitarama Iyer, learned counsel for the assessee, on the other hand, submits that none of the authorities including the Tribunal has considered the deed under which the assessee had transferred the property in favour of her daughter. The counsel submits that if the authorities perused the document it would have found that the transaction is one of settlement in consideration of the donee maintaining the assessee even after the marriage of the daughter. The counsel also read out the relevant portion of the document before us.

We have considered the rival contentions. The admitted facts are that the assessee had gifted away 8.14 acres of land to her daughter at the time of the daughter''s marriage through a registered document. The assessee himself had filed a return showing the value of the property at Rs. 1,50,000. The assessing authority had acted on the basis of the said return and completed the assessment. Of course, the assessee, by way of rectification petition, sought to contend that the transaction is not exigible to tax. It is seen that the contention taken by the assessee''s authorised representative before the two appellate authorities is that there was a custom in the orthodox Christian community of giving properties to the daughters at the time of their marriage which is supported by the certificate issued by the church and, therefore, such transaction cannot be treated as a gift. Both the appellant authorities had accepted the claim of the assessee relying on the decision of the Tribunal in Indira Devi''s case (supra).

We have perused the judgment of this Court in Indira Devi''s case (supra) and the decision in CGT v. M.C. George (supra). We find that this Court had not accepted the contention regarding the customary practice prevailing either in the Hindu community or in the Christian community regarding the giving way of property to their daughters at the time of their marriage for their future maintenance. This Court has clearly held that the obligation of a Hindu father or a Christian father to maintain his daughters ceases with the marriage of the daughter and, thereafter it is the obligation of their husbands to maintain them. According to us, the said decisions squarely applies to (sic)

In the light of the two decisions of this Court mentioned above the 3rd and 4th limbs of the question specified in para 1 of this judgment is answered in the negative, i.e., in favour of the Revenue and against the assessee. In view of the above answer it is unnecessary to answer the 1st and 2nd limbs'' of the question. We accordingly decline to answer the same.

Learned counsel for the assessee then submitted before us that till date the . assessee was not liable to gift-tax and that it is only by virtue of this decision the assessee is being saddled with the liability and, therefore, a direction may be issued to the authorities not to levy any interest on the amount of gift-tax. We are afraid we cannot issue any such direction while answering a reference in exercise of the advisory jurisdiction. However, it is open to the assessee to move the concerned CIT for waiver or reduction of interest if she is so advised.