Commissioner of Gift-tax vs Pothen Chacko

G. Sivarajan J.

At the instance of the Revenue, the following two questions of law are referred by the Income Tax Appellate Tribunal, Cochin Bench, Ernakulam, u/s 26(1) of the Gift-tax Act, 1958, for the decision by this court:

"(1) Whether, on the facts and in the circumstances of the case and also in the light of the Full Bench decision of the Kerala High Court in Commissioner of Income Tax Vs. P.M. Paily Pillai, , the Tribunal is right in its finding on the obligation of the Christian father towards his children ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the gift given by the assessee to his daughter at the time of marriage cannot be considered as transfer and hence it cannot be considered as gift exigible to gift-tax ?"

The matter arises under the Gift-tax Act, 1958. The assessment year concerned is 1987-88. The assessee gave a sum of Rs. 2 lakhs to his daughter at the time of her marriage on November 8, 1986. He did not file any return of gift-tax for the assessment year 1987-88. The assessing authority issued a notice u/s 16(1) of the Act on March 12, 1991. In spite of the said notice, the assessee did not file any return. The assessing authority, therefore, completed the assessment in respect of the gift of Rs. 2 lakhs after exempting a sum of Rs. 10,000 u/s 5(1)(vii) of the Act. The assessee took up the matter in appeal before the Deputy Commissioner of Gift-tax (Appeals), Thiruvananthapuram, who allowed the same by holding that the daughter had a legal right to receive the amount. The assessee had also raised an alter- native contention before the first appellate authority that the amount of Rs. 2 lakhs given by him to his daughter was in fact given on behalf of the assessee, his wife and son. Since the appeal of the assessee was allowed, this contention was not considered by the first appellate authority. The Department took up the matter in appeal before the Tribunal. Relying on an earlier decision of the Tribunal in G. T. A. No. 23/Coch. of 1991 in the case of M. C. George, Kotta-rakkara, the Departmental appeal was dismissed.

Learned standing counsel appearing for the Revenue submits that the abovementioned decision of the Tribunal in G. T. A. No. 23/Coch. of 1991 came up in reference before this court and this court in Commissioner of Gift-tax Vs. M.C. George, held that the obligation of the Christian father to maintain his daughter obviously ceases when he has given her away in marriage and that once the marriage takes place, the obligation of maintaining her is that of her husband. Relying on the said decision, standing counsel submitted that the assessee was not entitled to get exemption in respect of the gift of Rs. 2 lakhs made to his daughter at the time of marriage.

We have also heard Shri Jacob Thomas, learned counsel appearing for the respondent-assessee. He submits that though the two questions referred by the Tribunal are covered by the decision mentioned above, the assessee has raised an alternate contention before the first appellate authority that even if the gift made by the assessee is exigible to tax under the Gift-tax Act, still, since the appellant has got a case that the sum of Rs. 2 lakhs was paid by the assessee on behalf of the assessee, his wife and son, the said question has to be decided. We have perused the orders of the two appellate authorities. We find that the first appellate authority has clearly left open the said contention since the appeal was decided in favour of the assessee on the main ground. We also find that the Tribunal also did not consider the question since the Tribunal has agreed with the order of the first appellate authority on the main question, relying on its earlier order in M. C. George''s case mentioned above.

In view of the decision of this court in Commissioner of Gift-tax Vs. M.C. George, , the questions of law extracted in para. 1 of this judgment are to be answered in the negative, i.e., against the assessee and in favour of the Revenue. We answer the two questions accordingly.

Since the respondent has got a case that the sum of Rs. 2 lakhs paid by the assessee to his daughter came from the assessee, his wife and son and since the said contention, though raised, was not considered by either of the appellate authorities, we are of the view that the Tribunal must be directed to consider the said contention while passing final orders u/s 260 of the Act. We order accordingly. If the Tribunal feels that the matter has to be considered by the first appellate authority or by the assessing authority in the first instance, certainly, it is open to the Tribunal to remit the said question to either of the said authorities for consideration.

The Income Tax reference is disposed of as above. The office will forward a certified copy of this judgment before the parties for compliance.