Commissioner of Gift Tax vs Smt. Triveni Devi

This reference has been made u/s 26(1) of the GT Act, 1958 at the instance of the CGT for opinion of this Court on the following question of law:

Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that there was no gift of 29 Tolas of gold made by late Shri Roshanlal Goyal to his daughter-in-law Smt. Usha Goyal at the time of marriage?

The assessment pertains to the asst. yr. 1982-83. The assessee filed her return on 9th Nov., 1984 and the value of the taxable gift was shown as nil. Notice u/s 16(1) of the GT Act was issued on 19th Oct., 1984 to the assessee. Notice u/s 15(2) of the GT Act was also served. Late Shri Roshanlal Goyal gifted 29 Tolas of gold ornaments to his daughter-in-law. He submitted that the transfer of ornaments was neither voluntary nor without consideration, therefore, it was not a gift in terms of Section 2(xii) of the GT Act and not liable to tax. The GTO held that the value of the ornament is taxable. Appeal was preferred before the AAC, which came to be dismissed vide order dt. 29th Jan., 1987. On further appeal before the Tribunal, Jaipur, it was held that the ornaments given, to the daughter-in-law are a social and moral obligation and the value of the ornaments is not taxable.

We have heard learned Counsel for the petitioner. Learned Counsel for the respondent is not present.

Learned Counsel for the petitioner has submitted that this point, "whether the ornaments given to the daughter or daughter-in-law at the time of marriage are a gift under the provisions of GT Act, 1958" has been considered by the various High Courts. In number of judgments, it has been held that the gold ornaments given to the daughter at the time of marriage is a moral and social obligation and is a gift and not a taxable gift.

He has drawn the attention of the Court on a judgment of the Madhya Pradesh High Court delivered in case titled Smt. Savita Devi Vs. Commissioner of Gift-tax, The Court, dealing with this proposition, has observed as under:

So far as the gift made by the assessee to his daughter-in-law is concerned, it appears to be a gift because there is no moral obligation on the part of the father-in-law to part with any movable or immovable property. It may at best be a social obligation and cannot be treated as a moral obligation under the Hindu law to settle any movable and immovable property on the daughter-in-law. It is nothing but a voluntary transfer by the assessee to another person and it will definitely fall within the definition of ''gift'' as provided in Section 2(xii) of the Act.

We are of the view that a Karta of the family or father-in-law has no moral obligation to gift the gold ornaments to the daughter-in-law which shall amount to settle any movable or immovable property on the daughter-in-law. There is no custom also shown that it is by custom, moral or social, binding on the Karta. The view taken by the Madhya Pradesh High Court appears to be on sound reasoning. It has also been brought to our notice that the assessee has also gifted ornaments to the elder daughter-in-law and has shown in his return as a taxable gift, which has been taxed. In the present assessment year, the gift was given to the younger daughter-in-law which has not been included in the category of taxable value. We feel that the view taken by the Madhya Pradesh High Court is correct and we subscribe to that view. Accordingly, we answer the reference in favour of the Revenue and against the assessee.