Decided on December 07,1973

Cet Appellant
Thakore Saheb Of Lakhtar H H Respondents


T.U.MEHTA,J. - (1.)THIS reference raises the question whether the payment of Rs. 75,000 which the assessee has made to meet the marriage expenditure of his daughter is covered by the exemption clause (j) of section 5 of the Expenditure -tax Act, 1957 (which is hereinafter referred to as 'the Act'). The payment in question is made by the assessee in S. Y. 2016 which is the accounting period relevant for the assessment year 1961 -62. The case of the assessee is that the disputed amount of Rs. 75,000 was impressed with an obligation in the nature of a trust and, therefore, its expenditure is exempted from expenditure -tax under clause (j) of section 5, while the contention of the revenue is that the said clause has no application to the facts of the case.
(2.)FACTS of the case are that the assessee was an ex - r of Lakhtar State. Some time before the year 1952, there were some disputes between him on one side and his senior wife and her children on the other. These disputes seem to have been resolved at the intervention of the Government of India in the year 1952. The record of the case contains a copy of the letter dated 8th May, 1952, addressed to the assessee by the Raj Pramukh of the State of Saurashtra. This letter shows the terms of the settlement of the above referred disputes. One of the terms of this settlement was as regards the provision for the marriage expenditure of the two daughters of the assessee by his senior wife. According to this term of settlement, the assessee was expected to set apart the sum of Rs. 1,75,000 out of the sale proceeds of one of his immovable properties called 'Lakhtar Utara' situated at Rajkot, for meeting the marriage expenditure of his above referred two daughters. This particular direction is found in the said letter of the Raj Pramukh in the following words :
'You should also set apart a sum of Rs. 1,75,000 (Rupees one lakh and seventy -five thousand) from the sale proceeds of the Lakhtar Utara at Rajkot for the marriage of your two daughters.'

It appears that by that time the assessee had disposed of his above referred property at Rajkot, and it was from the sale proceeds of this property that the above referred amount of Rs. 1,75,000 was required to be set apart for the marriage of his two daughters. The letter of the Raj Pramukh, above referred to, then concludes as under :

'I have been requested by the Government of India to acquaint you with these decisions and to tell you that they must be implemented. The Government of India have observed that they are based on a compromise of the conflicting claims of the parties and it is essential that they should be accepted in a spirit of give and take and with goodwill by both parties.'

(3.)PURSUANT to this letter of the Raj Pramukh the assessee paid an amount of Rs. 1,00,000 to his Yuvraj in the year 1952 for the purpose of the marriage of his elder daughter. However, he kept the remaining amount of Rs. 75,000 with himself and parted with this amount in the accounting period when his second daughter was married. It is in this manner that he is said to have made the expenditure of Rs. 75,000 for the purpose of his daughter's marriage. The revenue contends that this payment of Rs. 75,000 by the assessee to his Yuvraj for the purpose of marriage of his second daughter amounts to expenditure and, therefore, is included in the assessment of his total expenditure in the accounting period. As against this, the contention of the assessee is that the payment of Rs. 75,000 is exempted by clause (j) of section 5 of the Act which contemplates exemption from expenditure when the same is incurred by way of or in respect of any gift, donation or settlement on trust or otherwise for the benefit of any other person.

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