COMMISSIONER OF GIFT TAX Vs. RAO M S

JUDGEMENT

(1.) THIS is a reference made by the Income-tax Appellate Tribunal, Patna Bench, under Section 26(1) of the Gift-tax Act, 1958 (hereinafter referred to as "the Act"). Four questions of law have been referred- -one in relation to the claim of exemption made by the assessee under Section 5(1)(vii) of the Act in respect of 60 cents of land at Ranchi gifted by the assessee to his daughter. Three questions of law relate to the claim of exemption by the assessee under Section 5(1)(xii) in respect of the land and house situated at Ranchi gifted by the assessee to his son. The assessee's daughter was married in May, 1963. The deed of gift was executed on September 28, 1964, reciting therein that possession over the gifted land was given to the daughter in April, 1964. The assessee claimed that it was a gift by him to his daughter, who was dependent upon him for support and maintenance, on the occasion of her marriage, and since it was within the maximum limit prescribed under Section 5(1)(vii) of the Act, it was exempt from levy of gift-tax. The Gift-tax Officer held that the gift was effective only on the execution of the deed of gift in September, 1964, which was a long time after the marriage of the assessee's daughter. Hence, it could not be held to be a gift on the occasion of the marriage of the daughter of the assessee. The Appellate Assistant Commissioner on appeal by the assessee took a different view. The department went up in appeal before the Appellate Tribunal, and the Tribunal took the view that oral gift was made at the time of the marriage of the daughter of the assessee, although possession was delivered later in April, 1964, and a registered deed was executed still later in September, 1964. In that view of the matter, the Tribunal has agreed with the decision of the Appellate Assistant Commissioner and held that the gift of 60 cents of land, the value of which has been determined to be Rs. 7,000, is exempt from gift-tax. In this regard the question of law referred to this eourt is:

(2.) ON September 28, 1964, it appears, the assessee had executed a registered deed of gift, gifting certain properties to his wife, daughter and son. The gift in favour of the wife which was also valued at Rs. 7,000, was held to be exempt from the gift-tax by the Gift-tax Officer himself. In favour of the son, a piece of land together with the house standing thereon was gifted. The value of this was determined to be Rs. 71,000, Rs. 7,000 for the land and Rs. 64,000 for the building, by the Gift-tax Officer. The Appellate Assistant Commissioner held that the gift in favour of the son was exempt from gilt-tax to the extent of Rs. 54,000 in view of the provision of law contained in Section 5(1)(xii) of the Act. The Tribunal has agreed with this finding, and the three questions of law referred for opinion of this court in this connection are the following:

(3.) OF course, this observation was made to repel the argument that the word "children" used in a will meant and included grand-children also. But I have respectfully adopted the definition given by the Lord Chancellor as, in my opinion, it is aptly applicable to the term used in Section 5(1)(xii). Here also "children" means issue of the first generation, and this primary sense ought to be adhered to when there is nothing, or not enough, to displace it. Surely, the fetter of age is not sufficient to take an issue of the first generation out of the term "children" in the section. To the same effect was the observation in Atkinson, In re : Pybus v. Boyd, [19)8] 2 Ch 138(Ch D). Younger J. said in the opening sentence of his judgment: