G.SIVARAJAN J. -
(1.) THIS is a reference under Section 26(1) of the Gift -tax Act, 1958 (for short 'the Act'), at the instance of the Revenue. The following questions are referred for decision of this court :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that there is no taxable gift in this case? (2) Whether, on the facts and in the circumstances of the case, and in the light of the decision of the Kerala High Court in Indira Devi  KLJ (Taxman) 352, the Tribunal is right in law in arriving at the findings and the conclusion reached in paragraphs 5 and 6 of its order ? (3) Whether, on the facts and in the circumstances of the case, is not the gift exigible to gift -tax and the assessee entitled only to an exemption under Section 5(1)(vii) of the Gift -tax Act ?'
(2.) THE brief facts necessary for decision of this case are as follows. The respondent -assessee is a goldsmith. He gave 51 sovereigns to his daughter, Jayalakshmi, at the time of her marriage, the value of which came to Rs. 73,174. Pursuant to a notice issued by the Gift -tax Officer, the assessee filed a nil return. The assessee contended that he has given the 51 sovereigns to his daughter at the time of her marriage as a part of his obligation under the Hindu Adoptions and Maintenance Act, 1956 (for short 'the Adoption Act'), and therefore, there is no gift exigible to tax under the Act. This was not accepted by the Gift -tax Officer, who noted that the assessee gave a sworn statement before the Assistant Director, Income -tax (Investigation), Kottayam, wherein he had stated that he gave 51 sovereigns to his daughter, Jayalakshmi, at the time of her marriage, and observed that the above statement clearly proved that the entire 51 sovereigns were gifted at the time of marriage. He, accordingly, assessed the sum of Rs. 73,174, representing the value of 51 sovereigns, to gift -tax after giving the exemption available under Section 5(1)(vii) of the Gift -tax Act. Being aggrieved by the said order, the assessee filed appeal before the Deputy Commissioner of Gift -tax (Appeals), who, by his order dated August 30, 1994, allowed the said appeal. In appeal by the Department, the Tribunal confirmed the same. Hence, this reference.
Shri P. K. R. Menon, senior Central Government standing counsel appearing for the Revenue, submits that the gift in the instant case is not covered by the provisions of Section 3(b) of the Adoption Act. Senior counsel, with reference to the provisions of Section 3(b)(i) of the said Act, submits that it is only the expenses, which are incurred and incidental to the marriage of the daughter alone, that can be roped within the purview of the said section and that any gift given to the daughter at the time of marriage cannot be included.
(3.) LEARNED counsel appearing for the assessee, on the other hand, submits that reasonable expenses of and incidental to marriage provided in Section 3(b)(ii) of the Adoption Act necessarily includes gold ornaments, given at the time of marriage of the daughter for being worn by her on the occasion of the marriage. Counsel also submitted that it is customary among Hindus to give gold ornaments to the daughter on the occasion of the marriage, which is a necessary expense to be incurred by the father according to his capacity, and therefore, the giving of gold ornaments at the time of marriage of a daughter is a legal obligation of the father under the provisions of the Adoption Act. It is in these circumstances, learned counsel submits that there is no gift involved in such a transaction. Section 20 of the Hindu Adoptions and Maintenance Act, 1956, reads thus :
'20. Maintenance of children and aged parents. - -(1) Subject to the provisions of this section a Hindu is bound, during his or her lifetime, to maintain his or her legitimate or illegitimate children and his or her aged or infirm parents. (2) A legitimate or illegitimate child may claim maintenance from his or her father or mother so long as the child is a minor. (3) The obligation of a person to maintain his or her aged or infirm parent or a daughter who is unmarried extends in so far as the parent or the unmarried daughter, as the case may be, is unable to maintain himself or herself out of his or her own earnings or other property.' ;