RAJENDER KUMAR GOYAL Vs. GIFT TAX OFFICER
LAWS(IT)-1989-2-10
INCOME TAX APPELLATE TRIBUNAL
Decided on February 28,1989

Appellant
VERSUS
Respondents

JUDGEMENT

S.S. Mehra Judicial Member - (1.)APPELLANT assessee by the present appeal challenges order dated 7-1-1988 of the ld. AAC of Gift-tax, New Delhi for the asst. year 1982-83, inter alia, on the following effective grounds :-
1. That on the facts and in the circumstances of the case, the authorities below were not justified in treating the transfer of two amounts of Rs. 10,000 and Rs. 7,000 made on 6-4-1981 and 1-5-1981 respectively aggregating to Rs. 17,000 to his unmarried major daughter Miss Kalpana Goyal for her marriage as gifts chargeable to gift-tax (which were made keeping in view permanent heart disease of the appellant).

(2.)That on the facts and in the circumstances of the case, the ld. authorities below have completely ignored the specific mention in the so-called "MEMORANDUM OF GIFT" that the transfer of the amounts were meant for specific purposes of marriage of Miss Kalpana Goyal which were actually utilised on her marriage in 1986.
2. Assessee by status in this case is an individual and advocate by profession whose valuation date was 31-3-1982. During the relevant accounting period the assessee transferred an amount of Rs. 10,000 to his daughter Kalpana Goyal vide cheque dated 6-4-1981 and further amount of Rs. 7,000 on 1-5-81 again by cheque to the same daughter. Assessee also appears to have transferred another sum of Rs. 2,000 vide cheque dated 25-1-1982 to Archana Gupta. According to the assessee there was no taxable gift made in this case. Cone decisions also were mentioned before the ld. GTO on behalf of the assessee. The value of gift of Rs. 19,000 was, however, brought to tax vide asst. order dated 10- 11 -1986 with the following observation:-

But the facts of these two cases are totally different from the case under consideration because in these two cases provisions were made in shape of allotment of certain property to unmarried daughters at the time of partition of a HUF property whereas in the case under consideration there is partial or complete partition of any HUF property. As such the amounts gifted in the present case are fully covered by the provisions of Section 2(xii) and that of Section 4 of the Gift-tax Act, 1958. Moreover our case is exactly like the one as reported in CGT v. Budur Thippaiah [1976] 103 ITR 189(AP) wherein it was held that in order to be entitled to exemption under Clause (vii), two conditions need to be cumulatively satisfied, namely (i) the gift should be to a relative dependent upon the assessee for support and maintenance and (ii) it should be on the occasion of the marriage of such a relative. It is not that every gift made to the relative who is dependent on the assessee is exempt. Gift must also be made on the occasion of marriage of the said relative. In view of the above stated facts and considering the fact that the gifts were made on 6-4-1981, 1-5-81 and 25-1-82 and the daughter of the assessee got married as last as on 13-2-86 and moreover the gifted amount was duly used by the daughter for the purpose of other than her marriage because she invested this money and earned income because of the amount received as gifts, as such it cannot be said that the present amount is in the nature of gift at the time of marriage of the daughter.

The action of the ld. GTO was contested by the assessee and before the ld. AAC of Gift-tax it appears to have been contended that Rs. 17,000 was transferred to a major unmarried daughter Kalpana Goyal for meeting her marriage expenses. It was explained that there was a clear stipulation that the amounts with interest thereon would be utilised by her at the time of her marriage and according to the assessee it was the discharge of assessee's legal obligation to meet the marriage expenses of daughter. Mention was also made of the decisions in the cases in CGT v. Bandlamudi Subbaiah [1980] 123 ITR 509 (AP) and 260 (sic). The ld. AAC, remaining unconvinced by the submissions made on behalf of the assessee, dismissed the appeal with the following observation:-

(3.)I have considered the submissions made by the appellant. After carefully examining the facts of the case relied by the appellant, it is observed that in those cases it was either a case of family settlement or a sort of provisions by the HUF for meeting the marriage expenses of the unmarried daughter and there was no power with the unmarried daughter to transfer the property settled for meeting out the marriage/maintenance expenses. However, in the present case, the facts are different. As the appellant has transferred a sum of Rs. 17,000 in favour of his daughter Miss Kalpana Goyal and she can operate this bank account herself without any restrictions imposed thereon. There is no limitation or restriction on the part of Miss Kalpana Goel which prevents her from withdrawing these funds from her bank account. As soon as these amounts were transferred to her account it became her absolute property without any interference of the appellant. This is undisputed that the amounts were not transferred at the time of her marriage and these were paid to her much before her marriage. Under the circumstances, in my opinion, the transfer of Rs. 17,000 by the appellant to his daughter is clearly a gift taxable under the provisions of G.T. Act, 1958. GTO was, therefore, justified in treating these transfers as gift. GTO's decision to treat these transfers as gifts is, therefore, confirmed.
4. Therefore the present appeal by the assesses before us is against that finding. On behalf of the assessee Shri Dharam Pal Bajaj, learned advocate besides repeating the submissions seen to have been made before the revenue authorities contended further that there was no taxable gift made Under Section 2(xii) of the Gift-tax Act, 1958. Mention was also made of Section 5(l)(vii) of the Act in respect of the gift made for support and maintenance or on the occasion of the marriage of the relative. Mention by the learned counsel was also made of Section 20 of the Hindu Adoptions and Maintenance Act, 1956 and so also of Section 3(b)(ii) of the Act. According to the learned counsel money was given to the daughter to meet her marriage expenses and that it was the assessee's social and legal obligation to incur such expenditure and that there was no element of gift involved therein. Reliance by the learned counsel was also placed on the ratio in the case of CGT v. Bandi Subba Rao [1987] 167ITR 66/32 Taxman 88 (AP). On behalf of the revenue the finding under challenge was supported and the ld. D. R. Sh. R.V. Ramanan further placed reliance on the ratio in the case of CGT v. Budur Thippaiah [1976] 103 ITR 189(AP). According to the ld.D.R. no interference was called for because the gift in the present case was neither at the time of marriage nor in connection therewith. According to the ld. D.R. the money received by the assessee's daughter was invested for earning interest and thus it was a clear case of gift which was rightly taxed.



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