Gift-tax liability on marriage gifts: transfer of car and jewellery to daughter was held taxable absent proof of legal compulsion.

Madras HC held that a father's transfer of a car and jewellery to his daughter at marriage was not exempt from gift-tax on the supposed ground of compulsion or legal obligation. The Tribunal's view that the transfer was involuntary, because the father was bound to safeguard the marriage and non-giving would lead to talaq, was rejected for want of any supporting material. The Court found no basis to infer such coercion and no legal duty on the father under a Muslim marriage contract. The transfer was therefore liable to gift-tax, the Revenue's position was accepted, and the Tribunal's order was set aside.

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Issues: Whether the value of a car and jewellery given by an assessee to his daughter at the time of her marriage was liable to gift-tax.

Analysis: The Tribunal had treated the transfer as involuntary and outside the mischief of the gift-tax law on the premise that the father was under a legal duty to safeguard the marriage and that non-giving would lead to talaq. The Court held that there was no material to support any such compulsion, no basis for the inference that talaq would follow, and no legal duty on the father in a Muslim marriage contract. The transfer was therefore not exempt on the ground of compulsion or legal obligation.

Conclusion: The question was answered in favour of the Revenue and the transfer was held liable to gift-tax.

Final Conclusion: The Tribunal's view was set aside and the appellate authority's order was restored, resulting in the Revenue succeeding on the reference.

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