Religious purpose exclusion under gift-tax depends on recipient use, not donor motive or timing of the donation.

Donations made during Ramzan were not treated as gifts for a religious purpose merely because of the timing or the donor's pious motive. The determining factor was the purpose for which the recipient was expected to apply the gift: only gifts required or expected to be used for religious objects, rituals, observances, or upkeep of a place of worship fall within the religious exclusion. On the facts, the donations were made to relieve hardship and there was no material showing any obligation to use them for religious ends. The gifts were therefore eligible for exemption from gift-tax.

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Issues: Whether donations made by the assessee during the month of Ramzan were gifts for a religious purpose so as to fall within the exclusion in section 5(1A) of the Gift-tax Act, 1958, and whether such donations were nevertheless eligible for exemption under section 5(1)(v) and (vi) of that Act.

Analysis: The expression "charitable purpose" in section 5(1A) excludes purposes that are wholly or substantially religious in nature. The determining factor is not the donor's personal piety or motive, but the purpose for which the recipient is expected to apply the gift. Gifts given to individuals as charity do not become religious gifts merely because they are made during a holy period. On the facts, there was no material to show that the recipients were required to apply the amounts for religious rituals, religious observances, or the upkeep of any place of worship. The donations were made to relieve hardship and were not shown to promote religion.

Conclusion: The donations were not gifts for a religious purpose and were eligible for exemption from gift-tax. The question referred was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: For the purposes of section 5(1A) of the Gift-tax Act, 1958, a gift is of religious nature only if the recipient is required or expected to apply it for religious objects; the donor's religious sentiment or the timing of the donation is not enough to deny exemption.

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