Gift-tax exemption for marriage gifts requires an existing dependent relative; gifts to daughters-in-law did not qualify.

Exemption under section 5(1)(vii) of the Gift-tax Act, 1958 applies only where the donee is both a relative dependent on the donor for support and maintenance and the gift is made on the occasion of that relative's marriage. Construing "relative" and "dependent" in their ordinary sense, the Orissa HC noted that a daughter-in-law becomes a relative only on solemnisation of the marriage and cannot be treated as a dependent relative before that time. A gift to a daughter-in-law in these circumstances therefore does not satisfy the statutory conditions and falls outside the exemption.

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Issues: Whether gifts made by a karta of a Hindu undivided family to daughters-in-law could qualify for exemption under section 5(1)(vii) of the Gift-tax Act, 1958 as gifts to a relative dependent upon the donor for support and maintenance on the occasion of marriage.

Analysis: The exemption applies only when both conditions are satisfied together: the donee must be a relative dependent on the donor for support and maintenance, and the gift must be made on the occasion of that relative's marriage. The expressions "relative" and "dependent" were not defined, so they were construed in their ordinary sense. A daughter-in-law does not become a relative until the marriage is solemnized, and before that point she cannot be treated as a dependent relative. The phrase "on the occasion of marriage" refers to association with the marriage event, but that cannot extend the exemption to a gift made to a person who was not yet a relative dependent on the donor at the relevant time.

Conclusion: Gifts made to daughters-in-law in these circumstances do not fall within section 5(1)(vii) of the Gift-tax Act, 1958, and the exemption claim fails.

Final Conclusion: The statutory exemption was held inapplicable to gifts made to daughters-in-law immediately after marriage, so the reference was answered against the assessee and in support of taxability.

Ratio Decidendi: Exemption under section 5(1)(vii) is available only where the donee is already a relative dependent on the donor for support and maintenance at the relevant time; a prospective or newly acquired marital relationship does not satisfy that requirement.

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