Gift-tax exemption for educational gifts turns on donor intent, not the donees' later investment or use of funds.

Exemption under section 5(1)(xii) of the Gift-tax Act depended on the purpose of the gift, not on the donees' later use of the funds. Where parents made gifts for the education of their children, the donor's intention to support education was the decisive factor and the exemption remained available. The fact that the money was directed into a partnership business or not immediately spent on education did not alter the character of the gift, so long as the underlying purpose was educational.

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Issues: Whether exemption under section 5(1)(xii) of the Gift-tax Act was available for gifts made by the parents to their children for education, where the gifts were directed to be invested in a partnership business and the actual utilisation was not immediate.

Analysis: The exemption provision had to be construed by reference to the purpose for which the gift was made. The decisive factor was the donor's intention that the gift be made for the education of the children. The manner in which the donees subsequently used or invested the money did not control the availability of the exemption, so long as the gift itself was made for educational purposes. Directing the funds into an income-yielding form did not, by itself, change the character of the gift if the underlying purpose remained education.

Conclusion: The exemption under section 5(1)(xii) was correctly allowed for the gifts made for the education of the children.

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