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Issues: (i) Whether the allotment of land to the married daughter constituted a taxable gift under the Gift-tax Act, 1958; (ii) Whether the allotment of land to the unmarried daughter constituted a taxable gift under the Gift-tax Act, 1958.
Issue (i): Whether the allotment of land to the married daughter constituted a taxable gift under the Gift-tax Act, 1958.
Analysis: A transfer is taxable as a gift only if it is made voluntarily and without consideration in money or money's worth. The Court held that under Hindu law and the Hindu Adoptions and Maintenance Act, 1956, a father may discharge a pre-existing legal and moral obligation by making a reasonable provision for a daughter, including after marriage. Such provision, even if made long after marriage, is not a voluntary transfer but a settlement in discharge of a binding obligation.
Conclusion: The allotment to the married daughter was not a taxable gift and the finding was in favour of the assessee.
Issue (ii): Whether the allotment of land to the unmarried daughter constituted a taxable gift under the Gift-tax Act, 1958.
Analysis: The unmarried daughter had a statutory right to maintenance, including reasonable expenses incidental to her marriage. Property set apart to meet that obligation was treated as a discharge of the father's legal duty and not as a voluntary transfer. The Court held that the existence of a custom in the community was unnecessary because the obligation arose from the general Hindu law and the Maintenance Act.
Conclusion: The allotment to the unmarried daughter was not a taxable gift and the finding was in favour of the assessee.
Final Conclusion: The transaction was treated as a family settlement made in discharge of pre-existing legal obligations and therefore did not attract gift-tax.
Ratio Decidendi: A reasonable provision made by a Hindu father for his daughters in discharge of a pre-existing legal obligation of maintenance or marriage-related provision is not a voluntary transfer without consideration and, therefore, does not amount to a gift under the Gift-tax Act, 1958.
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