Family maintenance obligation overrides gift characterization; transfer for an unmarried daughter's support was not liable to gift-tax.

A transfer from Hindu undivided family assets to a minor daughter made to meet the family's legal obligation to maintain and educate an unmarried daughter was treated as discharge of that obligation, not as a voluntary bounty. Because the provision was reasonable and adequate and made out of joint family assets, the consideration had monetary value and was not illusory. The indirect reduction of the karta's personal liability therefore did not attract the deeming provision for gift, and the transfer was held not to be a gift liable to gift-tax.

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Issues: Whether the transfer of Rs. 1,60,000 from the assets of a Hindu undivided family to the assessee's minor daughter, made in the context of the family's duty to maintain and educate her, amounted to a gift liable to gift-tax.

Analysis: The transfer was examined in the light of the family's legal obligation to maintain an unmarried daughter and the extent of the family assets. The amount set apart was treated as a discharge of that obligation and not as a mere voluntary bounty. The reasoning proceeded on the footing that where the provision is a reasonable and adequate one, made out of joint family assets towards maintenance and education, the consideration is not illusory but has monetary value. On that basis, the indirect reduction in the karta's personal liability did not attract the deeming provision for a gift.

Conclusion: The transfer did not constitute a gift and was not liable to gift-tax; the answer was in favour of the assessee.

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