Family allotments to daughters may escape gift-tax when made in discharge of legal duty or as marriage gifts.

Property allotted by a Hindu joint family to daughters may fall outside gift-tax where the transfer is made in discharge of the family's binding duty to maintain and provide for their marriage, because such an allotment is not voluntary and is supported by consideration in the form of satisfaction of a legal obligation. A separate allotment to married daughters may also qualify for the marriage-gift exemption if it is intended as a gift on the occasion of marriage, even when formalised later in a partition deed or settlement. On the facts noted, the Tribunal's view that the allotments were not exigible to gift-tax was sustained.

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Issues: (i) Whether the allotment of lands to the married daughters was exempt from gift-tax under the marriage gift provision; (ii) Whether the allotment of properties to the unmarried daughters in discharge of the family's obligation to maintain and marry them amounted to a gift liable to gift-tax.

Issue (i): Whether the allotment of lands to the married daughters was exempt from gift-tax under the marriage gift provision.

Analysis: The exemption for gifts made on the occasion of marriage applies where the transfer is connected with an arrangement to make a gift to the relative on that occasion, even if the formal instrument is executed later in a partition deed or settlement. The value of each allotment was below the statutory ceiling, and the decisive inquiry was whether the lands were intended as marriage gifts.

Conclusion: The issue was not to be referred as it turned on a question of fact, and the Tribunal's approach was upheld.

Issue (ii): Whether the allotment of properties to the unmarried daughters in discharge of the family's obligation to maintain and marry them amounted to a gift liable to gift-tax.

Analysis: An unmarried daughter has a legal right to maintenance and marriage provision under Hindu law, and the joint family has the corresponding obligation. When property is set apart under a partition deed or family settlement in discharge of that obligation, the transfer is not voluntary and is made for consideration in the form of satisfaction of a binding duty. Such an allotment does not answer the statutory definition of gift and cannot be treated as a deemed gift either.

Conclusion: The allotment to the unmarried daughters was not a gift within the Gift-tax Act and was not liable to gift-tax.

Final Conclusion: The reference was declined, and the Tribunal's view that the disputed allotments were not exigible to gift-tax was sustained.

Ratio Decidendi: Property allotted by a Hindu joint family in discharge of a binding legal obligation to maintain and provide for daughters is not a voluntary transfer without consideration and therefore is not a taxable gift; a marriage-linked allotment may also fall within the statutory exemption if made on the occasion of the marriage.

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