Educational gift exemption turns on circumstances at the date of gift, and the donee's wealth alone does not defeat relief.

Reasonableness of an educational gift for exemption under the Gift-tax Act must be assessed as on the date of the gift, with regard to the donor's family circumstances and the anticipated educational needs of the donee. A gift made by a karta as provision for higher education was treated as eligible where the family background supported that purpose, and the donee's independent wealth did not by itself defeat exemption. Later events, including actual pursuit of higher studies abroad, were consistent with the gift being a reasonable educational provision. The text states that the gift to Amrita was eligible for exemption under section 5(1)(xii) in favour of the assessee.

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Issues: Whether the gift made to donee Amrita was exigible to exemption under section 5(1)(xii) of the Gift-tax Act.

Analysis: The exemption claim had to be judged with reference to the circumstances existing at the time of the gift, including the family's educational background, the intended higher education of the donees, and the fact that the gift was made by the karta as a provision for education. The donee's independent wealth was not conclusive against the availability of exemption, since a father could still make a separate educational provision. The later course of events, including the actual pursuit of higher studies abroad, supported the view that the provision was not excessive.

Conclusion: The gift made to Amrita was held to be reasonable and eligible for exemption under section 5(1)(xii) of the Gift-tax Act, in favour of the assessee.

Ratio Decidendi: The reasonableness of an educational gift for exemption under the Gift-tax Act must be assessed as on the date of the gift, having regard to the donor's family circumstances and the anticipated educational needs of the donee; the donee's own wealth does not by itself defeat the exemption.

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