Customary marriage gifts may fall outside gift-tax where social obligation negates voluntariness of the transfer.

A transfer of jewellery by a father-in-law to his daughter-in-law on the son's marriage was treated as outside gift-tax because the transfer was made under an established social and customary obligation, not as a purely voluntary act. The Tribunal noted that the community custom of giving marriage gifts to a daughter-in-law existed and that the value transferred was not excessive in light of the assessee's status. It applied the principle that social or moral obligation can negate voluntariness for purposes of the Gift-tax Act, so the transfer did not constitute a taxable gift.

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Issues: Whether a transfer of jewellery by a father-in-law to his daughter-in-law on the occasion of the son's marriage, made pursuant to an established social and customary obligation, constituted a voluntary transfer amounting to a gift liable to gift-tax.

Analysis: The Tribunal noted that the community custom of giving gifts to a daughter-in-law on marriage existed and that the amount transferred was not excessive having regard to the assessee's status. It held that such a customary and social obligation on the father-in-law negatived the voluntariness of the transfer. The reasoning treated social and customary obligation as sufficient to take the transfer outside the definition of gift under the Gift-tax Act, in line with the view that even moral obligation can exclude voluntariness for this purpose.

Conclusion: The transfer was not a taxable gift under the Gift-tax Act and the assessee succeeded.

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