Marriage expenses from joint family funds are not a taxable gift when incurred to discharge the family's obligation.

Amounts spent by a Hindu undivided family on an unmarried daughter's marriage, including customary presents and related expenses, were not treated as a gift under section 2(xii) of the Gift-tax Act, 1958. The expenditure was incurred by the karta from joint family funds in discharge of the family's legal and moral obligation, and a daughter's marriage expenses could properly be met from family assets while the family remained joint. Because the payment was not a voluntary transfer without consideration, no deemed gift arose. The gift-tax addition was therefore unsustainable.

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Issues: Whether amounts spent by a Hindu undivided family on the marriage of an unmarried daughter, including customary presents and related expenses, constituted a gift chargeable to gift-tax under section 2(xii) of the Gift-tax Act, 1958.

Analysis: The marriage expenditure was incurred by the karta out of joint family funds in discharge of the family's legal and moral obligation towards the unmarried daughter. The governing principle was that a daughter has a right, while the family remains joint and has assets, to have her marriage expenses met from family funds, and therefore the spending does not involve a transfer in the strict sense. The reasoning applied the view that marriage expenses properly incurred are not gifts merely because the amounts are substantial, and that no deemed gift arises where the expenditure is in discharge of the family obligation rather than a voluntary transfer without consideration.

Conclusion: The amount spent on the daughter's marriage did not constitute a gift within section 2(xii) of the Gift-tax Act, 1958, and the gift-tax addition was unsustainable. The appeal was allowed in favour of the assessee.

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