Gift-tax treatment of life insurance assignment turns on proof of marriage provision, not later use of maturity proceeds.

Assignment of a life insurance policy to an unmarried daughter was treated as a gift under section 2(xii) of the Gift-tax Act, 1958 because it was made absolutely out of natural love and affection, with no proved obligation to provide for marriage. The fact that the maturity proceeds were later used to buy a car at the time of marriage did not by itself show that the transfer was intended as a marriage provision. In the absence of evidence that the assignment was for maintenance or marriage expenses, the transaction fell within the statutory definition of gift and was taxable.

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Issues: Whether the assignment of the life insurance policy and receipt of its maturity proceeds by the unmarried daughter constituted a gift within the meaning of section 2(xii) of the Gift-tax Act, 1958, or whether it was a provision for marriage and therefore not liable to gift-tax.

Analysis: The majority held that the assignment was made absolutely in consideration of natural love and affection, and not in discharge of any proved obligation to provide for the daughter's marriage. The subsequent use of the money for purchasing a car at the time of marriage did not, by itself, establish that the transfer was intended as marriage provision. In the absence of evidence showing that the assignment was made for maintenance or marriage expenses, the transaction fell within the statutory definition of gift.

Conclusion: The amount was held to be a taxable gift under section 2(xii) of the Gift-tax Act, 1958, and the assessee's contention that it was a marriage provision was rejected.

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