Marriage cash payment and gift tax: customary family provision may fall outside the definition of gift altogether.

A cash payment made by a Hindu family to a daughter on her marriage is not automatically a taxable gift under the Gift-tax Act, 1958. The controlling question is whether, on the facts and community custom, the amount was a usual marriage provision or the discharge of a customary legal obligation; if so, it falls outside the definition of gift altogether. If the payment is nevertheless treated as a gift, exemption under section 5(1)(vii) applies only to the extent permitted by that provision, and any balance remains taxable. The matter was sent back for factual determination on the nature of the payment.

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Issues: Whether a cash payment made by a Hindu family to a daughter on the occasion of her marriage was a taxable gift, or whether it was outside the definition of gift as a usual provision for marriage and discharge of a legal obligation, and if taxable, whether exemption under section 5(1)(vii) of the Gift-tax Act, 1958 applied.

Analysis: The governing inquiry was whether the payment was a voluntary transfer within the meaning of the definition of gift in section 2(xii) of the Gift-tax Act, 1958 read with section 2(xxiv), or whether it represented expenditure attributable to the maintenance and marriage of an unmarried daughter. A daughter is a relative within section 5(1)(vii), but the mere fact that payment is made on the wedding day does not by itself make it a gift. The controlling test is whether, having regard to the facts, the amount was a usual provision for the daughter's marriage in the particular family or community, or whether it was only the discharge of a legal obligation customarily incidental to marriage. If the amount is found to be the usual marriage provision, it falls outside gift-tax altogether; if it is a gift, then the statutory exemption under section 5(1)(vii) operates only up to the prescribed limit.

Conclusion: The matter was restored to the assessing authority to determine whether the cash payment was a usual provision for the daughter's marriage in the assessee's community. The amount would not be taxable as a gift if so found. Otherwise, only the extent qualifying under section 5(1)(vii) would be exempt and the balance would be taxable.

Ratio Decidendi: A payment made on a daughter's marriage is not automatically a gift for gift-tax purposes; the decisive question is whether, on the facts and community custom, it is a usual marriage provision or discharge of a legal obligation, in which event it falls outside the definition of gift.

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