Educational gift exemption upheld where transfers to daughters were reasonable and made for their studies under gift-tax law.

Gifts to the assessee's daughters qualified for exemption where they were made for their education and were reasonable in light of the circumstances. The children were pursuing nursing and school education, the amounts were not excessive for those courses, and the educational purpose was consistently stated in the verified gift-tax return. The absence of a separate document, book narration, or proof of later educational spending did not defeat the claim, because the donor had no control over post-gift use and the surrounding circumstances supported bona fides. Exemption under section 5(1)(xii) of the Gift-tax Act was therefore available.

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Issues: Whether gifts made by the assessee to her daughters qualified for exemption as gifts made for the education of children under section 5(1)(xii) of the Gift-tax Act.

Analysis: The exemption applies where the gifts are for the education of the assessee's children and are reasonable having regard to the circumstances of the case. The gifts were made to daughters who were studying nursing or school education, the amounts were not excessive for the educational courses pursued, and the assessee's claim of educational purpose was consistently stated in the verified gift-tax return. The absence of a separate document, narration in the books, or subsequent withdrawal of the gifted amounts for education did not disprove the stated purpose, since the donor had no control over post-gift utilisation and the legal guardian could meet educational expenses from other funds. The surrounding circumstances supported the bona fides of the claim.

Conclusion: The gifts were proved to have been made for the education of the donees and were reasonable, so the assessee was entitled to exemption under section 5(1)(xii) of the Gift-tax Act.

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