1983 (10) TMI 128 - AT - Income Tax

Betrothal gifts not exempt under Gift-tax Act. Tribunal decision emphasizes legal consistency.

Second Gift-Tax Officer. Versus Smt. Nirmala Rajasekharan.

The Tribunal held that gifts made at the time of betrothal or after the marriage, but not directly on the occasion of marriage, do not qualify for ... Break Up Method, Private Company, Quoted Equity Shares Issues:1. Whether a gift given to the daughter at the time of her betrothal is exempted under section 5(1)(vii) of the Gift-tax Act, 1958.Detailed Analysis:The appeal before the Appellate Tribunal ITAT MADRAS-B involved the issue of whether a gift given to a daughter at the time of her betrothal is to be exempted under section 5(1)(vii) of the Gift-tax Act, 1958. The dispute arose from the differing views of the Assessing Officer (GTO) and the Appellate Authority Commissioner (AAC) regarding the interpretation of the provision. The GTO disallowed the exemption claimed by the assessee on the grounds that the gift was premature as it was made at the time of betrothal and not at the actual marriage ceremony. In contrast, the AAC allowed the exemption, stating that the gift made in connection with the marriage, even at the betrothal stage, qualifies as a gift on the occasion of marriage under section 5(1)(vii).Upon hearing the arguments from both parties, the Tribunal analyzed the provisions of section 5(1)(vii) of the Act. The Tribunal emphasized that the specific language of the provision indicates that gifts made on the occasion of marriage are eligible for exemption. The Tribunal rejected the argument that betrothal should be considered part and parcel of marriage, highlighting that betrothal is merely a step towards marriage and not the actual marriage ceremony. The Tribunal cited precedents from the Patna High Court and the Andhra Pradesh High Court, which clarified that gifts made on the occasion of marriage are the ones eligible for exemption under section 5(1)(vii).The Tribunal concluded that the AAC had erred in interpreting the law and facts related to the exemption for gifts under section 5(1)(vii). The Tribunal held that gifts made at the time of betrothal or after the marriage, but not directly on the occasion of marriage, do not qualify for exemption under the provision. Therefore, the Tribunal set aside the order of the AAC and restored the decision of the GTO, denying the exemption for the gift made at the betrothal stage. The Tribunal emphasized the importance of following the interpretations of the High Courts and the Supreme Court in matters related to specific provisions of Acts, such as the Gift-tax Act, to ensure consistency and adherence to legal precedents. Ultimately, the Tribunal allowed the appeal in favor of the revenue, denying the exemption for the gift made at the time of betrothal.