Maintenance obligation and family arrangement can support share transfers to daughters, taking them outside gift-tax.

Transfer of shares by a Hindu undivided family to married daughters in satisfaction of a maintenance obligation may be supported by consideration and therefore fall outside gift-tax. A daughter's claim to maintenance can be traced to her birthright in family property, and marriage does not necessarily extinguish that claim; a reasonable provision may be made at any time. The transfer may also be characterised as a family arrangement made to settle a family claim and preserve family honour. On the stated facts, the shares transferred were reasonable in relation to family wealth, so the transaction was not a taxable gift.

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Issues: Whether the transfer of shares by the HUF to married daughters in discharge of a maintenance obligation, or alternatively as a family arrangement, constituted a gift chargeable to gift-tax.

Analysis: The transfer of property by a karta from joint family assets to female members may be supported by the family's obligation to maintain them, and that obligation is not extinguished merely because the daughters are married. The right to maintenance is traceable to the daughter's birthright in the family property and may be satisfied by a reasonable provision made at any time. The transaction may also be upheld as a family arrangement made to settle a family claim and preserve family honour. On the facts, the value of the shares transferred was reasonable in relation to the family wealth.

Conclusion: The transfer was not without consideration and did not amount to a taxable gift; the assessee succeeded.

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