Broad construction of "children" under Gift-tax law upheld exemption for educational gifts to illegitimate daughters.

The expression "children" in section 5(1)(xii) of the Gift-tax Act, 1958 was construed broadly because the Act did not define it restrictively. Gifts made for the education of the assessee's minor illegitimate daughters were treated as gifts to children, supported by the maintenance obligations recognised for legitimate and illegitimate children under the Hindu Adoptions and Maintenance Act, 1956 and the Code of Criminal Procedure. On that construction, the educational gifts qualified for exemption under section 5(1)(xii), and the departmental appeal failed.

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Issues: Whether gifts made to the assessee's illegitimate daughters qualified for exemption under section 5(1)(xii) of the Gift-tax Act, 1958 as gifts made for the education of his children.

Analysis: The expression "children" in section 5(1)(xii) is not defined in the Gift-tax Act, 1958. The record showed that the donees were the assessee's minor illegitimate daughters and that the amounts gifted for their education were reasonable. The statutory scheme under sections 20 and 21 of the Hindu Adoptions and Maintenance Act, 1956 recognizes an obligation to maintain legitimate or illegitimate children, and section 125 of the Code of Criminal Procedure, 1898 also refers to both legitimate and illegitimate children for maintenance purposes. In the absence of a restrictive definition in the Gift-tax Act, 1958, the broader construction of "children" adopted by the Full Bench of the Madras High Court was followed.

Conclusion: The exemption under section 5(1)(xii) was available to gifts made to the assessee's illegitimate daughters, and the departmental appeal failed.

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