Family arrangement transfers to minor daughters can still be taxable gifts, but statutory exemption claims require independent factual examination.

A transfer by a sole surviving coparcener to his minor daughters for education, maintenance and marriage expenses may still constitute a taxable gift, even if made under a family arrangement and not against an existing enforceable share or maintenance right. The basic contention that no gift arose was rejected. However, the alternative claim that the transfer could qualify for exemption under section 5(1)(vii) or section 5(1)(xii) of the Gift-tax Act required separate factual scrutiny because it had not been examined below. The assessment was therefore set aside and the exemption issue remitted for fresh consideration.

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Issues: (i) whether the transfer of Rs. 30,000 by the sole surviving coparcener to his minor daughters was a gift liable to gift-tax; (ii) whether the assessee's alternative claim for exemption under section 5(1)(vii) and section 5(1)(xii) of the Gift-tax Act, 1958, required fresh examination.

Issue (i): whether the transfer of Rs. 30,000 by the sole surviving coparcener to his minor daughters was a gift liable to gift-tax.

Analysis: The transfer was made under a family arrangement for the education, maintenance and marriage expenses of the daughters. The position of a sole surviving coparcener and the absence of an existing enforceable share or maintenance right in the female members were considered. On that basis, the transfer could not be treated as outside the concept of gift merely because it was made for family purposes.

Conclusion: The transfer was treated as involving a gift and the assessee's contention to the contrary was rejected.

Issue (ii): whether the assessee's alternative claim for exemption under section 5(1)(vii) and section 5(1)(xii) of the Gift-tax Act, 1958, required fresh examination.

Analysis: The alternative plea that the transfer may fall within the statutory exemptions had not been examined by the authorities below. The question depended upon the status of the family and other relevant circumstances, and therefore required factual consideration at the assessment stage.

Conclusion: The matter was remitted for fresh assessment and the exemption claim was directed to be reconsidered.

Final Conclusion: The assessment was set aside and the case was sent back to the Gift-tax Officer for a fresh decision limited to the exemption question, while the assessee's basic plea that no gift arose was rejected.

Ratio Decidendi: A transfer by a sole surviving coparcener for the benefit of minor daughters may still amount to a gift, but any claim to statutory exemption must be independently examined on the facts and circumstances of the family arrangement.

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