1987 (4) TMI 108

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....ng the return the assessee stated as under: "Note: Rs. 1,25,000 has been given as capitation fee in J.J.M. Medical College, Davangeri, Karnataka State for her son John A. Ferns for Medical College admission. By doing so, I have fulfilled my parental obligation." The Gift-tax Officer asked the assessee to produce the receipt or whatever evidence she has for having paid the amount to J. J. M. Medical College. But no receipt was produced by the assessee. The Gift-tax Officer rejected the assessee's claim for exemption under section 5(1)(xii) on the following grounds: (i) The donee, Shri John A. Ferns is an adult, i.e., more than 18 years of age; (ii) The donee is having his own independent business. He is assessed to both income-ta....

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....e preferred the present appeal. At the time of hearing, the assessee's counsel filed photostat copy of the receipt dated 24-6-1978 for the payment of Rs. 1,25,000 by John A. Ferns as capitation fee for admission to 1st M.B.B.S. in J.J.M. Medical College, Davangeri, copies of statements of income filed before the Income-tax Officer for the assessment years 1977-78, 1978-79, 1979-80 and 1980-81, copy of the statement of wealth filed before the Wealth-tax Officer for the assessment year 1980-81, copy of notice of demand under section 30 of the Wealth-tax Act, 1957 dated 9-3-1984 for the assessment year 1980-81 and copy of the income-tax assessment order for the assessment year 1980-81 dated 25-11-1982. His arguments were to the following effec....

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....esources, this is an entirely irrelevant factor for considering the allowability of exemption under section 5(1)(xii) of the Gift-tax Act, 1958. The assessee had gifted the amount in fulfillment of her parental obligation. The donee is one among the 4 daughters and 3 sons in the family of Mr. Mabrose and Mrs. Broney. Three of the daughters are doctors. The eldest son studied for medicine but discontinued because of his ill-health. The donee has already qualified himself as a Doctor. The last son is also studying for medicine. So the AAC was in error in confirming the order of the G.T O. 5. The departmental representative supported the order of the AAC. He, however, urged that if at all any exemption is to be given it would be reasonable ....

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....axes Circulars by Taxmann, Vol. 1, 1985 edition) says that the Gift-tax Officer would take into consideration the income of the donor and the nature of education that was proposed to be given to the child in deciding whether and how far the gift was reasonable. Neither section 5(1)(xii) nor the above circular say anything about the dependence of the donee on the donor. The absence of the words 'dependent upon' in clause (xii) of section 5(1) with clauses (vii) and (ix) of the said section which read as under: "(vii) to any relative dependent upon him for support and maintenance, on the occasion of the marriage of the relative, subject to a maximum of rupees ten thousand in value in respect of the marriage of each such relative;" "(ix)....