Judgment:
ORDER
Per Shri. S. P. Kapur, Judicial Member - The revenue is aggrieved and following specific ground has been raised before us :
'On the facts and in the circumstances of the case, the AAC erred in holding that the amount of Rs. 37,188 was a provision for marriage and not liable to gift-tax.'
2. At the assessment stage, although a return declaring nil taxable gift was filed, assessment was framed on a gross gift of the valuation of Rs. 37,188 resulting in taxable gift of Rs. 32,188 with the reasoning that the assessed-HUF made a gift of Rs. 37,188 to Miss. Veena Aggarwal, unmarried daughter of Shri. P. N. Aggarwal, by assigning the amount received on the maturity of LIC policy. The stand of the assessed was that gift is not taxable as it was made as provision for the marriage of the daughter. The assessed also contended that Miss Veena Aggarwal got married on 7-12-1975 and took with her along with other assets, the amount received by her against Policy No. 6070852, i.e. Rs. 37,181. the GTO reasoned that the amount was not a provision for marriage expenditure but was taken away by Miss Veena Aggarwal, hence, was a gift within the meaning of Gift-tax Act.
3. The learned AAC held it not to be a gift within the meaning of section 2(xii) of the GT Act and for the purpose he relied upon the decision of the ITAT rendered in the case of the very assessed for the assessment year 1976-77 in ITA No. 58 / Del / 81. The order is dated 15-7-1980. The ITAT in the said order held that jewellery of Rs. 20,826, fiat car worth Rs. 36,784 and balance in Miss Veena Aggarwals account in M/s Jai Bharat Steel amounting to Rs. 85,621 would be considered quite a reasonable dowry for the occasion since Miss Veena Aggarwals marriage was a love marriage and in these circumstances, it will be quite natural for the parents to be a little conservative in giving dowry to the daughter.
4. The revenue is aggrieved and we have heard the parties at length. Shri C. S. Aggarwal has placed strong reliance on the decisions in K. SP. S. KT Kalyappa Chettiar (HUF) v. Second GTO [1984] 7 ITD 213 (Mad.) CGT v. Bandlamudi Subbaiah : [1980]123ITR509(AP) , CGT v. M. Radhakrishna Gade Rao [1983] 143 ITR 260 and CGT v. Dr. (Mrs.) Neelambal Ramaswamy [1986] Tax. 80(3)-55 (Mad.). Of course, the ITATs order above referred to, has also been pressed into service. He has further said that the daughter of the karta Miss Veena Aggarwal vis-a-vis marriage expenditure including the assignment of LIC policy and the resultant payment to her accounted for the assessed, pious obligation in terms of the customs prevailing in the Hindus of the areas, hence, there was no gift much less any transfer. The learned D. R. While supporting the order of the GTO assailed the finding of the learned AAC but unsuccessfully since we agree with the stand of the assessed that assignment of LIC policy, which was funded by funds of HUF, has on the facts and in the circumstances of the case to be taken as dowry-presents and as a pious obligation of the assessed-HUF on the occasion of the marriage of the said Miss Veena Aggarwal who was a member of a HUF also and since on the peculiar facts of the present case to say the least to save all embarrassment to the family, the marriage being a love marriage the fact of encashment being later or else the marriage being later, will not affect the merits. Upholding the impugned order of the learned AAC, we adopt his reasoning as our own. Reliance of the learned counsel for the assessed before us supports the assesseds case. Revenues ground stands rejected and the appeal fails.
Per Shri B. Gupta, Accountant Member - since I have not been able to agree to the conclusion reached by the learned Judicial Member I may state my reasons for dissent as follows :
2. The facts leading up to the controversy as projected in the only ground raised by revenue in this appeal filed under the Gift-tax Act, 1958, have been stated in the order proposed by he learned Judicial Member, but in order that there is a proper appreciation of those facts for considering the applicability or otherwise of the relevant provisions of Gift-tax Act, I may state them in some more detail.
3. The assessed-respondent is a HUF which at the relevant time consisted of Parma Nand Agarwal (Karta). Mrs. Agarwal, Varun Agarwal (Son) and Veena Agarwal (unmarried daughter). The HUF had, in the year 1959 taken a joint life endowment insurance policy bearing No. 6070852 on the lives of the karta and his wife, and the premium thereof had always been paid out of the family funds. On 26-4-1974 when the policy was just about to mature, it was assigned to Veena Agarwal. The said policy matured on May 20, 1974 and thereafter a sum of Rs. 37,188 being the maturity amount was received by Veena Agarwal by a cheque dated 3-7-1974 issued by the LIC on Punjab National Bank, Darya Ganj, Delhi. When these facts came to the notice of the ITO holding jurisdiction over the assessed-Hindu undivided family, a letter was issued to the Divisional Manager, Life Insurance Corpn., asking for certain particulars regarding policy No. 6070852. In reply sent vide No. MTY : DO : RLC dated 10 / 12-3-1979, the Divisional Manager stated as follows :
'Dear Sir,
RE : Pol. No. 6070852-fvg. Shri Parma Nand Agarwal and Smt Kamla Aggarwal
We are in receipt of your letter No. CC / XIV / 78-89 / 616 dated 8-3-1979. As desired in your letter under reference we give below the required information :
1. The captioned policy was taken by Shri Parma Nand Aggarwal and Smt. Kamala Aggarwal in the joint name with date of commencement 20-5-1959.
2. It was joint life endowment policy for 15 years with profit for the sum assured of Rs. 30,000.
3. The policy was absolutely assigned on 26-4-1974 to the daughter of the lives-assured as a gift (Miss. Veena Aggarwal age 23) in consideration of natural love and affection.
Yours faithfully,
Sd/-Sr. Divisional Manager.'
After a lapse of a couple of years, the ITO / GTO initiated gift-tax proceedings against Parma Nand Agarwal HUF for the asstt. year 1975-76. A nil return of gift dated 14-3-1980 was filed in response to notice issued by GTO. It has been contended before him that the assessed-family was under an obligation to maintain and marry the unmarried daughter and that the sum of Rs. 37,188 being a provision for that purpose was not liable to gift-tax. The GTO rejected the assesseds contention and held that the sum of Rs. 37,188 was not a provision for marriage but a gift taxable within the provisions of Gift-tax Act. On an appeal being filed by the assessed, the AAC deleted the assessment of gift of Rs. 37,188 as according to him there was no outright gift by the appellant HUF to the daughter and as it was in fact a provision for marriage expenses not liable to gift-tax u/s 2(xii) of the Gift-tax Act.
4. It is in the background of the abovementioned facts that the revenue, feeling aggrieved of the order of the AAC, has filed this appeal. Shri. T. R. Talwar, learned Departmental Representative, has while assailing the order of the AAC supported the order of the GTO and contended that the assignment of the insurance Policy No. 6070852 to and the subsequent realisation thereof by Veena Aggarwal was not for the purposes of marriage or maintenance and, thereforee, the transaction fell within the definition of gift as contained in the provisions of sec. 2(xii) of the Gift-tax Act.
5. On the other hand, Shri. C. S. Agarwal, Advocate, learned authorised counsel of the respondent has supported the order of the AAC and reiterated the same contentions as had been made on behalf of the assessed before the GTO and the AAc. The learned authorised counsel has supported the order of the AAC by referring to the decisions of the Honble High Courts of Andhra Pradesh and Madras, respectively, in Bandlamudi Subbaiahs case (supra) and M. Radhakrishna Gade Raos case (supra) and a decision of the ITAT Madras Bench-B in K. SP. S. KT. Kalyappa Chettiar (HUF)s case (supra). Mr. Agarwal has also referred to an order of the ITAT Delhi Bench-B passed in the case of the assessed-HUF in relation to its income-tax assessment for the asstt. year 1976-77 wherein it had been held while considering the adequacy or otherwise of withdrawals made for household expenses, that since the source of jewellery worth Rs. 20,826, Fiat car worth Rs. 36,784 and credit balance in the account of Veena Agarwal in the books of Jai Bharat Steel stood accepted, no addition could be made on account of inadequacy of withdrawals in the asstt. year 1976-77. According to Mr. Agarwal, the above order of the ITAT clearly shows that the sum in question of Rs. 37,188, which had been utilised by Veena Agarwal for purchase of a Fiat car had been given to her as a provision for dowry at the time of marriage and, thereforee, not liable to gift-tax.
6. I have very carefully considered the facts of the case and the submissions made in support of rival standpoints of view. The decisions relied upon by the learned authorised counsel of the assessed and the relevant provisions of the Gift-tax Act, 1958 have also been equally carefully perused by me. The undisputed position under the Hindu Law is that an unmarried daughter who is a member of the HUF has a right to be maintained and get married. The obligation of a Hindu father is not only legal but moral and it is the duty of each and every Hindu head of a family to give his daughter in marriage to a suitable husband and to set apart a portion of the family property for the purposes of marriage. As per the provisions of sec. 2(xii) of the GT Act, the other undisputed position of law that emerges is that gift is a transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or moneys worth. In other words, if a transfer is made under a legal obligation, it would not be a gift as it would not be a transfer made voluntarily and without consideration. Having thus instructed myself, it appears to me that the assessed case does not fall within the abovementioned two settled positions of law. The letter issued by the Senior Divisional Manager of LIC reproduced above clearly shows that the policy No. 6070852 had been absolutely assigned on 26-4-1974 to the daughter of the lives-assured as a gift for love and affection. It nowhere shows that the policy had been assigned by way of maintenance of the unmarried daughter of the Karta or for her marriage. After the policy matured on May 20, 1974 and the sum in question of Rs. 37,188 was paid to the assignee, the proceeds of the policy were deposited by Veena Agarwal in her bank balance with the Central Bank of India. Subsequently, out of her balance with Central Bank of India, a sum of Rs. 35,000 was withdrawn and deposited with Nava Ratan Finance and Sales (P.) Ltd. on 2-8-1974. The money deposited with the above named company remained with it for nearly one year and four months when it was withdrawn in order to buy a Fiat car in December 1975. In these facts and circumstances, it cannot be be said that when on 26-4-1974 the policy No. 6070852 had been assigned in Veena Aggarwal it was either for her maintenance or for her marriage which did not take place till nearly a period of one year and 8 months had elapsed. In case the Aggarwal for her HUF in fact wished to assign the policy to Veena Aggarwal for her maintenance or by way of provision for marriage in future, it could have been so declared to the Life Insurance Corporation of India. The intention of the assignors was, however, to assign the policy to Veena Aggarwal for love and affection and accordingly it was so declared before the LIC. That being the factual position, the assesseds case does not fall within the scope of decided cases on which reliance has been placed by the learned authorised counsel of the assessed. In the cases decided by the Honble High Courts in Bandlamudi Subbaiahs case (supra) and M. Radhakrishna Gade Raos case (supra) and similarly in the decision of Madras Bench of the Income-tax Appellate Tribunal in K. SP. S. KT. Kalyappa Chettiar (HUF)s case (supra), the facts were significantly different in as much as in those cases it was found as a fact by the Appellate Tribunal that the assignment, settlement or transfer had been specifically made for the maintenance or marriage of the unmarried female members. In the present case the gift took place when policy No. 6070852 was assigned to Veena Aggarwal for love and affection on 26-4-1974 and, thereforee, the GTO was justified in assessing it in the asst. year 1975-76. The order of the ITAT in the assesseds own case relating to its income-tax assessment for the asstt. year 1976-77 does not in any way affect the finding of the GTO in view of the aforementioned facts, which clearly show that the assignment of the policy had not been made in discharge of any legal obligation but for love and affection only. After the assignee, i.e., Veena Aggarwal had received the proceeds of policy No. 6070852, it was at her sweet will to have spent money received in any manner she liked. She first of all invested it in a private limited company and thereafter after a lapse of a year and a half nearly utilised a part of it in buying a car. These facts in no way go to prove that the assignment of the policy No. 6070852 had been made for making any provision for maintenance or for a dowry to be given in the shape of a car. There were no such stipulations attached when the assignment of the policy was made and as I have repeatedly stated above and as is quite clear from the letter of the LIC reproduced above the assignment of the policy was absolute and the proceeds thereof were to be utilised in any unrestricted manner in accordance with the sweet will and discretion of Veena Aggarwal. The assignment of the policy was voluntary and for love and affection and not in discharge of any legal obligation and, thereforee, the transaction came within the definition of gift as contained in sec. 2(xii) of the GT Act. The assessment of the assigned value of the policy as gift made by the assessed-HUF to Veena Aggarwal was justified and I uphold it subject to the direction that the GTO will recompute the gift after taking into account the provisions of sec. 5(1) (ix) of the GT Act, 1958.
7. The appeal by revenue is allowed as per directions above.