Per Kum. M. Fatima Beebi, Judicial Member - This appeal by the assessee is directed against the order of the AAC dated 18-11-1980 confirming the gift-tax assessment for the assessment year 1973-74. The main ground urged by the assessee is against the rejection of the claim under Section 5(1) (xii) of the Gift-tax Act, 1958 (the Act).
2. The assessee, under a document dated 5-12-1972, gifted certain items of immovable properties to his only son who was a MBBS final year student. The property gifted consisted of a building in a plot of about 35 cents, 1.09 acres of garden land and 2.12 acres of wet land. The value of these items was declared in the gift deed as Rs. 10,000. The donor died on 31-1-1975. The done, after graduation from Kerala university, on completing the MBBS course and undergoing house sergeancy for a period of one year, went abroad and had his higher studies and research in Canada. He had taken a degree in MD and had been doing research work in Canada.
3. In response to a notice under Section 16(1) of the Act issued by the GTO, the legal representative of the donor filed a return showing the value of the gifted properties at Rs. 10,000. The assessee claimed that the gift was made solely and exclusively for the purpose of education of the done. There had been no specific recital in the settlement deed that the gift was for educational purposes. The gift was stated to be for the purpose of the donees Abhivridhi. The GTO rejected the claim for exemption, stating that there is nothing in the document in support of the claim. He determined the fair market value of the properties at Rs. 1,03,361 and also estimated the deduction, if any, admissible under Section 5(1) (xii) at Rs. 4,000, being the amount required for completing the MBBS course and the house sergeancy. By the assessment order dated 28-9-179, the value of the taxable gift was fixed at Rs. 98,360 and the tax payable was assessed at Rs. 11,004.
4. In the appeal against the assessment before the AAC, the claim for exemption under Section 5(1) (xii) was reiterated limiting the claim, on furnishing the computation of educational expenses, as under : The AAC agreed with the GTO that the assessee is not eligible for the exemption. The reasons given by the AAC for upholding the assessment order, are that the asset had not at all been used for educational purposes and that the gift is not specified to be used for educational purposes. The appeal was, accordingly, dismissed. The assessee being aggrieved is in further appeal before us.
5. It is contended that the word abhivridhi, when applied to the done who was a student at the time of gift, would take his education needs also and, therefore, the gift should be taken at least as a composite one, both for education as well as for generalness. It is pointed out that the claim for exemption under Section 5(1) (xii) cannot be verified with reference to the actual expenditure met out of the gifted property; gift-tax being a levy on the corpus of the gift. It is, therefore, contended that the assessee is entitled to the exemption to the extent indicated before the AAC, as the gift was for educational purposes and the purposes of the gift could be gathered from the circumstances of the case. The assessees representative sought reliance on the decision in CGT v. Mary Antony  86 ITR 469 (Ker.). The assessees representative placed on record a copy of the order of the Appellate Tribunal, Madras Bench, dated 26-5-1979 in GT appeal Nos. 15 & 16 (Mad) of 1978-79 pointing out that even in a case where there had been no recital in the document that the gifts are for education, the Tribunal has held that the gift was for purposes of education, having regard to the facts and attendant circumstances.
6. The departmental representative relying on the orders of the lower authorities, maintained that in the absence of a specific recital in the deed, the gift cannot be construed as one for the purpose of education of the done and that the expression abhivridhi cannot be understood as including educational needs. It was also pointed out that the assessee before proceeding to Canada, had been working in private hospitals in Kerala and had gone abroad for better employment, and not for higher studies, and even if he had acquired higher qualification while he was abroad, that circumstance cannot be taken into account in determining the extent to which the gift has been proved to be reasonable. The departmental representative relied on the decision in N. Durgaiah v. CGT  99 ITR 477 (AP) and contended that in order to obtain the exemption under Section 5(1) (xii), the assessee must establish that the gift was made for the education of the assessees son. In the case referred to, it was held that the intention of the donor that the gift was for facilitating or providing the education of his children must be gathered from the recitals in the deed. On the facts of that case, it was found that the gift was not entitled to exemption under Section 5(1) (xii).
7. We have considered the rival submissions. We cannot accept the contention of the revenue that because no specific mention is made in the deed that the gift is for purposes of education of the donee, exemption under Section 5(1) (xii) as claimed by the assessee, is to be denied. Under this clause, exemption in respect of gifts made for education of ones children is granted. The purpose of the gift has necessarily to be gathered from the recitals in the deed and the circumstances of the case. The gift deed has used the word abhivridhi, but it has specially made mention of the fact that the donee is a medical student and that the gift had been made for the betterment of the donee. In the context in which the word abhivridhi, had been used in the document and under the circumstances in which the document was executed, the word has to be understood as including not only the progress of the donee, as the word literally means, but also the generalness as well as the educational needs of the donee. It cannot be considered on a fair construction of the document that the educational needs of his son would have been completely ignored by the father when he made the gift. The proper view to be taken is that the gift was made by the father to his son so that the son need not depend upon his father for his general needs. The word abhivridhi when applied to a person who is a student would take in his educational needs also. In that view, the gift must be taken as a composite one for both education and welfare of the donee. We are supported in this view by the decision of the Kerala high Court in the case of Mary Antony (supra). In that case, the assessee who was advanced in age, made a gift of some property to his son for purposes of his Kalakshepam. The son was studying in a college. It was held that in the context in which it was used in the document, and in the circumstances in which the document was executed, the meaning attributed to the word Kalakshepam would include educational needs, and that the gift was made partly for the purpose of education of his son and it was exempt with regard to that part under Section 5(1) (xii). The decision relied on by the revenue is distinguishable. It was a case where there was no specific mention of the fact that the house property was gifted to the minor son with a view to provide for his education, nowhere in the document any such reference has been made nor the same can be gathered from the document.
As the intention of the donor could not be gathered from the very terms and recitals of the gift deed, it was held that the gift was not entitled to exemption. In the assessees case, as already noticed, the expression used in the deed has to be understood as including educational needs. We, therefore, hold that the assessee is entitled to the exemption under Section 5(1) (xii), to the extent to which the gift is proved to be reasonable having regard to the circumstances of the case.
8. Though the value of the gift has been determined at Rs. 1,03,361 the assessee has limited the claim to an amount of Rs. 29,461. This amount according to the assessee is what had been actually spent by the donee since that date of gift. It is said that he had disposed of one item of property. For claiming the exemption under clause (xii), it is not necessary for the assessee to show that the actual expenditure has been met out of the gifted property. The Act allows exemption to the extent to which the gift is reasonable having regard to the circumstances of the case. The GTO has to take into consideration the income of the donor, the nature of the education that is being or proposed to be given to the donee, and then decide whether and how far the gift is reasonable. The circumstances to be regarded are, the status and position of the family and the nature of the education proposed. The materials placed on record clearly show that the donee at the time when gift was made was undergoing a professional course and that the donor was in a position to make provisions for his higher studies either in India or abroad. It is disclosed that the donee had in fact prosecuted for such studies. It is immaterial that he had gone abroad and had chosen to settle down thereafter having worked for a short period in India. Obviously, where the education is in a foreign country, the expenses would be heavier and naturally gift of a larger amount is called for than when education is undergone in India. It can be gathered from the circumstances and recitals in the deed that the donor had intended to make adequate provision for such expenses to be met for the higher education of his son. We, therefore, consider that an amount of Rs. 25,000 would not be unreasonable or excessive, having regard to all the facts and circumstances of the case. We, therefore, uphold the claim for exemption to the extent of Rs. 25,000 and direct the GTO to allow that deduction under Section 5(1) (xii). The appeals is, accordingly, allowed.