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Commissioner of Gift-tax Vs. Mary Antony (Legal Heir of Late Dr. C.J. Antony) - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberIncome-tax Reference No. 95 of 1969
Judge
Reported in[1972]86ITR469(Ker)
ActsGift Tax Act, 1958 - Sections 5(1)
AppellantCommissioner of Gift-tax
RespondentMary Antony (Legal Heir of Late Dr. C.J. Antony)
Appellant Advocate P.A. Francis and; P.K. Ravindranatha Menon, Advs.
Respondent Advocate P.P. Devassy, Adv.
Cases ReferredKishinchand Chellaram v. Commissioner of Income
Excerpt:
- - ' 3. the contention of the assessee was negatived by the assessing authority as well as by the appellate assistant commissioner. the assessee contended before the tribunal in the secondappeal that the document was executed, in any view of the matter, to provide for the educational needs of his son as well and this contention found acceptance with the tribunal. 7. regarding the second contention raised before us, we are not satisfied that the reference made by the tribunal to the clarification document invalidates the conclusion reached by it......at that time studying in the loyola college, madras. the property was valued at rs. 20,000 in the gift deed. the gift-tax officer valued the gift at rs. 1,05,200 after allowing the statutory exemption of rs. 5,000. in the assessment for the year 1964-65, the assessee claimed exemption from gift-tax under the gift-tax act, 1958, in relation to the above gift on the ground that the gift in question was one that would fall under section 5(1)(xii) of the gift-tax act, 1958. that section is in these terms :'5. (1) gift-tax shall not be charged under this act in respect of gifts made by any person .... (xii) for the education of his children, to the extent to which the gifts are proved to the satisfaction of the gift-tax officer as being reasonable having regard to the circumstances of the.....
Judgment:

Govindan Nair, J.

1. This is a reference under Section 26(1) of the Gift-tax Act, 1958, at the instance of the department in relation to an assessment for the year 1964-65. The questions referred are :

'1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the gift was made partly for the education of the assessee's son and was to that extent exempt from tax under Section 5(1)(xii) of the Gift-tax Act?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in relying on the clarification, deed dated August 23, 1966?'

2. The previous year for the assessment year 1964-65 was the period that ended on March 31, 1964; On March 25, 1964, the assessee, one Dr. C. J. Antony, made a gift of a property situate in the town of Ernakulam having an extent of 19 cents with a building thereon in favour of his son who was at that time studying in the Loyola College, Madras. The property was valued at Rs. 20,000 in the gift deed. The Gift-tax Officer valued the gift at Rs. 1,05,200 after allowing the statutory exemption of Rs. 5,000. In the assessment for the year 1964-65, the assessee claimed exemption from gift-tax under the Gift-tax Act, 1958, in relation to the above gift on the ground that the gift in question was one that would fall under Section 5(1)(xii) of the Gift-tax Act, 1958. That section is in these terms :

'5. (1) Gift-tax shall not be charged under this Act in respect of gifts made by any person ....

(xii) for the education of his children, to the extent to which the gifts are proved to the satisfaction of the Gift-tax Officer as being reasonable having regard to the circumstances of the case.'

3. The contention of the assessee was negatived by the assessing authority as well as by the Appellate Assistant Commissioner. After the assessment order, the assessee also executed a clarification deed dated August 23, 1966, in which he specifically stated that the gift was made in order that the educational needs of his son may also be met. In the deed of gift, annexure 'A', the only statement is that the properties were gifted for the son's kalakshepam. The English translation also uses the same word 'kalakshepam' without attempting to translate it. In fact, we think, it is rather difficult to find out an exact translation for this word inEnglish, particularly in the context in which it has been used in the document in question and taking into account the circumstances in whichit was executed. The assessee contended before the Tribunal in the secondappeal that the document was executed, in any view of the matter, to provide for the educational needs of his son as well and this contention found acceptance with the Tribunal. We may usefully read paragraph 5 of the Tribunal's order in this regard :

'After having heard both the sides and after going through the deed of gift and the clarification document, we are of the opinion that the gift was executed by the late Dr. Antony to his son who was then a student for his expenses. In the context in which the word 'kalakshepam' has been used and when applied to a person who is a student, we feel that it will take in both the general needs and also the educational expenses required for the maintenance of the student. 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, according to us, is that the gift was made by the father to his son so that the son need not depend upon the father for his educational and general needs. The word 'kalakshepam' 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 the educational and general needs of the donee.'

4. On behalf of the revenue, two contentions have been raised by the counsel. The first was that it is the principle of the decision of the Supreme Court in Commissioner of Gift-tax v. Dr. George Kuruvilla, [1970] 77 I.T.R. 746 (S.C.) that would apply and the second was that the Tribunal erred in relying on the clarification deed which was not executed during the relevant accounting period.

5. The question that was considered by the Supreme Court in Commissioner of Gift-tax v. Dr. George Kuruvilla was whether the gift that was considered therein was executed in the course of carrying on a business for the purpose of the business. Their Lordships held that 'in the course of carrying on the business' meant not only that the gift should be executed during the continuance of a business but that the gift must have a nexus with the business. They also held that it must be shown that it was for the purpose of the business. In view of the dearth of material for coming to the conclusion that the gift was 'in the course of carrying on the business', and 'for the purpose of the business', the exemption under Section 5(1)(xiv) of the Gift-tax Act was not granted.

6. This is not a case where there is such dearth of material. The document has used the word 'kalakshepam' which definitely and undisputedlyindicated the purpose of the gift. The donor at that time was advanced in age. His son was studying in an important college in the city of Madras. The word has been understood by the Tribunal as including not only the general needs of the son but also his educational needs. We are not prepared to say that the meaning attributed to the word in the context in which it was used in the document and in the circumstances in which the document was executed is wrong and we have not been shown any decisive meaning of the word 'kalakshepam' which compel us to take a different view.

7. Regarding the second contention raised before us, we are not satisfied that the reference made by the Tribunal to the clarification document invalidates the conclusion reached by it. The decision relied on by counsel for the revenue in Kishinchand Chellaram v. Commissioner of Income-tax, [1956] 29 I.T.R. 993 (Bom.) we do not think, has any application. The clarification deed is not a subsequent event. It was intended only for clarifying the terms of the document already executed, and in fact, it does not purport to go any further. A reference to that document by the Tribunal is, therefore, not misplaced.

8. We, therefore, answer both the questions in the affirmative, that is, against the department and in favour of the assessee. We make no order as to costs.

9. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.


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