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Commissioner of Gift-tax, Tamil Nadu-ii Vs. M. Radhakrishna Gade Rao - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 814 of 1977
Judge
Reported in(1983)37CTR(Mad)155
ActsGift Tax Act, 1958 - Sections 2
AppellantCommissioner of Gift-tax, Tamil Nadu-ii
RespondentM. Radhakrishna Gade Rao
Appellant AdvocateJ. Jayaraman and ;Nalini Chidambaram, Advs.
Respondent AdvocateS.V. Subramaniam and ;P.P.S. Janarthana Raja, Advs.
Cases ReferredKamla Devi v. Bachulal Gupta
Excerpt:
.....pradesh high court in cgt..........the early years of anglo-hindu law, courts have taken the view that unmarried daughters in a hindu joint family are entitled, as of right, to get married at the cost and expense of the joint family, to be met out of either the funds or the properties of the family. this right of the unmarried daughters is not dependent merely on the legal or moral obligation of the father or the karta of the family, as the case may be, but rather on the position of the daughters themselves as members of the family unit. as female members, they are, till their marriage, entitled to maintenance from out of the income or properties of the joint family. they are also entitled to have their marriage expenses defrayed from out of the income or property of the joint family. this being the position under the.....
Judgment:

Balasubrahmanyan, J.

1. The assessee is a Hindu by name Radhakrishna Gade Rao. He belongs to a Maratha family which had migrated long ago to South India and settled in Thanjavur District. He obtained, in a family partition, ancestral properties of the total extent of 52 acres 7 cents as and towards his share. In January, 1970, when he was 58 years old and not in good health, he settled both wet and dry lands of the extent of 8 acres 73 cents, which were part of the ancestral properties which he had obtained on partition, in favour of his eldest daughter, Kumari B. Nirmala Devi, who had come of age but was yet to be married. The settlement was made under a deed in writing dated January 27, 1970. In the recitals in the settlement deed, the assessee stated that he was in search of a good marriage alliance for the daughter. He further stated that according to the custom and usage prevalent in Maratha families and as consistent with his family position, the marriage of Kumari Nirmala Devi, she being the eldest daughter, had to be celebrated on a scale which would involve a considerable sum of money. He further stated that since he was prone to spend a major portion of his income from properties in charities and other ways and since it was essential to make an appropriate provision for the marriage expenses, he considered it necessary to make the settlement out of respect for custom and usage as well as out of natural love and affection for the daughter concerned. This settlement was accepted by the settlee.

2. The GTO considered that this settlement by the assessee was chargeable under the G.T. Act, 1958, as a taxable gift. He valued the properties which were the subject-matter of the settlement at Rs. 49,500 and levied gift-tax thereon. He treated the gift as having been effected by the assessee in his capacity as the karta of an HUF. The assessment was accordingly made on the HUF.

3. On appeal, however, the Tribunal set aside the assessment. The Tribunal took note of the recitals in the settlement deed and recorded a finding that the settlement of the ancestral properties by the assessee in favour of his daughter was for the specific purpose of meeting her marriage expenses. According to the Tribunal, with properties settled on the daughter for such a purpose, the assessee had freed himself from the obligation of himself having to incur expenditure to meet the cost of the daughter's marriage. In this view, the Tribunal held that the settlement cannot be regarded as a transfer without consideration in money or money's worth. The Tribunal in conclusion entered the determination that the settlement cannot be charged to gift-tax as a taxable gift within the meaning of s. 2(xii) of the G.T. Act.

4. In this reference made by the Tribunal at the instance of the Commissioner of Gift-tax, the following question of law has been referred to us for our opinion :

'Whether, on the facts and in the circumstances of the case, the settlement of the lands made by the karta of the assessee-Hindu undivided family on his unmarried daughter under the deed dated January 27, 1970, did not amount to a gift within the meaning of the said expression as defined in section 2(xii) of the Gift-tax Act, 1958, for the reason that it was made to enable her to defray her marriage expenses ?'

5. The answer to this question is settled by authority.

6. Right from the early years of Anglo-Hindu law, courts have taken the view that unmarried daughters in a Hindu joint family are entitled, as of right, to get married at the cost and expense of the joint family, to be met out of either the funds or the properties of the family. This right of the unmarried daughters is not dependent merely on the legal or moral obligation of the father or the karta of the family, as the case may be, but rather on the position of the daughters themselves as members of the family unit. As female members, they are, till their marriage, entitled to maintenance from out of the income or properties of the joint family. They are also entitled to have their marriage expenses defrayed from out of the income or property of the joint family. This being the position under the Hindu law, it is not only customary but also obligatory for joint family members to perform the marriages of unmarried daughters spending family funds therefor. In the event of a partition of the family properties, it is not only usual but a legal requirement to set apart a reasonable portion of the joint family property as a provision for meeting the expenses of the marriage of the unmarried daughter. Indeed, in cases where partition is effected without any proper provision being made for the marriage of unmarried daughters, the partition and allotment are open to question at the instance of the daughters.

7. These principles are settled by a long line of authorities. In Rajagopala Ayyar v. Venkataraman [1947] 2 MLJ 37; AIR 1947 PC 122, it was held by the Privy Council that the right of an unmarried daughter to have her marriage expenses met out of joint family property is really in lieu of her share on partition. More recently in Kamla Devi v. Bachulal Gupta, : [1957]1SCR452 , the Supreme Court upheld an alienation made by a Hindu widow of a reasonable portion of her husband's estate in favour their daughter as a marriage gift. The alienation was upheld on the basis that the gift of property fulfils the obligation attached to the property.

8. These general principles of Hindu law laid down by courts have been applied to determine questions arising under the G.T. Act. Courts have taken the view that the definition of gift under s. 2(xii) of the G.T. Act as a transfer made voluntarily and without consideration in money or money's worth can hardly fit in with the so-called gifts or settlements of ancestral or joint family property in favour of unmarried daughters in Hindu families. In one sense a gift or settlement of property to the unmarried daughters may be said to be in discharge of a legal obligation. As we have earlier seen, it is the right of an unmarried daughter to have a reasonable portion of income or corpus of the joint family property utilised for meeting her marriage expenses. In this sense, a settlement in her favour of joint family property as a marriage provision can hardly be regarded as a gift since such a provision compulsive under the Hindu law and by no means voluntary in the proper sense of the term. Again, since the karta, when he settles the property on the unmarried daughter, by the same token, discharges the obligation of the joint family estate to meet the expenses of marriage, the transaction cannot be regarded as one without consideration in money or money's worth. Looked at from any angle, settlements of this kind cannot be brought within the mischief of the G.T. Act.

9. Although a number of cases having a direct as well as an indirect bearing on this question were cited at the hearing, we would like to refer only to one or two decisions of the Andhra Pradesh High Court in CGT v. Bandlamudi Subbaiah : [1980]123ITR509(AP) . The learned judges observed that when the joint family makes a provision for the unmarried daughters, it cannot be said that the said provision has been made voluntarily and without consideration in money or money's worth. To the same effect is an earlier decision of the Andhra Pradesh High Court in CGT v. Chandrasekhara Reddy : [1976]105ITR849(AP) . In some of the cases dealing with this topic, s. 20 of the Hindu Adoptions and Maintenance Act, 1956, is referred to. We may, however, observe that a reference to the provisions of this Act may not be quite apposite while we are engaged in discussing cases of gifts or settlements of joint family property by the karta of the family in favour of unmarried daughters of the family as and by way of marriage provision. The statutory obligation of a Hindu father under s. 20 of the Hindu Adoptions and Maintenance Act, 1956, has nothing whatever to do with the nature and incidence of the joint family property or with the powers of alienation of joint family property exercisable by the karta of the family for a provision for the marriage of the daughter. We have, therefore, desisted from making further reference to the statutory provisions in the discussion of the question in the present case, which, as we earlier indicated, arises in the assessment of an HUF.

10. For the reasons stated above, our answer to the question of law is in favour of the assessee and against the Department. The assessee is entitled to his costs. Counsel's fee Rs. 500.


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