The main legal point established in the judgment is that a gift made under the Hindu Adoptions and Maintenance Act, 1956, must be in discharge of a legal obligation to be exempt from gift tax.

Om Prakash, C.J.

Pursuant to the direction of this Court under S.26(2) of the Gift Tax Act, 1958, the Income tax Appellate Tribunal, at the instance of the Revenue, referred the following question, relating to the assessment year 1980-81, for the opinion of this Court:

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in holding that the transfer in question is not subject to levy of tax under the provisions of the Gift-tax Act?"

2. The facts, as found by the Appellate Tribunal, are that the assessee made a gift of her self-acquired properties in favour of her daughter on the eve of the latter's marriage. The properties which are the subject matter of the gift deed dated 30.4.1979, are as follows:

(a) 37 cents of land and a building thereon in Sy. No. 560/364 in Vanchiyoor Village inside East Fort, Trivandrum; and

(b) 1521/2 cents of land in Sy.No. 210/3A in Nemom Village.

3. Return of gift was filed by the assessee on 31.12.1980. The Gift-tax Officer, for the purpose of gift tax, estimated the value of these properties taking into consideration the value fixed by the Valuation Cell for the purpose of wealth-tax assessment of the donee for the subsequent years.

4. Aggrieved, the assessee carried the dispute in appeal before the Commissioner of Income Tax (Appeals). Apart from disputing the valuation of the properties as fixed by the Gift-tax Officer, the assessee contended before the appellate authority that no gift of the property was made by the assessee voluntarily, within the meaning of S.2(xii) of-the Gift-tax Act, but the properties were gifted by her to her daughter to discharge "a moral, if not a legal obligation to give her daughter in marriage and to provide for her comfortable living after marriage". The assessee relied on C.G.T. v. Ch. Chandrasekhara Reddy ((1976) 105 ITR 849 (AP)), which, in turn, relied on Kamala Devi v. Bachulal Gupta (AIR 1957 SC 434) and C.G.T. v. Ramanathan Chetliar ((1969) 74 ITR 758). The C.I.T. (Appeals), studying these decisions, concluded in paragraph 13 of its order as follows:

"It is thus evident that for the transactions to be outside the scope of the Gift-tax Act, the transfer must be by a family which had remained joint and not only this, such a family must have properties. Only then can the expenditure or transaction can safely be excluded from the application of the Gift tax Act".

The C.I.T. (Appeals), in paragraph 15 of its order, further found as follows:

"15. By now, it would be evident that the underlying thread in all these decisions is that the legal obligation to get a daughter married attached only to a joint family, so Ion g as it rein aimed joint, and additionally when such a family had properties. This principle cannot be extended to individual hands, as pointed out by the Madras High Court, and the moral or social obligation on a parent to get the daughter married suitably or otherwise cannot convert itself into a debit and attach itself to any individual properties held. In view of this, I hold that no portion of the settled property can said to be a transfer for consideration and hence exempt from the Gift-tax Act".

5. Both the assessee as well as the Revenue felt aggrieved of the order of the CA.T. (Appeals) and cross appeals were filed by them before the Appellate Tribunal.

6. The assessee assailed the finding of the C.I.T. (Appeals) before the Appellate Tribunal contending that the gift of the immovable properties made by her in favour of her daughter, was not liable to gift tax. The Appellate Tribunal, relying on Mulla's Hindu Law, accepted the contention of the assessee and found as follows:

"From this, it is evident that the Hindu female is also under an obligation to maintain

her legitimate or illegitimate children. From the above, we have to hold that

the assessee is entitled to bequeath her property to her unmarried daughter for the purpose of marriage also.

The mother or the guardian apart from the father of the child