Time limit in which a gift on the occasion of Marriage

[sagsha]

Sir, I am a single male aged about 70 years. I am having a deemed daughter( Not legally adopted due to some legal constraints ) who is about 30 years old. Unfortunately she had divorced. Now she is remarried on 26th August 2020. She is in Jaipur and I am living about 200 Kms. away at Beawar. I wished to gift her my flat at Jaipur but due to COVID-19 crisis, I could not dare to go to Jaipur for the purpose. Now I wish to make the Gift deed in her name. Please suggest me that whether it shall be accepted by Income Tax Authorities after such delay. What is time frame normally in such cases. Should I go ahead and make the Gift deed now. Though I have made a will in her name for my all movable and immovable assets. But I apprehend any kind of legal challenge to my will by my brother or sisters, however, there is little chance but I wish to avoid any such circumstances. I know it will prove me little costly due to stamp duty etc.

If possible please site some case example of similar nature, if available.

[admin]

The following reply has been received from Advocate Shashi Ashok Bekal

On the basis of our understanding of your query, Since, you and your daughter are not legally related, it is precarious to claim exemption under section 56 2(x) of the Income tax Act, 1961 (Act) by virtue of (I) Proviso to section 56 2(x) of the Act i.e. "from a relative".

However, since she got married on August 26, 2020; and as per (II) Proviso to section 56 2(x) of the Act, any sum of money or any property received on the occasion of the marriage of the individual will not attract 56 2(x) of the Act.

Reference is drawn on the judicial precedents to facilitate the interpreting the phrase on the occasion of marriage they are as under:

The Honble High Court of Orrisa in the case of Commissioner of Gift-tax v. Dr. (Mrs.) Neelambai Ramaswamy [1987] 164 ITR 369 (Madras) (Gift tax Act 1958) where nearly eleven months after marriages of her son and daughter assessee gifted certain properties to them by separate gift deeds which stated that gifts were intended to be made at time of marriage but could not be made then because of certain unfortunate events including death of assessees younger son. Tribunal found that delay in making gifts stood satisfactorily explained and assessee was entitled to exemption under section 5(1)(vii) in respect of aforesaid gifts. The Tribunal held that the expression on the occasion of the marriage would mean in relation to the occasion of the marriage.

The revenue contended that the expression on the occasion of the marriage could only mean at the time of the marriage or immediately preceding the marriage and could not be interpreted as meaning any time subsequent to the marriage. Accordingly the order of the Tribunal was upheld and the question was decided against the revenue.

The Honble High Court of Madras in the case of A. Rudrakodi v. CIT [2000] 244 ITR 309 (Mad.) where the assessee made gifts to his married daughter in September 1975 (almost 4 years after her marriage took place in September 1971). As the assessee had certain financial commitments at the time of the performance of the marriage of his daughter he could not make any substantial presentation to his daughter at the time of her marriage. However after some improvements in his financial position he subsequently made a gift of Rs. 15000 to his daughter on September 29 1975. Applying the ratio in Dr. (Mrs.) Neelambal Ramaswamy (supra) the Madras High Court held that this gift has been made on occasion of marriage and allowed the assessee exemption under section 5(1)(vii) of the Gift-tax Act 1958.

The Honble High Court of Madras in the case of CGT v. G. Venkataswamy [1999] 236 ITR 539 (Mad.) where the assessee was a retired inspector of police. His daughter got married on August 25 1964 and the assessee made a gift of land worth Rs. 34000 to his daughter in 1979 (after 15 years from the marriage) and claimed exemption during the course of the assessment proceedings for the year 1979-80 under section 5(1)(vii) of the Gift-tax Act 1958 (hereinafter to be referred to as the Act). The gift deed contained the following recital:

Whereas the donor has not provided with means to live and as he promised at the time of marriage he devised the property described hereunder as unconditional gift for support and maintenance absolutely.

The High Court accepted the finding of the Tribunal (based on the above clause) that there was an earlier promise by the donor at the time of her marriage to make a gift in favour of his daughter and in fulfilment of the earlier promise the assessee transferred the property by way of gift in favour of his daughter. The High Court also accepted the Tribunals finding that the assessee being a retired inspector of police would not have made a false statement in the gift deed just for claiming exemption of Rs. 10000. Applying the ratio in Dr. (Mrs.) Neelambal Ramaswamy (supra) the Madras High Court held that this gift has been made on occasion of marriage and allowed the assessee exemption under section 5(1)(vii) of the Gift-tax Act 1958.

In light of the above judicial precedents it is clear that the phrase on the occasion of marriage does not mean on the date of marriage or immediately preceding the marriage.

Without prejudice the reason for delay in the gift deed can be substantiated on account of the novel corona-virus pandemic. Further the wedding has taken place amidst the pandemic and normalcy has not been restored till date.

Therefore a gift deed for the occasion of marriage can be executed in favour of your daughter who is legally not a relative.

Kind Regards

Shashi Ashok Bekal

C.A. LL.M. (Tax Law)

Tax Litigation & Advisory

Mumbai  Delhi

[sagsha]

Thank you very much for a detailed response to my Post. I assume that I can still gift by Gift Deed to my so called daughter (not biological daughter). Now I shall do the same at the earliest. Can you provide me your mail Id and phone number/s, if I need your help in the matter sometime in future.
V.S.Sharma
Mail Id : sagsha51@gmail.com
Phone 7014052775