Gujarat H.C : The assessee was entitled to the exemption under s. 5(1)(ix) in respect of the gift of life insurance policy valued at Rs. 9,921 to her minor son

High Court Of Gujarat

Commissioner Of Gift Tax vs. Smt. C.D.R. Laxmidevi

Section GT 5(1)(ix)

Asst. Year 1971-72

Rajesh Balia & M.S. Shah, JJ.

GT Ref. No. 1 of 1982

29th September, 1995

Counsel Appeared

J.M. Thakore for M.R. Bhatt & Co., for the Revenue : D.A. Mehta, R.K. Patel & B.D. Karia for K.C. Patel, for the Assessee

RAJESH BALIA, J. :

The following questions of law have been referred to this Court for its decision at the instance of CGT, Rajkot, relating to asst. yr. 1971-72 :

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the assessee was entitled to the exemption under s. 5(1)(ix) in respect of the gift of life insurance policy valued at Rs. 9,921 to her minor son ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law on its interpretation to s.3(42) of the General Clauses Act?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in coming to the conclusion that the expression “person” appearing in s. 5(1)(ix) included a female assessee ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in coming to the conclusion that the female assessee was entitled to exemption in respect of the gift of life insurance policy to a person who is dependent upon her for support and maintenance ?”

Heard the learned counsel for the appellants. The respondent assessee had gifted a life insurance policy valued at Rs. 9,921 to her minor son. She claimed the said gift to be exempt under s. 5(1)(ix) of the GT Act. The GTO allowed the claim of exemption. The CGT after examining the record, came to the conclusion that the assessee was not entitled to the above exemption, on the ground that relief under s. 5(1)(ix) of the Act was available only to a male assessee and not to a female assessee and set aside the order of the GTO.

The Tribunal on appeal accepted the contention of the assessee and allowed the appeal by holding that the expression `person’ in the aforesaid provisions include both males and females by referring to s. 3(42) of the General Clauses Act and was of the view that the context does not require deviation from the provisions of General Clauses Act and held that sub-cl. (ix) applies to both males and females. He also came to the conclusion that the minor son was dependent on the assessee and condition of claiming exemption under s. 5(1)(ix) was fully met with.

We may notice that though four questions have been referred, in fact, all the questions are reflected in question No. 3—`Whether, on the facts and in the circumstances of the case, the Tribunal was right in coming to the conclusion that the expression “person” appearing in s. 5(1)(ix) included a female assessee.’ We, therefore, propose to recast the questions referred to us into one question, as aforesaid, and answer the same. Sec. 5(1)(ix) which is required to be interpreted reads as under : “5(1) Gift-tax shall not be charged under this Act in respect of gifts made by any person—……….. (ix) of policies of insurance or annuities to any person (other than his wife) who is dependent upon him for support and maintenance subject to a maximum of rupees ten thousand in value in the aggregate in one or more previous years of the benefits in respect of each such donee.”

The contention on behalf of the Revenue is that by providing for excluding the gift made by husband to wife from the scope of exemption, the necessary consequence that follows is that the person in the context of sub-cl. (ix) is confined to a male person and not to female because the gift by wife to husband has not been excluded. He argued that the clause `other than his wife’ appearing in the bracketed portion can only refer to the fact that the person, who is donor, must necessarily be a male, and, the clause `other than his wife’ cannot be applied to a female donor.

Learned counsel also placed reliance in this connection on a decision of the Supreme Court in the case of CIT vs. Sodra Devi (1957) 32 ITR 615 (SC). He also referred to sub-s. (vii) providing exemption for gifts made by a person to his or her spouse. To buttress the argument that the legislature has used words `his’ or `her’ in the case of providing exemption for a spouse instead of making use of the word `person’. At any rate the exemption used in sub-cl. (vii) have not been left to be interpreted in the light of General Clauses Act by providing gift to his or her spouse instead of using only masculine gender to be interpreted in the light of s. 13 of the General Clauses Act.

6A. Having carefully considered the contention raised by the learned counsel, we are unable to sustain the same. There is nothing in the context of the provision which can make it applicable to gifts made by males only and not by females. So far as bracketed portion `other than his wife’ is concerned, that only qualifies the words `to any person’ referred to as donee. By user `other than his wife’ in bracket the legislature has not qualified words `by any person’ referred to as donor used in sub-s. (1) of s. 5. The obvious meaning of provision appears to us is that `such gift’ as are mentioned in sub-clauses of s. 5(1)(ix) whether male or female `to person’ of all description, male or female, excepting the wife as donee, if such donee is dependent upon the donor for support and maintenance to the extent provided thereunder is exempt from gift-tax. In fact `person’ is an expression not confined to masculine gender but includes the entity of any genre including a juristic person. Obviously, in the context of sub-cl. (ix) which refers to the gift of life insurance policy of a person to persons dependent on policy holder is referable to donor being a human being and not a juristic person. Carving out the exception from the dependent donee to whom the gift of life insurance policy is subject to exemption to the extent of Rs. 10,000 does not lead to any inference that word `person’ appearing in sub-s. (1) as donor is also subject to same qualification, merely because the gift made by wife to husband is not excluded from the category of excepted donees.

It may also be noticed that the exemption is granted to donor from the application to pay gift-tax. The law itself has not made any distinction nor cross out any exception in the manner to whom such exemption from tax has been granted. As a matter of fact, it does not stand to reason that legislature by excepting a gift to wife by husband under sub-s. (ix) intended to deprive all females from the benefit of exemption from gift-tax in sub-cl. (ix) while granting such blanket exemption in the case of male donors only. Obviously, such a provision creating a classification on the ground of sex alone, which is not also a special provision for female would have contravened the provisions of Art. 15 of the Constitution on the face of it. Law is well settled that Courts would not adopt such an intterpretation which would expose the statute to the vice of being ultra vires the Constitution.

We have not been able to find anything in the context which would lead to any other interpretation with reference to the object of providing exemption than the one taken by the Tribunal, nor the learned counsel for the Revenue has been able to point out any object which could be read behind accepting the interpretation put forth on behalf of the Revenue for granting of exemption to the male donors to the exception of female donors.

In our opinion, the plain reading of the provision as well as viewing from the point of context and object for which the provision has been made, no different conclusion can be arrived at. The object being clearly to the effect that gifts by the donor of his life insurance policy in favour of his dependent to the extent of Rs. 10,000 should be subject to exemption from the gift-tax. The amount of premium on maturity of the policy is to enure for the benefit of those who are not otherwise independent but dependent on the policy holder. To achieve this object, it is not discernible, what difference it would make if the gift is made by a male or a female to his or her dependent.

9A. It may be noticed that even the decision of Supreme Court relied on by the learned counsel for the Revenue does not lay down the principle differently. The principle which was accepted by their Lordships was— “Unless there is any ambiguity in the words used in a statute, it is not open to the Court to depart from the normal rule of construction which is that the intention of the legislature should be primarily gathered from the words which are used. It is only when the words used are ambiguous that they would stand to be examined and construed in the light of surrounding circumstances and constitutional principles and practice.” In our opinion, there is nothing in the policy of the legislature and the scope and object of the provision under consideration which compels us to cut down the natural meaning of the word `person’ used in s. 5(1) so as to confine its operation to make donors and not to female donors.

10. In the case of CIT vs. Sodra Devi (supra), the Court was called upon to construe the provisions of s. 16(3) of the IT Act, 1922 which provide for inclusion of income of certain other persons in the income of individual for the purposes of his assessment. The relevant provisions read as under : “16(3). In computing the total income of any individual for the purpose of assessment, there shall be included— (a) so much of the income of a wife or minor child of such individual as arises directly or indirectly— (i) from the membership of the wife in a firm of which her husband is a partner; (ii) from the admission of the minor to the benefits of the partnership in a firm of which such individual is a partner; (iii) from assets transferred directly or indirectly to the wife by the husband otherwise than for adequate consideration or in connection with an agreement to live apart; or (iv) from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual otherwise than for adequate consideration; and (b) so much of the income of any person or AOP as arises from assets transferred otherwise than for adequate consideration to the person or association by such individual for the benefit of his wife or a minor child or both.”

The majority noticed the use of word `such individual’ under cl. (a) and also the question whether the income of wife or minor could be read distinctively so as to give the extended meaning to word `individual’ to put him in reference to wife or minor separately and independently or to put the same person vis-a-vis the wife and minor to find whether such individual referred to `husband and father’ or to be read as a `husband or father’. It was in the context of the provisions before their Lordships and the background in which those provisions were brought on statute book, their Lordships held as under : “The opening words of s. 16(3) talk of “any individual” whose total income has got to be computed for the purpose of assessment and the words “such individual” used in s. 16(3)(a) have reference only to that individual. That individual must be an assessee and it is in the computation of his total income for the purposes of assessment that the income of the persons mentioned in cls. (a) and (b) have got to be included. Sub-cl. (a) refers to two distinct sets of persons bearing a relationship with “such individual”, the assessee. One is a wife and the other is a minor child. The case of the wife is dealt with in sub-cls. (i) and (iii) and the case of a minor child is dealt in sub-cls. (ii) and (iv). Sub-cls. (i) and (iii) use the word “her husband” or the husband” in place of the words “such individual” with reference to the income derived by the wife in the circumstances therein mentioned, though, it may be observed that by user of the words “such individual” would not have made the slightest difference to the position. Sub-cls. (ii) and (iv) which deal with a “minor child” use the words “such individual” in relation to the minor child whose income under the circumstances therein mentioned has to be included in computing the total income of “such individual” for the purpose of assessment. Whereas the words used in sub-cls. (i) and (ii) are specific and refer only to “her husband” and “the husband” as “such individual”, the words used in sub-cls. (ii) and (iv) leave it indefinite as to which is meant by the words “such individual” whether a male and/or a female of the species. If the words used in all these four sub clauses were to be harmoniously read and the two cases which are mentioned in sub-cls. (i) and (iii) are not to be read differently from the cases mentioned in sub-cls. (ii) and (iv), the only way in which the words “such individual” as used in sub-cls. (ii) and (iv) could be understood would be to read them as confined to a male of the species and not including the female. If these words “such individual” as used in sub- cl. (ii) and (iv) are thus read restricted to a male of the species, all these sub clauses would have reference only to the male of the species, irrespective of the fact that the words “her husband” and “husband” have been used in sub-cls. (i) and (iii) instead of the words “such individual”. If the words “such individual” had been used in sub-cls. (i) and (iii) as they have been used in sub-cls. (ii) and (iv), the position would have been just the same because in that event also we would have had to determine whether there was any justification for reading the words “such individual” used with reference to sub- cls. (i) and (iii) in any difference from the same words “such individual” as used in sub-cls. (ii) and (iv). The crux of the question therefore is whether the words “such individual” used in the opening part of s. 16(3)(a) are used to mean a male of the species when they are read in juxtaposition with the words “a wife” and/or used to mean both a male as well as a female of the species, as the case may be, when used in juxtaposition with the words “minor child”.

From the aforesaid, it is clear that their Lordships were construing the provisions, where one construction would have led to read the very same expression differently in sub-cl. (i) and (iii) from sub-cl. (ii) and (iv). In these circumstances, the Court opined that in the context of the surrounding circumstances, “such individual”, “person” in s. 16(3) will not be applied to computing the total income of a mother.

The aforesaid decision according to us is clearly distinguishable and cannot be said to be laying down the law in general that wherever the term “the wife” has been used in relation to expression “person” or “individual”, the “person” must be interpreted to mean only male and not female.

From the language of s. 5 it is clear that word person has been used at two places. Firstly it is used in the opening para and is prefixed by the words `gifts made by the’, which makes the person referable to is donor. Second time when the word person has been used in cl. (ix) it is prefixed by the words `to the’ denoting `gift to the person’, which makes it referable to donee. The exclusion of person in bracketed portion only qualified the second class of persons namely donees and does not hold the key to interpret the extent of class of persons included in the category of `donors’ who are the subject of main provision governing all clauses.

Accordingly we answer the question reframed by us above in favour of the assessee and against the Revenue. There shall be no order as to costs.

[Citation: 220 ITR 50]

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