A gift made by a Hindu undivided family to the wife of Karta is exempt under Section 5 (1) (viii) of the Gift Tax Act (1958).

JAGANMOHAN REDDY, J.

( 1 ) THE question that has been referred to us under Section 26 (1) of the Gift Tax Act (1958) (hereinafter called the Act) by the Income-tax Appellate Tribunal is"whether the gift made by Sri Vadrevu Venkappa Rao who is a karta of the Hindu undivided family to his wife of a part of Hindu undivided family property is exempt under Section 5 (1) (viii) of the Act. "

( 2 ) THE assesses filed a return for the assessment year 1958-59, for the relevant accounting year ending with 31-3-1958, under the Gift Tax Act in respect of a gift made to his wife, by a deed of gift dated 18-9-1957, of Act 15-46 cents of land, of the value as given on the deed of Rs. 23,000. The Gift Tax Officer did not allow the exemption under Section 5 (1) (viii) of the Act, because the donor was a Hindu undivided family. Before the Appellate Assistant Commissioner, it would appear that the assessee contended that the gift made by a Hindu undivided family to the wife of Karta should have been exempted from tax; but this contention, it was stated, was not pressed. Before the Tribunal, it was again raised. The Tribunal, however, in paragraph 3 of its order stated:"with reference to gifts made by a Hindu undivided family to the wives of its members, exemption under Section 5 (1) (viii) is not available as the Hindu undivided family cannot have a wife. If it had been an independent property of the members of the Hindu undivided family, then the gifts by the several members to their wives will be certainly exempt. But since the exemption contemplated under Section 5 (1) (viii) is with reference to the gifts made to the wives of individuals and since this is a ease of Hindu undivided family which had made the gifts to the wives of its members, there is no question of getting an exemption under the said section. "

( 3 ) IN order to appreciate this question, it may be stated that the return fifed by the assesses was in his status its a Hindu undivided family and as a Karta. The learned Advocate for the assessee contends that whatever may be the status in which he filed the return, which according to him was a mistake, what is necessary for the purposes of determining whether exemption under Section 5 (1) (viii) is available to the assessee is to determine what according to the tenor of the document the assessee has purported to gift. The document itself does not mention anywhere that the assessee was making a gift of the property as an Hindu undivided family; nor is there any meaning in the Tribunals statement that there cannot be a wife to a Hindu undivided family. It has never been the case of the assessee that there can be a wife to a Hindu undivided family. What the assessee contends, even as per the statement of the case, is that there cannot be any distinction between a gift made by an individual to his wife and a member of the Hindu undivided family to his wife and at the worst, in the latter case it should be presumed to have been made out of his share in the Hindu undivided family. Section 5 (1) (viii) reads thus:"5. (1) Gift-tax shall not be charged under this Act in respect of gifts made by any person, (viii) to his or her spouse, subject to a maximum of rupees one latch in value in the aggregate in one or more previous years, the expression "spouse" in this clause, where there are more wives than one meaning all the wives together. ""person" has been defined in Section 2 (xviii) to include a Hindu undivided family or a company or an association or a body of individuals or persons, whether incorporated or not," so that prima facie the exemption is available to members of a Hindu undivided family also in respect of transfers of property made by them to their wives.

( 4 ) SRI Kondatah, on behalf of the Department, contends that the definition of "person" as given in Section 2 (xviii) having regard to the terms of Section 5 (1) (viii), where the words "his or her spouse" have been specified, to that extent must be deemed to have been cut do

Click Here to Read the rest of this document