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Assessability of gifts to gift-tax, validity of gifts under Hindu law, determination of reasonable limits for gifts, taxability of gifts beyond reasonable limits. Assessability of gifts to gift-tax: The court deliberated on whether the gifts made by the karta of a Hindu undivided family to his minor daughters were liable to gift-tax. Initially, the Gift-tax Officer levied gift-tax on the gifts, considering them as completed transactions. However, the Appellate Assistant Commissioner and subsequently the Tribunal viewed the transactions as family arrangements, not attracting gift-tax. The High Court, in a previous judgment, clarified that the legal effect of a gift under the Gift-tax Act must be determined to ascertain tax liability. The Tribunal remanded the matter to the Appellate Assistant Commissioner to determine the legal effect of the gifts. Ultimately, the Tribunal held that the gifts were void as there was no valid transmission of title to the donees, leading to the gifts not being chargeable to gift-tax. Validity of gifts under Hindu law: The court analyzed the validity of the gifts under Hindu law, emphasizing the moral obligation of a Hindu father to provide a reasonable portion of family property as a marriage portion to his daughters. Referring to legal precedents, it was highlighted that such gifts are not confined to the occasion of marriage and can be made at any time. However, the power of disposal over joint Hindu family property is limited, and gifts beyond reasonable limits are considered void under personal law. In this case, the court found the gifts of about 25 acres and odd to be extravagant and unreasonable, exceeding the reasonable limits within which a father can make valid gifts to minor daughters. Determination of reasonable limits for gifts: The court considered the total extent of the immovable property held by the family, which was 44.44 acres, and concluded that the gifts of about 25 acres and odd were beyond reasonable limits. It was noted that the gifts were made to reduce the father's properties and increase the property of his minor daughters. The court held that the gifts were void under personal law and could only be voided by coparceners but were void against all other persons. Taxability of gifts beyond reasonable limits: The revenue argued that if the gifts exceeded reasonable limits, the Tribunal should have determined the value of reasonable gifts for taxability. However, the court disagreed, stating that the gifts should be considered as a whole, and the assessing authorities cannot create new gifts by splitting up the original gifts. The court upheld the Tribunal's decision that the gifts were void due to being beyond reasonable limits, thus not subject to gift-tax. The court ruled in favor of the assessee, holding that the gifts were not chargeable to gift-tax.
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