1973 (9) TMI 6 - HC - Income Tax

Gift Tax Act, 1958 - Whether a gift made by a person who is the manager of a joint Hindu family to his wife of a portion of the property belonging to the family is a gift by a person to his spouse within the meaning of section 5(1)(viii) of the Gift-tax Act ? - Question answered in the affirmative i.e., in favour of the assessee and against the department.

Summary

Issues:
Interpretation of section 5(1)(viii) of the Gift-tax Act regarding gifts made by the manager of a joint Hindu family to his wife.

Detailed Analysis:
The case involved a question of law regarding whether a gift made by the manager of a joint Hindu family to his wife constitutes a gift to his spouse within the meaning of section 5(1)(viii) of the Gift-tax Act. The assessee, a Hindu undivided family, made a gift of Rs. 49,000 to his wife and Rs. 4,900 to his minor daughter. The Gift-tax Officer denied exemption under section 5(1)(viii) on the grounds that a Hindu undivided family does not have a wife and the karta cannot gift family property to his wife. However, the Appellate Assistant Commissioner allowed the exemption, stating that a person in section 5 includes a Hindu undivided family. The Tribunal upheld the decision, relying on previous case law. The department challenged the decision, leading to the High Court's consideration of the matter.

The High Court analyzed the relevant provisions of the Gift-tax Act, particularly sections 2 and 5. Section 2 defines "assessee," "donor," and "person," while section 5 outlines exemptions for certain types of gifts. The court considered the argument that the word "person" in section 5(1) has different meanings based on the context of each clause. However, the court focused on the specific case at hand, where the karta of the Hindu undivided family had made a gift to his wife from family funds. The court noted that the department did not contest that the gift was made by the individual, not the Hindu undivided family as a whole. Relying on precedent cases like Jana Veera Bhadrayya v. Commissioner of Gift-tax, the court affirmed the Tribunal's decision to grant the exemption under section 5(1)(viii) to the assessee.

In conclusion, the High Court answered the question in favor of the assessee, holding that the gift made by the karta of the Hindu undivided family to his wife qualified as a gift to his spouse under section 5(1)(viii) of the Gift-tax Act. The court found no reason to deviate from the Tribunal's decision and ruled in favor of the assessee. The judgment was unanimous, with both judges concurring on the affirmative answer to the question posed.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved, the interpretation of relevant provisions of the Gift-tax Act, and the court's reasoning in arriving at its decision.