711/CBDT. - Income Tax - 711/CBDT

INSTRUCTION NO. 711/CBDT Dated : July 4, 1974 The Board recently had an occasion to consider the question as to whether gifts made by the sole surviving coparcener of a HUF are liable to gift -tax. 2. The power of the Karta of a HUF governed by Mitakshara School of Hindu law to make gifts is extremely limited. The Board are, however, advised that in a case in which there is only one co-parcener, it is competent for that coparcener to make a gift of the ancestral property. The ancestral property in the hands of a coparcener who is the only coparcener of the HUF at the relevant time is for all practical purposes at par with self-acquired property. It, therefore, follows that gifts made by a coparcener of the HUF, if there is no other coparcener in existence, would be liable to gift-tax. It is, however, clarified that such cases should be distinguished from the cases of HUF where there are more than one coparcener. For instance, attention is invited to the decision of the Andhra Pradesh High Court in Valluri Janakamma vs. Commissioner of Gift-tax (66 ITR 255). In the Andhra Pradesh case there was a son in womb at the relevant time and as such this imposed restrictions on the individual's power to make a gift which even otherwise was held to be a sham one. 3. These instructions may please be brought to the notice of all the officers working in the charge.