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TMI Blog1997 (12) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant was not entitled to the exemption under section 5(1)(xii) of the Gift-tax Act of gifts given to daughters of the karta of the assessee-HUF for the purposes of education ?" The assessee, which is a Hindu undivided family, filed a return of gifts under section 13(1) of the Act, on July 12, 1974, showing the value of taxable gifts as "nil". The assessee had made gifts of Rs. 1 lakh each on October 7, 1971, to Jankiben Sanatkumar and Vaishali Sanatkumar, who were the minor daughters of the karta-Shri Sanatkumar Jayantilal. These gifts were claimed to be exempt under section 5(1)(xii) of the said Act, on the ground that they were made for the education of the children. The age of the two minor daughters in whose favour the gifts were ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Appellate Assistant Commissioner of Income-tax, who confirmed the order of the Gift-tax Officer and dismissed the appeal by his order dated January 16, 1981. Thereafter, the matter was carried by the assessee to the Tribunal and the Tribunal, while holding that the gifts in question were reasonable and that it would not make much difference that there were no deeds of gift executed, came to the conclusion that just as a Hindu undivided family cannot have a wife, it cannot have daughters also. It was held that section 5(1)(xii), which speaks of "his children", would not be applicable to the case of a Hindu undivided family assessee, because a Hindu undivided family cannot have any children. In the present case, the two gifts in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of certain gifts and the relevant clause (xii) with which we are concerned, reads as follows : "5. (1) Gift-tax shall not be charged under this Act in respect of gifts made by any person--. . . (xii) for the education of his children, to the extent to which the gifts are proved to the satisfaction of the Gift-tax Officer as being reasonable having regard to the circumstances of the case ; . . ." In the context of the said provision, it was contended on behalf of the Revenue that the words "his children", which occur in the clause would indicate that for the purpose of the said exemption gift only by a living person was contemplated and that in the context the word "person" occurring in section 5(l) in the opening words would not includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricting the benefit to those categories only. This can be noted, for example, from clause (iia) which refers to such person who is an individual not resident in India ; or clause (iib) which refers to a person resident outside India ; or clause (iic) referring to a citizen of India ; or clause (iiic) which refers to an individual or a Hindu undivided family. In clause (xii) of section 5(1), no such categories are specified. But from the expression "his children" it is contended by the Revenue that the only category of persons who can make gifts to their children that can fall under this clause, would be living persons. The word "his" importing the masculine gender would obviously be taken to include females. The question whether in the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and it would consist of all persons lineally descended from a common ancestor including their wives and unmarried daughters. We have also kept in mind that the joint and undivided family is a normal condition of Hindu society and that in its peculiar ethos it would be incumbent upon the Hindu undivided family to look after the welfare of its members, more particularly children, in the context of their education. When you talk of children of a Hindu undivided family, it is not a meaningless expression and it would clearly identify such children who are the members of the joint Hindu family. Therefore, when the Hindu undivided family as a legal person gifts any property to such children who are its members, in our opinion, such gifts would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontext of clause (xii) of section 5(1), children of such Hindu undivided family would only mean such of the members of the Hindu undivided family who are children, and, therefore, the gifts by the Hindu undivided family in favour of its children would be exempt under clause 5(1)(xii) of the Act, as held by us above. In view of the above discussion, we hold that the Tribunal was in error in law in holding that the applicant-Hindu undivided family was not entitled to the exemption under section 5(1)(xii) of the said Act in respect of gifts given to the daughters of the karta of the Hindu undivided family for the purposes of education. The question referred to us is, therefore, answered in the negative in favour of the assessee and against t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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