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TMI Blog1980 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... s and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee was entitled to spouse allowance under section 5(1)(viii) of the Gift-tax Act ? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in cancelling the penalty levied under section 17(1)(a) of the Gift-tax Act ? " The assessee is an HUF. The karta gifted a half share in immovable properties to his wife. He gifted also movables valued at Rs. 20,000. The GTO brought to tax the value of the properties gifted to the wife amounting in all to Rs. 3,52,000, and did not grant the exemption claimed by the assessee under s. 5(1)(viii) of the Act. The AAC, on appeal, cancelled the assessment of immovable pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alias Balakrishnan, AIR 1967 SC 569, has pointed out as follows (head note): "So far as movable ancestral property is concerned, a gift out of affection may be made to a wife, to a daughter and even to a son, provided the gift is within reasonable limits. A gift, for example, of the whole or almost the whole of the ancestral movable property cannot be upheld as gift through affection ; But, so far as immovable ancestral property is concerned, the power of gift is much more circumscribed than in the case of movable ancestral property. A Hindu father or any other managing member has power to make a gift of ancestral immovable property within reasonable limits for 'pious purposes'. What is generally understood by 'pious purposes' is gift for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a gift out of affection could be made to the wife. Hence the validity of the gift by itself would not be open to question, on the facts of this case. The contention for the Commissioner, however, is that the word spouse occurring in s. 5(1)(viii) would not be applicable to an HUF and that with reference to this aspect the Tribunal, merely relying on the decision of the Andhra Pradesh High Court in Jana Veera Bhadrayya v. CGT [1966] 59 ITR 176, has wrongly held that the exemption under s. 5(1)(viii) is applicable. The judgment of the Andhra Pradesh High Court has been subsequently considered in another decision in Vadrevu Venkappa Rao v. CGT [1974] 95 ITR 313 (AP), which is published as an appendix to the decision of the High Court of Pun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s would depend on the construction of the deed with which he conveyed the property." After referring to the observations of the learned judges in Jana Veera Bhadrayya v. C GT [1966] 59 ITR 176, at p. 177, to the effect (p. 316): "The controversy relates to the capacity in which he made the gift it cannot be postulated that he made the gift as the manager of the family, since the words of the document make it abundantly clear that in his capacity as the husband he made the gift. If that were so, there is no reason why this gift should be excluded from the ambit of clause (viii) of section 5(1) of the Act", the learned judges, who decided the case in Vadrevu Venkappa Rao v. CGT [1974] 95 ITR 313, observed (p. 316): " We are in respectful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It has also been explained in the judgment in Vadrevu Venkappa Rao v. CGT [1974] 95 ITR 313, that even in the assessment of gift-tax in the hands of a joint family, this question of the capacity in which the property was gifted can be gone into. It is this aspect that has not been gone into by the Tribunal in the present case. In the absence of a finding on the capacity of the donor, it is not possible for us to answer the second question that has been referred to us in the present case. We have, therefore, to return the reference unanswered as far as the second question is concerned. The Tribunal will go into the question as to the capacity in which the karta made the gift in favour of the donee in the present case in the light of all th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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