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TMI Blog1979 (3) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... amily in favour of his wife by virtue of the deed dated March 26, 1970, was not liable to gift-tax? " We may briefly refer to the material facts that gave rise to the aforesaid question of law. Sri Valluru Venkateswara Rao, who is the karta of a HUF, the assessee herein, made a gift of immovable property of 2 acres 95 cents of dry land worth about a lakh of rupees by a registered deed dated March 26, 1970, in favour of his wife, Smt. Valluru Chandravati, towards her maintenance. For the assessment year 1970-71, the assessee filed a gift-tax return on November 28, 1970, declaring the gifted property and claimed exemption of the same on the ground that it was transferred in favour of his wife towards her maintenance according to the Hindu l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the wife of the karta in lieu of her maintenance expenses and, therefore, no gift was involved in this transaction. Hence this reference. The submission of Mr. P. Rama Rao, learned counsel for the revenue, is that the transaction in question is really a gift within the meaning of s. 2(xii) of the Act and there was no family settlement and it is, therefore, taxable. This claim of the department is resisted by Mr. M. J. Swamy, learned counsel for the assessee, contending, inter alia, that the Tribunal has rightly found that it is not a gift but a settlement towards maintenance of the wife of the karta and the question must be answered in favour of the assessee. The crux of the matter is whether or not the transaction is a gift within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f, at the time of the partition of the Hindu joint family, some reasonable provision has been made towards the maintenance of a female, it cannot be considered to be a gift, though a Hindu female in a joint family is not entitled to a share. Section 18(1) of the Hindu Adoptions and Maintenance Act, 1956, reads thus : " Subject to the provisions of this section, a Hindu wife, whether married before or after the commencement of this Act, shall be entitled to be maintained by her husband during her lifetime." No doubt sub-s. (2) of s. 18 provides for the maintenance of a Hindu wife although she lives separately from her husband under the circumstances specified in cls. (a) to (g). Sub-section (3) of s. 18 makes it clear that a Hindu wife ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partition of the joint family of the assessee. It fell for decision whether such payment was for consideration and consequently not liable to pay gift-tax. It was held that the payment, in the circumstances of the case, to the wife had the effect of giving quittance to the family obligation to maintain the kartas wife and, therefore, such consideration is money's worth and hence the payment was not a gift. That apart, the transaction can be justified even as a family settlement in view of the decision of the Supreme Court in Kale v. Deputy Director of Consolidation, AIR 1976 SC 807. The Supreme Court held that the family arrangement may be even oral and if there is a memorandum which is only a record of the settlement entered into orally e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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