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TMI Blog1985 (10) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... t to a maximum of Rs. 50,000 in the aggregate in one or more previous years. It was the claim of the assessee that since the gift was made by Shri Ram Murti Malhotra to his wife, Smt. Motia Rani Malhotra, it was exempt from tax under the above section. 2. The GTO examined the matter. He went through the gift deed itself and held that in this case the gift was made by the karta Shri Ram Murti Malhotra for and on behalf of the assessee-HUF, though with the concurrence of other members of the family and coparceners and, therefore, it did not earn exemption under section 5(1)(viii). On behalf of the assessee reliance was placed on the decision of the Andhra Pradesh High Court in Jana Veera Bhadrayya v. CGT [1966] 59 ITR 176. The GTO, on the other hand, relied on a later decision of the Punjab and Haryana High Court in CGT v. Harbhajan Singh Sons [1979] 119 ITR 542. He finally held that the sum of Rs. 50,000 was liable to tax. After allowing the statutory deduction of Rs. 5,000, he subjected the balance of Rs. 45,000 to the above tax. 3. The assessee appealed to the AAC. It was contended before him that the ownership of the funds was not necessary for making the gift and the karta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ift. Signed in presence of the witnesses on this fifth day of February, 1976. The consenting members of the Hindu undivided family mentioned above have also put their respective signatures on this memorandum of gift in token of their consent to the above gift in the above said manner." On the above facts, it was submitted that the gift had actually been made by Shri Malhotra to his wife in the capacity of a husband and, therefore, the assessee was entitled to exemption under section 5(1)(viii). It was pointed out that the department was not concerned with the ownership of the amount, which was the subject-matter of gift or the status in which the return had been filed. Reliance, in this connection, was placed on the following authorities: Jana Veera Bhadrayya's case, CGT v. Hari Chand [1974] 95 ITR 308 (Punj. Har.), Vadrevu Venkappa Rao v. CGT [1974] 95 ITR 313 (AP), K.B. Manickam Gupta's case and M.S.P. Rajah v. CGT [1982] 134 ITR 1 (Mad.). It was also submitted before us that it was open to a karta of a family to make a gift of the property of the family with the consent of the other members of the family. In this connection, reliance was placed on a decision of the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that in paragraph 1 of the preamble of the memorandum, the donor was Shri Ram Murti Malhotra and not the HUF. About the third submission of the learned departmental representative, he contended that McDowell Co. Ltd.'s case had no application to the present situation as in this case the assessee had acted within the four walls of the provisions of law in making gift out of the property of the family to his wife. 8. We have given our careful thought to the various submissions placed before us. We will first deal with the question whether the exemption under section 5(1)(viii) can be availed by an HUF in its own return. In this connection, we will first refer to the decision of the Supreme Court in CIT v. Rameshwarlal Sanwarmal [1971] 82 ITR 628. It was held in this case that the same person could be taxed both as an individual as well as the karta of his family. However, the two capacities are totally different. The individual and the HUF are totally different units of taxation ; they are two different assessees. A similar view was taken by the Allahabad High Court in the case of CWT v. J.K. Srivastava Sons [1983] 142 ITR 183. In this case, the Tribunal held that an 'assoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, is vital to the case of the assessee. Such a consent became necessary only because the karta wanted to make a gift of a part of the coparcenary property in favour of a female member of the family. Had he been thinking of gifting a part of the property to which he might have been entitled, perhaps it was not necessary to seek the consent of other major male members of the family. The other cases in the memorandum refer that the gift had been made in consideration of the natural love and affection of Shri Malhotra held towards Smt. Motia Rani Malhotra. However, it is the preamble which generally governs the intention and purpose of a deed. In our opinion, therefore, the only conclusion that can be drawn is that this is the case of a gift by a karta on behalf of the family to a member of the family. 10. We will now refer to some of the authorities cited at the bar. In the case of Jana Veera Bhadrayya it was found that the gift was by the husband to the wife. The Court observed : "Having regard to the tenor and language of the document, it cannot be denied that the gift in question is by the husband to the wife." The Court again observed: "We are not here concerned with the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it were his separate property. Accordingly, in the opinion of the Court, he should be deemed to have acted in his individual capacity while making the gift in favour of his wife. 12. Some of the above decisions were distinguished by the Punjab and Haryana High Court in a later decision in Harbhajan Singh Sons' case. Here it was found by the AAC that, the gift in question had been made by Shri Harbhajan Singh in his capacity as 'karta' of the family and not in his capacity as an 'individual'. On the basis of this fact, it was held that if the gift was made as karta of the HUF, then the provisions of section 5(1)(viii) were not attracted because there could not be any spouse of the HUF as such as contemplated therein. 13. A perusal of the above authorities clearly goes to show that section 5(1)(viii) applies only to a case where the gift has been made by an individual to his spouse or when it is made in the capacity of a husband to the wife. We have already stated above that our reading of the memorandum of gift goes to show that it was made by Shri Malhotra as karta of the family to a female member of the family. The gift in question was not made by Shri Malhotra as an indi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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