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Issues: Whether a Hindu undivided family is entitled to exemption under section 5(1)(xii) of the Gift-tax Act, 1958 for gifts made for the education of the daughters of the karta.
Analysis: The definition of "person" in section 2(xviii) includes a Hindu undivided family unless the context otherwise requires. Section 5(1)(xii) grants exemption for gifts made by any person for the education of "his children" to the extent found reasonable. Reading the provision contextually, the expression "his" can operate as "its" when the donor is a Hindu undivided family. The family members who are children are not strangers to the concept of children of the family, and there is no incongruity in treating such gifts as made for the education of the family's children. The provision is an exemption clause and its language does not confine the benefit only to natural persons. On this construction, gifts by a Hindu undivided family to its children for education fall within the clause.
Conclusion: The Hindu undivided family was entitled to the exemption under section 5(1)(xii) in respect of the gifts made for the education of the karta's daughters.
Final Conclusion: The reference was answered against the Revenue and in favour of the assessee, with the exemption held available to the Hindu undivided family for educational gifts to its children.
Ratio Decidendi: Where a statute defines "person" to include a Hindu undivided family, an educational-gift exemption framed in terms of gifts made by "any person" for the education of "his children" applies to a Hindu undivided family gifting to the children who are members of that family, unless the context clearly excludes it.
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