Invalid gift of coparcenary property by a karta does not attract gift-tax under Hindu law principles.

An ancestral agricultural property held in a joint Hindu family was not validly gifted by the karta to his sons because a coparcener already has an interest in coparcenary property by birth and the karta is not its absolute owner. A transfer in favour of persons who are already owners in law is void and cannot amount to a transfer of ownership. The alleged gift therefore fell outside the meaning of a taxable gift under the Gift-tax Act, and the assessment was cancelled.

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Issues: Whether the transfer of ancestral agricultural land by a father to his sons amounted to a valid gift liable to gift-tax.

Analysis: The property was treated as ancestral and, on the relevant Hindu law principles, the assessee and his sons formed a coparcenary in a joint Hindu family. A coparcener has an interest in coparcenary property by birth, and the karta is not the absolute owner of such property. A gift of coparcenary property to a coparcener is ineffective because no transfer of ownership can occur in favour of a person who is already an owner. On that basis, the transfer was held to be void in law and outside the concept of a gift under the Gift-tax Act.

Conclusion: The transfer did not constitute a taxable gift and the assessment order was rightly cancelled.

Final Conclusion: The reference was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: A karta of a Hindu undivided family cannot validly gift ancestral coparcenary property to a coparcener, and a void transfer of that nature does not amount to a gift within the meaning of the Gift-tax Act.

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