Spousal gift-tax exemption applies afresh after divorce and remarriage, with aggregation limited to simultaneously existing wives.

The article explains that exemption for gifts to a spouse under the Gift-tax Act applies afresh when a donor makes a gift to a subsequent spouse after divorce from the earlier marital relationship. The phrase "where there are more wives than one" is treated as referring to wives existing simultaneously, so the aggregation limit operates only in that setting. A gift made after divorce and remarriage is therefore treated as a gift to a different spouse, allowing a fresh exemption within the statutory cap.

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Issues: Whether a gift made to a second husband after divorce from the first husband is entitled to exemption under section 5(1)(viii) of the Gift-tax Act, 1958, and whether the words "where there are more wives than one" require aggregation only when multiple wives exist simultaneously.

Analysis: The clause grants exemption for gifts to a spouse subject to a maximum aggregate value. The qualifying words about "more wives than one" were read as referring to wives existing simultaneously, where gifts are made during the subsistence of the marital relationship with each donee-wife. The provision was held to reflect the legislative position that, while a husband may have more than one wife in law in the relevant context, a wife cannot have more than one husband at a time. A gift made after divorce and on a subsequent remarriage was therefore treated as a gift to a different spouse, capable of a fresh exemption within the statutory limit.

Conclusion: The question was answered in the affirmative, and the gift to the second husband was held exempt to the extent of Rs. 50,000 under section 5(1)(viii) of the Gift-tax Act, 1958, in favour of the assessee.

Ratio Decidendi: The exemption for gifts to a spouse under section 5(1)(viii) is available afresh where the donor has ceased to have the earlier spousal relationship and makes a gift to a subsequent spouse; the aggregation language applies only to multiple wives existing simultaneously.

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