Spousal gift-tax exemption upheld where the transfer was accepted as a genuine gift to the wife, not a family property transaction

Gift-tax exemption under section 5(1)(viii) was available where the Tribunal found that Manickam Gupta made the gift to his wife as the real state of affairs, with no evidence to show otherwise. The decisive issue was whether he acted as husband or as karta of the Hindu undivided family; on the facts accepted, the gift of family property shares to the spouse satisfied the statutory condition for exemption. The question was answered in favour of the assessee.

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Issues: Whether the assessee was entitled to exemption under section 5(1)(viii) of the Gift-tax Act in respect of the gift made by Manickam Gupta to his wife.

Analysis: The assessment year was 1966-67. The dispute turned on whether the gift was made by Manickam Gupta in his capacity as husband or as karta of a Hindu undivided family. The Tribunal found that the assessee had consistently claimed that the gift was to the wife, that there was no evidence to show that the transaction did not reflect the real state of affairs, and that the shares of the family property were gifted by Manickam Gupta to his wife. On that finding, the statutory condition for exemption to a spouse was satisfied.

Conclusion: The assessee was entitled to exemption under section 5(1)(viii) of the Gift-tax Act, and the question referred was answered in the affirmative, in favour of the assessee.

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