Spouse-based gift-tax exemption unavailable where a karta gifts HUF property to his wife in representative capacity.

A gift made by the karta of a Hindu undivided family to the karta's wife did not fall within the spouse-based exemption in section 5(1)(viii) of the Gift-tax Act, 1958, because the gift was made in the representative capacity of the HUF and not by an individual donor. The exemption contemplates a spouse in relation to the donor as an individual; a Hindu undivided family cannot itself have a spouse. Authorities relied on by the assessee were distinguishable as they concerned gifts between individuals. The exemption was therefore unavailable and the issue was answered against the assessee.

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Issues: Whether a gift made by the karta of a Hindu undivided family to the wife of the karta attracted the exemption under section 5(1)(viii) of the Gift-tax Act, 1958.

Analysis: The finding recorded was that the gift was made by Harbhajan Singh in his capacity as karta of the Hindu undivided family and not as an individual. The exemption in section 5(1)(viii) contemplates a spouse in relation to the donor in the relevant individual capacity. A Hindu undivided family cannot have a spouse as such, and the authorities relied upon by the assessee were distinguishable because they proceeded on gifts made by an individual to an individual and not by a karta on behalf of a family.

Conclusion: The gift did not qualify for exemption under section 5(1)(viii) and the question was answered in the negative, in favour of the Revenue.

Ratio Decidendi: A gift made by the karta of a Hindu undivided family to the wife of the karta is not a gift to a spouse within section 5(1)(viii) of the Gift-tax Act, 1958, and therefore the exemption is unavailable.

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