Void settlement deeds by a karta do not create gift-tax liability where the transfers were beyond family authority.

Settlement deeds executed by a karta in favour of his married sisters were outside his authority where the properties, obtained on partition, remained ancestral in his hands qua his minor sons. As the beneficiaries were strangers to the family, any provision for them should have been made at the partition itself; the later settlements were therefore treated as wholly void ab initio. On that basis, a void transfer did not amount to a taxable gift under the Gift-tax Act, so no gift-tax liability arose.

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Issues: Whether the settlement deeds executed by the karta in favour of his married sisters were void ab initio and, if so, whether such transactions attracted gift-tax liability.

Analysis: The properties had been obtained on partition and were ancestral in the hands of the assessee qua his minor sons. The beneficiaries were married sisters who stood as strangers to the family. Any provision for them, if at all, ought to have been made at the partition itself. The later settlements in their favour were therefore beyond the karta's authority and were treated as wholly void. A gift that is void ab initio does not constitute a taxable gift under the Gift-tax Act.

Conclusion: The transfers were void ab initio and no gift-tax liability arose on them.

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