Limits on a Hindu karta's gift power: excessive gifts of joint family property are void and not chargeable as completed gifts.

A Hindu karta's gift of joint family property to his minor daughters was valid only to the extent of a reasonable provision for maintenance or marriage, judged by the family's financial position and surrounding circumstances. Gifts extending to an extravagant or substantial part of the estate were outside that power and therefore void against persons other than coparceners. On the facts, gifts covering about 25 acres out of 44.44 acres exceeded reasonable limits, so they were void under personal law. Because gift-tax liability depends on the legal effect of the transaction, a void disposition could not be taxed as a completed gift on its full value or broken up into notional valid gifts.

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Issues: Whether the gifts made by the karta of a Hindu undivided family in favour of his minor daughters were beyond reasonable limits under Hindu law and, if so, whether such void gifts could be charged to gift-tax.

Analysis: A Hindu father may make a valid gift out of joint family property only as a reasonable provision for the daughter's maintenance or marriage, having regard to the financial position and relevant circumstances of the family. The power is confined within strict limits and cannot extend to extravagant dispositions of a substantial part of the family estate. On the facts, the gifts comprised about 25 acres out of a total holding of 44.44 acres and were therefore not within reasonable limits. Such gifts were void under personal law against persons other than the coparceners. Since taxability under the Gift-tax Act depends on the legal effect of the transaction, a void disposition of this kind could not be treated as a taxable gift on its full value or split into hypothetical reasonable gifts.

Conclusion: The gifts were void beyond reasonable limits and were not chargeable to gift-tax as made; the question was answered in the affirmative and in favour of the assessee.

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