Sole surviving coparcener's gift to wife treated as individual transfer, attracting Gift-tax exemption on the settled property.

A gift of house property by a sole surviving coparcener to his wife may be treated as made in his individual capacity, rather than as karta of the Hindu undivided family, where the property had already been partitioned and the settlement deed shows a transfer out of love and affection as husband. In that situation, the coparcener is entitled to deal with the property as if it were his separate property, and the gift is capable of qualifying for exemption under section 5(1)(viii) of the Gift-tax Act, 1958. The exemption was applied to the amount gifted to the wife.

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Issues: Whether the gift of house property settled by the sole surviving coparcener in favour of his wife was made in his individual capacity so as to qualify for exemption under section 5(1)(viii) of the Gift-tax Act, 1958.

Analysis: After the partition of the immovable properties, the assessee became the sole surviving coparcener and was entitled to deal with the coparcenary property as if it were his separate property. The settlement deed did not describe him as acting as karta of the Hindu undivided family, but showed that the transfer was made by him out of love and affection in his capacity as husband. A gift by a sole surviving coparcener of coparcenary property is treated as an alienation by him in his individual capacity, and the earlier partition supported this position. The exemption was therefore attracted for the amount gifted to the wife.

Conclusion: The gift to the wife was made in the assessee's individual capacity and was exempt under section 5(1)(viii) of the Gift-tax Act, 1958 to the extent of Rs. 50,000.

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