1979 (6) TMI 97 - AT - Income Tax

Tribunal Upholds HUF Exemption for Gift to Wife

GIFT TAX OFFICER. Versus S. SUBRAMANIA IYER.

GIFT TAX OFFICER. Versus S. SUBRAMANIA IYER. - TTJ 008, 409, Issues:1. Whether the assessee, a Hindu Undivided Family (HUF), is entitled to exemption under section 5(1)(viii) of the Gift Tax Act in respect of a gift made to the wife of the Karta.Comprehensive Analysis:The Appellate Tribunal ITAT MADRAS-D considered the departmental appeal concerning the entitlement of the HUF to exemption under section 5(1)(viii) of the Gift Tax Act for a gift made to the Karta's wife. The Gift Tax Officer disallowed the exemption claim, contending that the provision did not apply to a HUF. However, the Assistant Appellate Commissioner (AAC) accepted the assessee's claim, emphasizing that the Karta was the sole coparcener and had the authority to alienate family property, making the gift exempt under section 5(1)(viii) of the Act. The AAC relied on the decision of the Andhra Pradesh High Court in a specific case. The Revenue appealed against the AAC's order, leading to the current proceedings.During the appeal hearing, the assessee was absent but supported the AAC's order through a letter, referencing relevant rulings. The Departmental Representative argued that the gift was made out of joint family property and not by the Karta as an individual, challenging the relevance of the cited rulings. The Tribunal examined the submissions, noting the Revenue's failure to dispute the HUF's composition or provide evidence against it. The Departmental Representative contended that the gift was not admissible for exemption as it was not shown that a specific portion of the Karta's property was gifted to his wife. However, the Tribunal disagreed, citing established principles that a sole coparcener could dispose of joint family property as if it were his separate asset.The Tribunal referenced precedents from the Punjab and Haryana High Court and the Andhra Pradesh High Court, which supported exemption claims for gifts made by the manager of a HUF to his wife from joint family property. These decisions clarified that the nature of the gift, made by the Karta as a husband, determined its exemption eligibility under section 5(1)(viii) of the Gift Tax Act. Given the absence of contrary decisions favoring the Revenue's position, the Tribunal upheld the AAC's order, granting the assessee exemption for the gift to the wife. Consequently, the Revenue's appeal was dismissed, affirming the entitlement of the HUF to the exemption under the relevant provision of the Act.