Gift-tax exemption for gifts by a karta to his wife may apply where the transfer is made in the capacity of husband.

A gift made by a karta to his wife may qualify for exemption under section 5(1)(viii) of the Gift-tax Act where the gift is made in the capacity of husband rather than merely as manager of the Hindu undivided family. The fact that the gifted amount came from joint family property does not, by itself, defeat the exemption, and a sole surviving coparcener may deal with coparcenary property as if it were separate property. On that reasoning, the exemption was available on the facts discussed.

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Issues: Whether the assessee-HUF was entitled to exemption under section 5(1)(viii) of the Gift-tax Act in respect of the gift made by the karta to his wife.

Analysis: The gift was made by the karta, who was also the husband of the donee, and the family consisted of the karta and his wife. The fact that the gifted amount came from joint family property did not, by itself, defeat the exemption. A sole surviving coparcener may dispose of coparcenary property as if it were separate property, and the cited High Court rulings recognised that a gift by the manager or karta of joint family property to his wife can fall within the exemption where the gift is made in the capacity of husband.

Conclusion: The assessee was entitled to exemption under section 5(1)(viii) of the Gift-tax Act.

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