Hindu widow's gift of life-interest property excluded later interest income from her taxable total income

A transfer by a Hindu widow or other limited heir without legal necessity and without reversioners' consent may remain ineffective against reversioners, but it is binding on the widow during her life interest. Once she has fully divested herself of rights in the property, income accruing on the transferred amounts is not taxable in her hands. The later Hindu Succession Act did not affect the validity of the earlier gifts for the relevant assessment years, so the interest on the gifted amounts was excluded from the widow's total income.

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Issues: Whether the amounts transferred by a Hindu widow to her daughters-in-law by way of gift were valid so as to exclude the subsequent interest from her taxable income.

Analysis: A transfer made by a Hindu widow or other limited heir without legal necessity and without consent of the reversioners may not bind the reversioners, but it is nevertheless binding on the widow for the duration of her life interest. Once she has completely parted with her legal rights in the property, the income accruing on the transferred amounts cannot be treated as income of the transferor. The subsequent applicability of the Hindu Succession Act did not affect the validity of the earlier transfers for the relevant assessment years.

Conclusion: The gifts were valid as against the assessee, and the interest accruing on the transferred amounts was not includible in her total income.

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