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Issues: Whether a gift of coparcenary property made by the karta of a Hindu undivided family was void ab initio and therefore outside the charge of gift-tax.
Analysis: The definition of "gift" under the Gift-tax Act requires a transfer by one person to another of existing property made voluntarily and without consideration. In the case of coparcenary property, the karta and the sons are joint owners of the property, and a transfer of such property to the sons does not amount to a transfer of ownership to another person for the purposes of the Act. As regards the female donees, they were strangers to the coparcenary, and Hindu law did not permit the karta to make a gift of ancestral immovable property to them. The distinction between gratuitous gifts and alienations for value was material: the rule of estoppel, which may sustain certain unauthorised sales as voidable, did not apply with the same force to gifts. The authorities relied on by the revenue were distinguished, and the line of decisions supporting the invalidity of such gifts was accepted.
Conclusion: The gift was void, not merely voidable, and no gift-tax could be levied on it. The question was answered in the affirmative, in favour of the assessee and against the revenue.
Final Conclusion: The reference was answered by holding that an unauthorised gift of coparcenary property by the karta could not be treated as a taxable gift under the Act.
Ratio Decidendi: A gift of coparcenary property by a karta, made without authority under Hindu law, is void ab initio; where no valid transfer of property exists, the transaction does not constitute a "gift" chargeable under the Gift-tax Act.
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