Spousal gift-tax exemption applies to a karta's gift from family funds to his wife under the statutory definition of donor.

A gift made by the karta of a Hindu undivided family out of family funds to his wife was treated, for the spousal exemption under section 5(1)(viii) of the Gift-tax Act, as a gift by a person to his spouse. The statutory definition of "person" included a Hindu undivided family, but the donor's character remained that of the individual making the gift, so his status as karta did not defeat the exemption. On that construction, the gift fell within the exemption and was not subject to gift-tax.

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Issues: Whether a gift made by the karta of a Hindu undivided family out of family funds to his wife is a gift by a person to his spouse within the meaning of section 5(1)(viii) of the Gift-tax Act and therefore exempt from gift-tax.

Analysis: The relevant statutory scheme defined "person" to include a Hindu undivided family, and section 5(1)(viii) granted exemption for gifts made by any person to his or her spouse. The gift in question was made by Hari Chand to his wife, and the mere fact that he acted as karta of a Hindu undivided family did not alter the character of the donor for the purpose of the exemption. The interpretation adopted by the Tribunal was supported by the authorities relied upon, and no contrary decision was shown.

Conclusion: The gift was within section 5(1)(viii) and was exempt. The question was answered in the affirmative, in favour of the assessee and against the department.

Ratio Decidendi: For the purpose of the spousal exemption under section 5(1)(viii) of the Gift-tax Act, a gift made by the karta out of Hindu undivided family funds to his wife is treated as a gift by the donor to his spouse where the statutory context so permits.

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