COMMISSIONER OF GIFT TAX Vs. SITA RAM GUPTA

JUDGEMENT

(1.) The Tribunal, Allahabad, has referred the following questions of law under Section 26(3) of the GT Act, 1958, hereinafter referred to as the Act, for opinion to this Court ;

(2.) Briefly stated, the facts giving rise to the present reference are as follows: The present reference relates to the asst. yr. 1972-73. The respondent is an HUF. Its Karta made two gifts in favour of Smt. Deva Gupta who is the wife of the Karta, the first one of Rs. 8,000 on 4th Sept., 1971, and the second one of Rs. 15,000 on 28th Sept., 1971. The Karta also executed a gift deed in 28th Sept., 1971. In the assessment under the GT Act, the respondent claimed exemption in respect of these gifts under Section 5(1)(viii) of the Act. The GTO declined to grant exemption on the ground that the gifts were not made by Sita Ram Gupta in his individual capacity but as the Karta of the HUF. Feeling aggrieved, the respondent preferred an appeal before the AAC. The AAC noticed that the amount of gifts came from HUF funds. He was of the opinion that Sita Ram Gupta could not have gifted such funds to his wife so long as his interest and share in the HUF were not determined. In this view of the matter, he held that it was not a gift by the individual to his wife and that the exemption under Section 5(1)(viii) of the Act was not available. Still feeling aggrieved, the respondent preferred an appeal before the Tribunal. The Tribunal held that the gifts were exempt and accordingly allowed the appeal. However, at the instance of the CGT, it had referred the following question of law for opinion of this Court:

(3.) This Court vide order dt. 5th March, 1979, since reported as CGT v. Sita Ram Gupta 1981 UPTC 365 had held that it is not disputed that the gifts were made by Sita Ram Gupta as Karta of his HUF. However, the Court was of the opinion that it is difficult to agree that the document of gift could be interpreted as a deed of gift by the Karta to a member of HUF. There appears to be some confusion in the statement of the case. The Court returned the reference unanswered with the direction to the Tribunal to rehear the appeal in the light of the observation made in the order. Pursuant to the order passed by this Court, the Tribunal reheard the appeal filed by the respondent and allowed the same with the following observations :