COMMISSIONER OF GIFT TAX Vs. BANSHILAL NARSIDAS

JUDGEMENT

(1.) THE assessee, Banshilal Narsidas, a Hindu Undivided Family (in short 'huf') consisting of Banshilal, his five sons and wife, gifted gold ornaments valued at Rs. 29,075/- in favour of his wife, Smt. Venubai, on 5-11-1980 out of the funds and entered the factum of gift in the books of account of HUF. He filed return in respect of the gift tax in the status of an HUF and claimed exemption under Section 5 (1) (viii) of the Gift Tax Act, 1958 (hereinafter referred to as 'the Act') raising a contention that he, as the 'karta' of the HUF, had gifted the gold ornaments belonging to the HUF in favour of his wife and he could have done so in law. The claim was negatived by the gift tax officer on the foundation that it was not a gift by an individual to his wife but was a gift by the 'karta' of the HUF to one of the members of the HUF out of the assets of the HUF and, therefore, exemption under Section 5 (1) (viii) of the. Act was not permissible.

(2.) BEING grieved by the aforesaid order the assessee preferred an appeal before the appellate authority under the Act who expressed the view that the 'karta' of the family was competent to make a gift and, therefore, was entitled to exemption. Grieved by the aforesaid order the revenue went up in appeal before the Tribunal highlighting the contention that a gift by the 'karta' of the HUF to the wife or any member of the HUF from the assets of the HUF would not come under the conception of exemption as postulated under Section 5 (1) (viii) of the Act. The Tribunal declined to accept the aforesaid contention raised by the revenue and dismissed the appeal.

(3.) AFTER being unsuccessful in the appeal the Department filed an application under Section 26 (1) of the Act for drawing of a statement of case and refer the question of law to this Court for answer of the same. Accordingly the Tribunal has drawn up the statement of case and referred the following question of law :-