COMMISSIONER OF GIFT TAX Vs. GULRAJ BABOOLAL

JUDGEMENT

(1.) THIS is a reference under Section 26(1) of the Gift-tax Act, 1958 (for short, "the Ad"), at the instance of the Revenue and: the following question has been referred for answer by this court :

(2.) THE brief facts giving rise to this reference are these : THE assessment year is 1982-83. THE assessee is the sole surviving coparcener of the Hindu undivided family which consists of himself and his wife, Smt. Rashma Devi. THE assessee gifted Rs. 50,000 to his wife on October 24, 1981, and executed a memorandum of gift in respect of that gift. He claimed exemption under Section 5(1)(viii) of the Act. He contended that being the sole surviving coparcener, he was competent to gift Rs. 50,000 to his wife out of the funds of the Hindu undivided family. THE claim was negatived by the Gift-tax Officer on the reasoning that it was a gift by the karta of the Hindu undivided family to one of the members of the Hindu undivided family out of the assets of the Hindu undivided family and, therefore, he is not entitled for exemption under Section 5(1)(viii) of the Act. THE assessee went up in appeal and the Appellate Assistant Commissioner following the decision of the Madras High Court in the case of M, S. P. Rajah v. CGT [1982] 134 ITR 1 held that the gift was made by the assessee as karta of the Hindu undivided family which he was competent to do. He, there-' fore, allowed the exemption. THEreafter, the Department took up the matter in appeal before the Tribunal which affirmed the finding of the appellate authority. Hence, this reference has been made by the Tribunal at the instance of the Department.