- (1.) PER Shri Prakash Narain, Accountant Member - A complicated, though an interesting question of law and interpretation of document arises in this case. The assessee is an HUF whose karta is Shri Ram Murti Malhotra besides Shri Malhotra, the family consisted of his wife Smt. Motia Rani Malhotra, their Major Sons, Shri Satya Pal Malhotra, Shri Naresh Chandra Malhotra, Shri Subhash Chandra Malhotra, Mahesh Chandra Malhotra and two minors master Rakesh Chandra Malhotra and Kumari Sareeta Malhotra. The HUF filed a return of Gift -tax for the assessment year 1977 -78 showing the value of gift at Rs. 50,000. It was, however, claimed as exempt under Sec. 5(1) of the Gift -tax Act, 1958 (the Act). It was subsequently clarified that the exemption was claimed under clause (viii) of Sec. 5(1). According to this clause of Sec. 5(1), Gift -tax shall not be charged in respect of gifts made by any person to his or her spouse, subject to a maximum of Rs. 50,000 in the aggregate in one or more previous year. It was the claim of the assessee that since the gift was made by Shri Ram Murti Malhotra to his wife, Smt. Motia Rani Malhotra, it was exempt from tax under the above section.
(2.) THE GOT examined the matter. He went through the gift deed itself and held that in this case the gift was made by the karta Shri Ram Murti Malhotra for and on behalf of the assessee -HUF, though with the concurrence of other members of the family and coparceners and, therefore, it did not earn exemption under Sec. 5(1)(viii). On behalf of the assessee reliance was placed on the decision of the Andhra Pradesh High Court in Jana Veera Bhadrayya v/s. : [1966]59ITR176(AP) . The GOT, on the other hand, relied on a later decision of the Punjab and Haryana High Court in CGT v/s. Harbhajan Singh and Sons, [1979] 119 ITR 542. He finally held that the sum of Rs. 50,000 was liable to tax. After allowing the statutory deduction of Rs. 5,000, he subjected the balance of Rs. 45,000 to the above tax.
(3.) THE assessee appealed to the AAC. It was contended before him that the ownership of the funds was not necessary for making the gift and the karta could dispose of the property of the family by any manner he liked. Before him, the counsel for the assessee relied on a decision of the Madras High Court in CGT v/s. : [1981]128ITR598(Mad) . The AAC finally held that the gift had been made by Shri Malhotra in the capacity of the karta of the family to the lady and, therefore, the latter was not entitled to exemption under Sec. 5(1)(viii). The assessee is now in appeal before us. Before we proceed further, we will like to quote the memorandum of gift in full in order to appreciate the point of the parties : "Memorandum of Gift This memorandum of gift made on this fifth day of February, one thousand nine hundred seventy six, by Shri Ram Murti Malhotra, son of late Shri Ram Sahai Malhotra, resident of 107/234, Nehru Nagar, Kanpur (hereinafter referred to as donor) in favour of his wife Smt. Motia Rani Malhotra (hereafter referred to as donee). Whereas the said donor, Shri Ram Murti Malhotra is the karta of his joint Hindu family consisting of himself, his wife, above named, major Sons Sarvashri Shri Satya Pal Malhotra, Naresh Chandra Malhotra, Subhash Chandra Malhotra, Mahesh Chandra Malhotra and minors a son and a daughter respectively Rakesh Chandra Malhotra and Kumari Sareeta Malhotra And whereas the said karta, here in above referred to as the donor desired, with the consent of all the major male members of the family, to make a gift of the property equal to the value of Rs. 50,000 (Rupees fifty thousand only) out of coparcenary property held in the shape of two fixed deposit receipts of the State Bank of India, Transport Nagar, Kanpur, namely, F. D. R. No. E 849500, dated 19 -1 -1976, and F. D. R. No. E 849501, dated 19 -1 -1976, each for Rs. 25,000 in the joint names of Shri Ram Murti Malhotra and Smt. Motia Rani Malhotra. Now this memorandum of gift witnesses that the said Shri Ram Murti Malhotra, in consideration of his natural love and affection, gave, with and by word of amount expressed himself to give to his wife the said Smt. Motia Rani Malhotra for her own use and benefit absolutely and delivered her the two Fixed Deposit Receipt Nos. E 849500 and E 849501 for Rs. 25,000 (Rupees twenty -five thousand only) each today and placed her in possession and control thereof and she at the same time accepted the said gift. Signed in presence of the witnesses on this fifth day of February, 1976. The consenting members of the Hindu undivided family mentioned above have also put their respective signatures on this memorandum of gift in token of their consent to the above gift in the above said manner." On the above facts, it was submitted that the gift had actually been made by Shri Malhotra to his wife in the capacity of a husband and, therefore, the assessee was entitled to exemption under Sec. 5(1)(viii). It was pointed out that the department was not concerned with the ownership of the amount, which was the subject -matter of gift or the status in which the return had been filed. Reliance, in this connection, was placed on the following authorities : Jan Veera Bhadrayyas case (supra), CGT v/s. , Vadrevu Venkappa Rao v/s. : [1974]95ITR313(AP) , K. B. Manickam Guptas case (supra) and M. S. P. Rajah v/s. : [1982]134ITR1(Mad) . It was also submitted before us that it was open to a karta of a family to make a gift of the property of the family with the consent of the other family members. In this connection, reliance was placed on a decision of the Bombay High Court in Tatoba Ganu v/s. : AIR1957Bom280 .;