Law:

Section:

Section 2(xii) of the Gift-tax Act, 1958 - Gift - Whether gifts made by karta of a Hindu undivided family of any portion of immovable coparcenary property to coparcenars as well as to non-coparcenars, were void and, therefore, such gifts could not be brought to tax under Act - Held, yes FACTS The assessee, karta of HUF, inherited certain ancestral property which mainly consisted of agricultural lands. It was admittedly coparcenary property. He gifted some land to coparceners (three sons of karta) and non-coparceners (brother's widow, mother and step-mother). In the course of gift-tax assessment proceedings the plea of the assessee was that the gift was invalid because by the gift, ancestral immovable property, which was joint Hindu family property, had been transferred, and that the assessee as a karta of the family could not transfer the same including his own interest, according to the well-settled rule of Hindu law, and, therefore, there was no valid gift. This plea was rejected by the GTO, who calculated value of gifted land and levied tax thereon. On appeal, the AAC accepted assessee's plea. The revenue's appeal before Tribunal was also dismissed. On reference : HELD Section 30 of the Hindu Succession Act has made an inroad into the coparcenary interest in as muchas a coparcener has the power to make a testamentary disposition of his interest in coparcenary property. No such power has been given so far as his right to make a giftinter vivos is concerned. The position in Hindu law is that whereas the father has the power to gift ancestral movables within reasonable limits, he has no such power with regard to ancestral immovable property or coparcenary property. He can, however, make a gift within reasonable limits of ancestral immovable property for pious purposes. But the rule seems to be firmly settled that a father has no power to make a gift of ancestral immovable property to his wife to the prejudice of the minor sons. So also is the rule that, a gift to a stranger is equally invalid and the other members of the family need not sue to set it aside. In the instant case, the property admittedly was coparcenary property. The three sons of the donor had…

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