Law:

Section:

Gift made by a karta of HUF to his wife out of HUF's assets is entitled to exemption under section 5(1)(viii) of the Gift-tax Act, 1958 Section 5(1)(viii) of the Gift-tax Act, 1958 - Exemptions - Whether 'karta' of HUF can make out a gift within reasonable limits even without consent of other coparceners - Held, yes - Whether, therefore, gift made by a karta to his wife out of HUF's assets is entitled to exemption under section 5(1)(viii) - Held, yes FACTS The karta of the assessee-HUF gifted some gold ornaments to his wife out of the funds of the HUF and claimed exemption in respect of such gifts under section 5(1)(viii). The GTO negatived the claim on the ground that the gift was not from an individual to his wife but instead it was by the 'karta' of the HUF to one of the members of the HUF out of the assets of the HUF. However, the appellate authority allowed the claim, which was also affirmed by the Tribunal. On reference : HELD The definition of 'donor' is quite broad, all engulfing and encapsulating one. There is no reason or base to give a narrow meaning to the term 'donor'. What the aforesaid term conveys is that a person who makes a gift is a donor. It is not necessary that he should be the owner of the property but he must be competent to transfer. Therefore, a person who is competent to transfer the property in whole or part and absolutely or with attachment of conditions can be a donor. As per the Hindu Law, 'the karta' of the family has a right to dispose of the property by way of gift under certain circumstances. [Para 7] If the 'karta' has gifted jewellery to his wife from the HUF's assets and he is competent to do so under the obtaining circumstances, there is no reason to throw the claim of the assessee overboard and deny him the benefits under section 5(1)(viii). In the instant case, nothing had been brought on record by the revenue that the husband as the 'karta' of the family was not entitled because of existence of certain circumstances to make a gift. It is well-settled law that the 'karta' can make out a gift within reasonable limits even without the consent of other coparceners. This is a power vested in him in his individual capacity.…

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