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Sri Vadrevu Venkappa Rao Vs. the Commissioner of Gift-tax, Andhra Pradesh, Hyderabad - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAndhra Pradesh High Court
Decided On
Case NumberCase Referred No. 28 of 1962
Judge
Reported inAIR1966AP83; [1974]95ITR313(AP)
ActsGift Tax Act, 1958 - Sections 2 and 5(1)
AppellantSri Vadrevu Venkappa Rao
RespondentThe Commissioner of Gift-tax, Andhra Pradesh, Hyderabad
Appellant AdvocateD. Suyra Prakash Rao, Adv.
Respondent AdvocateC. Kondaiah, Adv.
DispositionReference allowed
Excerpt:
.....exemption in respect of gift made by him to his wife - whether gift made by person who is karta of hindu undivided family to his wife a part of hindu undivided family property and exempted under section 5 (1) (viii) - members of hindu joint family have individual rights in joint family property - they have all rights in respect of their share in properties - gift is exempted under section 5 (1) (viii) if karta making gift to his wife in capacity of husband - assessee as a manager cannot make gift out of property of hindu joint family. - - what the assessee contends, even as per the statement of the case, is that there cannot be any distinction between a gift made by an individual to his wife and a member of the hindu undivided family to his wife and at the worst, in the latter case..........property, or incur debts or make their share of the property liable, they could also individually gift joint family property to their spouses. in the return which the assessee made, ho has no doubt stated that he is a member of a hindu undivided family. in fact, it is so. the gift is from the joint family property made by him. the validity or otherwise of the transfer vis-a-vis hindu law is not what is being considered now, but whether in fact the gift made by him has been made as an individual, i.e. whether it is a gift inter vivos. this would depend on the construction of the deed with which he conveyed the property.a question of similar nature arising on an analogous facts arose for decision by a bench of tltis court consisting of chandra reddy. c. j., and chandrasekhara sastry, j......
Judgment:

Jaganmohan Reddy, J.

1. The question that has been referred to us under Section 26(1) of the Gift Tax Act (1958) (hereinafter called the Act) by the Income-tax Appellate Tribunal is

'whether the gift made by Sri Vadrevu Venkappa Rao who is a karta of the Hindu undivided family to his wife of a part of Hindu undivided family property is exempt under Section 5(1)(viii) of the Act.'

2. The assesses filed a return for the assessment year 1958-59, for the relevant accounting year ending with 31-3-1958, under the Gift Tax Act in respect of a gift made to his wife, by a deed of gift dated 18-9-1957, of Act 15-46 cents of land, of the value as given on the deed of Rs. 23,000. The Gift Tax Officer did not allow the exemption under Section 5(1)(viii) of the Act, because the donor was a Hindu undivided family. Before the Appellate Assistant Commissioner, it would appear that the assessee contended that the gift made by a Hindu undivided family to the wife of Karta should have been exempted from tax; but this contention, it was stated, was not pressed. Before the Tribunal, it was again raised. The Tribunal, however, in paragraph 3 of its order stated:

'With reference to gifts made by a Hindu undivided family to the wives of its members, exemption under Section 5(1)(viii) is not available as the Hindu undivided family cannot have a wife. If it had been an independent property of the members of the Hindu undivided family, then tho gifts by the several members to their wives will bo certainly exempt. But since the exemption contemplated under Section 5(1)(viii) is with reference to the gifts made to the wives of individuals and since this is a ease of Hindu undivided family which had made the gifts to the wives of its members, there is no question of getting an exemption under the said section.'

3. In order to appreciate this question, it may be stated that the return fifed by the assesses was in his status its a Hindu undivided family and as a Karta. The learned Advocate for the assessee contends that whatever may be the status in which he filed the return, which according to him was a mistake, what is necessary for the purposes of determining whether exemption under Section 5(1)(viii) is available to the assessee is to determine what according to the tenor of the document the assessee has purported to gift. The document itself does not mention anywhere that the assessee was making a gift of the property as an Hindu undivided family; nor is there any meaning in the Tribunal's statement that there cannot be a wife to a Hindu undivided family. It has never been the case of the assessee that there can be a wife to a Hindu undivided family. What the assessee contends, even as per the statement of the case, is that there cannot be any distinction between a gift made by an individual to his wife and a member of the Hindu undivided family to his wife and at the worst, in the latter case it should be presumed to have been made out of his share in the Hindu undivided family. Section 5(1)(viii) reads thus:

'5. (1) Gift-tax shall not be charged under this Act in respect of gifts made by any person,

(viii) to his or her spouse, subject to a maximum of rupees one latch in value in the aggregate in one or more previous years, the expression 'spouse' in this clause, where there are more wives than one meaning all the wives together.'

'Person' has been defined in Section 2(xviii) to include a Hindu undivided family or a company or an association or a body of individuals or persons, whether incorporated or not,' so that prima facie the exemption is available to members of a Hindu undivided family also in respect of transfers of property made by them to their wives.

4. Sri Kondatah, on behalf of the Department, contends that the definition of 'person' as given in Section 2(xviii) having regard to the terms of Section 5(1)(viii), where the words 'his or her spouse' have been specified, to that extent must be deemed to have been cut down in order to exclude from the advantages conferred by that section to gifts made by individuals of Hindu joint family property. We are unable to accept this contention as sound. Members of a Hindu joint family have individual rights in the joint family. They can partition the property, they can agree to gift of joint family property being made. If the coparceners have a right to partition in the joint family property, or incur debts or make their share of the property liable, they could also individually gift joint family property to their spouses. In the return which the assessee made, ho has no doubt stated that he is a member of a Hindu undivided family. In fact, it is so. The gift is from the joint family property made by him. The validity or otherwise of the transfer vis-a-vis Hindu law is not what is being considered now, but whether in fact the gift made by him has been made as an individual, i.e. whether it is a gift inter vivos. This would depend on the construction of the deed with which he conveyed the property.

A question of similar nature arising on an analogous facts arose for decision by a Bench of tltis Court consisting of Chandra Reddy. C. J., and Chandrasekhara Sastry, J. in Janaveerabudrayya v. Commr. of Gift Tax, Andhra Pradesh, Referred Case Nos. 36 and 37 of 1962 dated 15-4-1964: (reported in : AIR1966AP69 ). The question there was, 'Whether a gift made by a person who is the manager of joint Hindu family to his wife of a portion of the property belonging to the family is a gift by a person to his spouse within me meaning of section 5(1)(viii) of the Gift-tax Act. The facts there also were that a manager of the Hindu joint family made a gift of sonic property belonging to the joint family, to his wife. The contents of that gift deed so far as they pertain to the wife were as follows:

'You are my wife. Out of love and affection for you, I have today gifted to you the landed property worth Rs. 30,000 measuring Ac. 31-83 cents, as described in the schedule hereto appended and I have this day delivered the same to you. So, you shall hereafter enjoy the same with absolute rights with powers of alienation paying taxes thereon to Government.'

In the present case also words similar to those were used:

'Because you are my wife, I having intended to give away some immovable property to you and having taken the love and affection I have got for you as the consideration, I executed this gift deed conveying you the land of Ac. 15-46 cents belonging to Venkatayapalem village as per the schedule below. The said property is delivered possession of to you this day itself. Hence, hereafter, you yourself paying all the taxes payable to the Government and becoming the permanent right holder enjoy happily with the absolute rights of alienation and hereditary rights for the progeny of your sons and grandsons.'

On the facts stated above, the Bench observed that there was nothing in the document to indicate that the gift was being made in any capacity other than as a husband, and that therefore there was no obstacle in the way of applicability of Section 5(1)(viii). Thereafter the learned Judges posed the question whether the fact that he happened to be the manager of a Hindu family made any difference, and answered it in the negative. The learned Chief Justice observed:

''We are not here concerned with the question whether it is open to the manager of a joint family to make a gift of the joint family property to his wife, nor are we concerned with the question whether it should be allotted to his share.

The controversy relates to the capacity in which he made the gift. It cannot be postulated that he made the gift as the manager of the family, since the words of the document make it abundantly clear that in his capacity as the husband that he made the gift. If that were so, there is no reason why this gift should be excluded from the ambit of Clause (viii) of Section 5(1) of the Act.'

We are in respectful agreement with these observations. We cannot also find any merit in the contention that the question itself is so posed as to indicate that the gift was made by Hindu undivided family in favour of the wife. The question definitely postulates whether the gift made by the assessee, who is a karta of the joint family, of joint family property is exempt under Section 5(1)(viii). The fact that he happens to be the manager of the joint, family cannot make the gift a gift by the Hindu joint family.

5. Accordingly, for the above reasons, we answer the question in the affirmative, in favour of assesses, with costs. Advocate's fee Rs. 250.


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