1. The assessee is the karta of a Hindu undivided family consisting of his wife, minor daughters and minor sons. The family possessed ancestral immovable property of acres 44.44. Out of the immovable property that the family held, the assessee made three gifts through written instruments. One gift was made on May 20, 1957, giving acres 17.681/2 to his three minor daughters. The second gift was made on October 11, 1957, through an instrument in respect of acres 728 in favour of his minor sons and the third gift on January 26, 1959, in respect of acres 7.46 in favour of his fourth minor daughter. The first two gifts fell for consideration for assessability to gift-tax in the assessment year 1958-59, the accounting year of which was the financial year 1957-58. The third gift in favour of the fourth minor daughter fell for assessability in the year 1959-60, the relevant accounting year of which was the financial year 1958-59. The Gift-tax Officer held that there were completed gifts in respect of those transactions and they were chargeable to gift-tax for the relevant assessment years and accordingly levied gift-tax on those gifts. In respect of the third gift the Gift-tax Officer also charged gift-tax for the assessment year 1959-60. Aggrieved by those assessments the assessee filed appeals to the Appellate Assistant Commissioner of Gift-tax. The Appellate Assistant Commissioner of Gift-tax held that those transactions amounted to family arrangements and were not gifts within the meaning of the Gift-tax Act so as to attract gift-tax. Accordingly, the Appellate Assistant Commissioner allowed the appeals. Aggrieved by those orders the Gift-tax Officer preferred appeals to the Income-tax Appellate Tribunal. The Tribunal held that no enquiry about the validity or otherwise of the gift was envisaged in terms of the Gift-tax Act and that if a transaction of gift was complete in all respects, gift-tax was chargeable under the Act, and the transactions referred to were gifts and were accordingly chargeable to gift-tax. The assessee was aggrieved by the order passed by the Tribunal and at his instance references were made to this court for its opinion on the question whether the settlements in question made by the assessee were gifts liable to tax under the Gift-tax Act. Those references were answered by this court by its judgment dated April 16, 1965, in Bhupathiraju Narasimharaju v. Commissioner of Gift-tax AIR 1936 Mad 825. This court split up the question into two parts. The first part was whether the transactions under the settlement deeds are gifts within the meaning of the Act irrespective of the legal effect and the second part was whether the assessee is liable to tax under the Act in respect of the said transactions irrespective of their legal effect. After discussing the legal position this court held that irrespective of their legal effect the transactions under the settlement deeds were gifts within the meaning of the Act. In regard to the second part of the question this court did not agree with the Tribunal's view that the legal effect of a gift within the meaning of the Act was beyond the purview of the Act. This court held that the taxability of a gift under the Gift-tax Act depended on the legal effect of the gift which had to be determined by the Tribunal.
2. When the file went back to the Tribunal for passing a consequential order in view of the answer given by this court on the references made by the Tribunal, the Income-tax Appellate Tribunal held that the matter had to be gone into by the Appellate Assistant Commissioner for the ascertainment of the legal effect of the gifts and accordingly remanded the matter to the Appellate Assistant Commissioner. After remand the Appellate Assistant Commissioner held that the gifts were valid and the karta of the family was competent to make those gifts and those gifts were reasonable in view of the fact that large sums of dowry were required to be paid in the community to which they belong for the marriage of the daughters and accordingly upheld the taxability of those gifts. Aggrieved by the order, the assessee went up in appeal to the Tribunal. The Tribunal after discussing the legal position held that the ultimate position was that the gifts were void in. so far as the persons other than the coparceners of the family were concerned, as there could be no purchasers because so far as they were concerned there was no transmission of title to the donees under the said gifts. Since in their opinion there was no valid transmission of titles to the donees, the gifts could not be charged to gift-tax and accordingly the appeals filed by the assessee were allowed. At the request of the Commissioner of Gift-tax, who was aggrieved by the order of the Tribunal, the following question has been referred to this court under Section 26(1) of the Gift-tax Act, 1958 :
'Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the gifts made by the karta of the assessee-family to his minor unmarried daughters by means of the settlement deeds did not transmit any title to the donees and that since there was no value to such gifts, the gifts could not be charged to gift-tax ?'
3. The facts have already been stated in the preceding paragraphs. Recapitulating the facts, it is obvious that the family owned acres 44.44 of land in all. Out of the total holding of acres 44.44 the father who was the karta of the Hindu joint family gifted about 25 acres and odd in favour of Ms minor daughters in the assessment years 1958-59 and 1959-60. The short question that arose for consideration by the Tribunal and the question which has been referred to this court is whether the gifts so made by the father in favour of his daughters were reasonable gifts and valid gifts under the Hindu law. This matter was considered by Venkata-ramana Rao J. in Sithamahalakshmamma v. Kotayya. Dealing with the legal position, the learned judge observed :
'A Hindu father is under a moral obligation to make a gift of reasonable portion of the family property as a marriage portion to this daughters on the occasion of their marriages. It is a continuing obligation till it is discharged by fulfilment thereof. It is on this principle that gifts of a small portion of immovable property by a father have been held to be binding on the members of joint family.'
4. This case was referred to with approval by the Supreme Court in Guramma v. Mallappa, : 4SCR497 . His Lordship, Subba Rao J., as he then was, laid down the law thus :
'The Hindu law texts conferred a right upon a daughter or a sister, as the case may be, to have a share in the family property at the time of partition. That right was lost by efflux of time. But it became crystallized into a moral obligation. The father or his representative can make a valid gift by way of reasonable provision for the maintenance of the daughter, regard being had to the financial and other relevant circumstances of the family. By custom or by convenience, such gifts are made at the time of marriage, but the right of the father or his representative to make such a gift is not confined to the marriage occasion. It is a moral obligation and it continues to subsist till it is discharged. Marriage is only a customary occasion for such a gift. But the obligation can be discharged at any time, either during the life-time of the father or thereafter.'
5. The learned judge further observed :
'The manager has no absolute power of disposal over joint Hindu family property. The Hindu law permits him to do so only within strict limits. The scope of the power cannot be extended on the basis of the wide interpretation given to the words 'pious purposes' in Hindu law in a different context.'
6. What emerges from a consideration of the decided cases is that the father cannot gift away the properties in favour of his minor dependant children beyond reasonable limits. What are reasonable limits is a question of fact to be decided with respect to the facts of each given case. Judged from the facts of this case it is not possible to us to say that the gifts of about 25 acres and odd in favour of the minor daughters are within the reasonable limits, within which the father can make a valid gift in favour of his minor daughters when the total extent of the immovable property held by the family is only acres 44.44. We have, therefore, no hesitation in agreeing with the finding of the Tribunal that the gifts made by the father in favour of his minor daughters are beyond reasonable limits. They are extravagant and unreasonable. They are, therefore, void under the personal law. Those gifts are no doubt voidable at the instance of the coparceners who are affected by those gifts, but still those gifts are void as against all the persons other than the coparceners. The coparceners in this case are the father and three sons. The father, if the properties of the joint family are divided, will get only a one-fourth share. In view of all the facts it cannot by any stretch of imagination be held that those gifts made by the father are within reasonable limits. It is obvious that the father made those gifts to reduce his properties and to increase the property of his minor daughters. We, therefore, agree with the Tribunal that the legal effect of the gifts is that they are void.
7. The next question argued before us for the revenue was that if the gifts were beyond reasonable limits, the Tribunal should have considered the facts of the case and ascertained what were reasonable limits in the case and should have accordingly taxed the value of the reasonable gifts. We are unable to agree with this contention. The gifts effected by the father should be considered as a whole. Whether the gifts so made by the father were reasonable or not has to be considered with reference to the properties that have been giJted under the concerned instruments and the total assets. The gifts made by such instruments cannot be split up and new gifts created by the Tribunal or the assessing authorities to consider them for taxability. We, therefore, agree with the view expressed by the Tribunal in its order. In view of the answer that we have given to the above question, the second part of the question whether there was any value to such gifts does not arise. We, accordingly, answer the first part of the question referred to us in the affirmative and in favour of the assessee and against the Commissioner of Gift-tax. The Commissioner shall pay the costs of the reference to the assessee. Advocate's fee Rs. 250.