Per Shri T. Venkatappa, Judicial Member - The assessee, Shri Deve Gowda, had two sons, Puttaswamy and Shivaswamy. It appears that the second son, shivaswamy left the house in 1961 and his whereabouts are not known till now. There was a partition between the assessee and his first son Puttaswamy as per the partition deed dated 26-6-1967.
Subsequently, on 3-7-1977 the assessee, Deve Gowda, gifted to his daughter-in-law, Smt. M. P. Sharadamma, 13 acres and 9 guntas of land of coffee plantation. it was claimed that the value of the said land should not be included in the net wealth of the assessee. The WTO held that the assessees branch of the family consists of the assessee, his wife and his second, Shivaswamy. The karta of the HUF cannot make a gift of the HUF property to a stranger or a relative. since the husband of the donee has separated from the assessee in the partition in 1967, the donee is no longer a member of the assessee-HUF. She is a stranger to the family now. Thus, he held that he gift made by the karta is not a valid gift and the property is to be added to the net wealth of the assessee. On appeal, the AAC upheld the same.
2. The learned counsel for the assessee submitted that under section 108 of the Evidence Act, 1872 where a person has not been heard of for 7 years, it should be presumed that he is not alive. He strongly urged that the family consists of the assessee and his wife. The assessee is the sole coparcener. Hence, he has absolute right to gift the property.
Thus, the lower authorities were not justified in holding that the gift is not valid. The learned departmental representative submitted that after the partition in 1967, the donee is a stranger to the family and the karta of the family cannot make gift to a relative or stranger.
Thus, the gift made is not valid. The value of the gifted properties is includible in the net wealth of the assessee.
3. We have considered the rival submissions. The assessee had two sons, namely, Puttaswamy and shivaswamy. The assessees second son Shivaswamy left the house in 1961 and his whereabouts are not known. Under section 108 where a persons has not been heard for 7 years by those who would naturally have heard of him if he alive, his death can be presumed. - Ramrati Kuer v. Dwarika Prasad Singh AIR 1967 SC 1134. Accordingly, we have to presume that Shivaswamy is not alive. By a partition deed dated 26-6-1967 there was a partition between the assessee and his son Puttaswamy. After the above partition, the assessees family consists of the assessee and his wife.
4. It is well settled by the decision of the Supreme Court in N. V.Narendranath v. CWT  74 ITR 190 that the effect of partition did not affect the character of the properties which did not cease to be joint family properties and when a coparcener having a wife and two minor daughters and no son receives his share of the joint family properties on partition, such properties in the hands of the coparcener belong to the HUF.5. When the gift was made on 3-7-1977, Deve Gowda, the assessee, was the sole surviving coparcener in possession of the family property got on partition, he has absolute right to dispose oaf the property as he likes as if it were his separate property. He can make gift of it or sell it. In this connection we may refer to para 257 of the Mullas Hindu Law, 15th edn., which is extracted as under : "(1) A person who for the time being is the sole surviving coparcener is entitled to dispose of the coparcenary property as if it were his separate property. He may sell or mortgage the property without legal necessity or he may make a gift of it. If a son is subsequently born to him or adopted by him, the alienation, whether it is by way of sale, mortgage or gift, will nevertheless stand, for a son cannot object to alienations made by his father before he was born or begotten." (p.
345) It is clear from the above passage that the sole surviving coparcener has the absolute power to dispose of the coparcenary property as if it were his separate property and he can make a gift of it.
6. In CED v. Smt. Kalawati Devi  125 ITR 762, the Allahabad High Court held that the assets that are received on partition by a member of a HUF who has no male issue at the time can be said to belong to him absolutely, although they are capable of being owned by a HUF consisting of him and his son or sons that may be borne or adopted subsequently.
7. The ratio laid down in the above case squarely applies to the instant case. In our view, the assessee who is the sole surviving coparcener had the power to gift the property as per the deed dated 3-7-1977 to his daughter-in-law. Thus, the gift made by him by the said deed is valid one. Hence, the value of the properties gifted under the said deed is not includible in the net wealth of the assessee. We direct that the value of the gifted properties should be excluded from the net wealth of the assessee.