1. At the instance of the Commissioner of Gift-tax, the following question has been referred :
'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in holding that the assessee would be entitled to exemption under Section 5(1)(viii) of the Gift tax Act ?'
2. The assessment year under consideration is 1966-67. The gift-tax assessment was made in the status of 'individual ', though the assessee claimed the status of HUF. Before the GTO, the assessee claimed exemption under Section 5(1)(viii) of the G.T. Act in respect of the gift made by K. V. Manickam Gupta in favour of his wife. The GTO rejected, this claim.
3. The assessee appealed to the AAC before whom one of the questions raised was whether the status was properly taken as an 'individual'. The AAC held that the proper status for assessment was HUF. He further held that in order to claim exemption under Section 5(1)(viii), the gift should have been made by the assessee to his wife in his capacity as husband. According to the AAC, there was no evidence to show that the gift was made in the capacity of the husband to the wife. The assessee thereafter appealed to the Tribunal and it directed allowance of the relief to the extent admissible, having due regard to the gifts made by Manickam Gupta to his wife in any of the previous years. In other words, the Tribunal's finding was that the assessee was eligible for the relief under Section 5(1)(viii) in principle. The quantum of the exemption was directed to be worked out in the light of the gifts made in the earlier years. The present reference has been made by the GTO, questioning this conclusion of the Tribunal.
4. Section 5(1)(viii) to the extent relevant, runs as follows:
'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 fifty thousand 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.'
5. The question to be examined is whether there has been any gift by the husband in favour of the wife. The Tribunal has found in para. 5 of its order :
'The assessee had throughout claimed that it was a-gift by Manickam Gupta to his wife. There is no evidence at all to suggest that the contention of the assessee did not reflect the real state of affairs. Even the ITO in his assessment order refers to the gift made to the wife. It may be that Manickam Gupta is the karta of the HUF, but the fact remains that the shares of the HUF to the extent of the value of Rs. 40,000 was gifted by Manickam Gupta to his wife. There is nothing to show that the gift was not made by Manickam Gupta as Manickam Gupta, but as karta of HUF. In these circumstances, we agree that the assessee is entitled to the relief under Section 5(1)(viii).'
6. In view of the above finding that the gift has been made by Manickam Gupta in his capacity as husband to his wife, the conclusion of the Tribunal on the facts of the case cannot be taken exception to. We, therefore, do not think it necessary to go into the question whether a karta or a member of an undivided or joint family can make a gift to the wife of any joint family property, and claim exemption under Section 5(1)(viii) of the G.T. Act. The question referred is answered in the affirmative and in favour of the assessee. The assessee will be entitled to his costs. Counsel's fee Rs. 500.