Gift To Minor Daughters Out Of HUF Property Prior To Marriage
On the issue whether the Karta can gift the HUF property to minor daughters only on the occasion or marriage or at any time, it was held that, the Karta of a HUF has inherent powers to make gifts out of HUF property in reasonable quantity. The support for this proposition is derived from the Apex Court case of CWT vs K.N. Shanmugasundaram, (1997) 11 SCC 252, wherein the Apex Court referred to the following finding of the Madras High Court at Page 255:
Under the Hindu law the father or his representative can make a valid gift by way of reasonable provision for the maintenance of the daughters, regard being had to the financial and other relevant circumstances of the family, and by custom or 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 and it is a moral obligation which 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 lifetime of the father or thereafter. The High Court has further held that the right of the father or his representative to make such a gift is not confined to the marriage occasion and that there was no reason why a father should not have the power to make a gift of a reasonable portion of the joint family property to his minor unmarried daughters who might get married or continue to remain as spinsters and lead a life of celibacy. According to the High Court, the need of a father in a Hindu undivided family to make a provision for the future maintenance of his minor unmarried daughters is greater and more compelling than the one he may have to make a provision for the maintenance of the daughter at the time of the marriage or thereafter. For a daughter who gets married or who has already got married, has her husband who may provide for her maintenance in addition to the support which she derives from her father after the marriage while there is no such support from a person like the husband or other relative in the case of a minor unmarried daughter of a Hindu father of an undivided family. The High Court further found that having regard to the fact that the total assets of the assessee amounted to Rs 13 lakhs and that the gift which each of the three minor daughters got would bear only 1/39 portion of the total value of the assets of the assessee on one computation and only 1/55 portion of. the total value of the assets by another computation it could not be said that the properties gifted to the minor daughters do not bear a small or reasonable proportion of the total value of the properties owned by the family of which the assessee is the manager. In view of the aforesaid findings, the High Court has answered the questions referred to it against the Revenue and in favour of the assessee.
After this the Hon’ble Apex Court declined to interfere on the ground that the Gift of property in small proportion to three minor daughters from HUF property was approved under the Income-tax as well as Gift tax Assessment.
Thus, it can be concluded that the Karta can gift in reasonable quantity to the members of the HUF.
Taxation in Business & Profession [Section 28 to 44]
Computation of income under the head 'Profits and Gains of Business or Professions' [Section 28 to 44]
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