Gift of HUF Property to Stranger or to any Person who is a Alien to HUF
There are restrictions on Gift of Property belonging to HUF to strangers or to any person who is alien to HUF.
The Hon’ble Supreme Court in the case of Guramma vs Mallappa reported at AIR 1964 SC 510 held as follows : -
“No authority has so far been placed before us to sustain a gift to a stranger even on the ground of charity. It must be remembered that the manager has no absolute power of disposal over the HUF property. The Hindu law permits him to do so only within such limits. We cannot extend the scope of power on the basis of the wide interpretation given to the word pious purpose in Hindu Law in a different context. In the circumstances, we hold that the gift to stranger of a Joint family property by rhanager is void.
2. In the case of Mukund Singh vs Wazir Singh, (1972) 4 SCC 178, at page 180 the Apex Court was considering the validity of a gift made by a father to a stranger out of the coparcenary property wherein the coparcenary consisted of father and his adopted son and the Apex Court after detailed reasoning held that A gift Of coparcener’s property by a member is void. There is nothing in Section 13 of the Hindu Adoptions and Maintenance Act, 1956 which detracts from that rule.
Thus, gift by HUF to strangers is void. Interestingly the Rajasthan High Court in the case of Commissioner of Income-tax vs Dwarka Dass and Sons(1995) 212 ITR 579 held cash gift of reasonable amount(Rs.5000/-) out of HUF Property to strangers as valid. Thus it has been seen that even though gifts have been held to be void by various courts of law, it is not uncommon to find gifts by HUF. In such cases, precaution must be taken to ensure that the gift to members/strangers by HUF are not termed as Partial Partition within the meaning of Section 171 of the Income-tax Act,1961 as discussed in later chapters.
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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