Question 1.

Can an immovable property be gifted to HUF , by registered GPA holder ( GPA

is son , Principal is mother) ?

Question 2. The GPA holder ( son ) is the also the karta of the HUF alongwith the other
members including mother . Will such Gift as GPA holder ( son ) to HUF ( karta being son )
invite any legal hurdles?

To answer these questions we would see the provision of HUF in Income Tax Act 1961.

Hindu Undivided Family has not been defined anywhere. Under section 2 (32) of Income Tax
HUF is considered to be a seperate person.

Section 2(32) of income tax act 1961 says that

“1) “person” includes—
(i) an individual,
(ii) a Hindu undivided family,
(iii) a company,
(iv) a firm,
(v) an association of persons or a body of individuals, whether incorporated or not,
(vi) a local authority, and
(vii) every artificial juridical person, not falling within any of the preceding sub-
clauses

In a landmark case “Gajanand Poonam Chand and Brothers vs. Commissioner of Income
Tax.” The Rajasthan High Court observed that :

“It would be useful to refer to the definition of "person" given in section 2(31) of the
Act. This is an inclusive definition and it clearly shows that an "individual", a "Hindu
undivided family" and a "firm" are to be treated as distinct persons or entities for the
purposes of the Income Tax Act. In this scheme of things, it is obvious that under the
provisions of the Income Tax Act, there is no inconsistency in treating an individual as
a person distinct from the same individual representing the Hindu undivided family as
its karta for the purposes of partnership in a firm.”1

1
Gajanand Poonam Chand and Brothers vs. Commissioner of Income Tax. (06.05.1988 - RAJHC) :
MANU/RH/0163/1988
Hence by this we can conclude that in the present case The GPA holder who also happens to be
the Karta of the HUF are two separate legal identities.

Now we would define Gift.

Gift has been defined under Section 122 of Transfer of Property Act, 1882 as under:-

“Gift” is the transfer of certain existing moveable or immoveable property made

voluntarily and without consideration, by one person, called the donor, to another,
called the donee, and accepted by or on behalf of the donee.”

Acceptance when to be made.—Such acceptance must be made during the lifetime of

the donor and while he is still capable of giving, If the donee dies before acceptance, the
gift is void.

From this section certain essential ingredients can be laid down:-

a) The Donor should have the capacity to execute such gift i.e. competent to contract.
b) The transfer should be done voluntarily.
c) There should be no consideration involved in such transfer.
d) The gift should be accepted by the donee in order to complete the transfer.

In the present scenario The Donor is the Mother of the Karta and the Donee is the HUF. A
gift would be valid if it meets the essential ingredients mentioned hereinabove.

Question 3. GPA holder cant gift to himself in individual capacity , but if he gifts as GPA
holder to HUF ( whose Karta he himself is and one of the member is mother also ) will be
it valid gift ?

Next question that arises is that if the GPA Holder can execute a gift deed in favour of the
HUF on behalf of his mother who is the principal of the GPA. To answer this question I
would like to quote Section 2 of The Powers-of-Attorney Act, 1882 :

Execution under power-of-attorney.—The donee of a power-of-attorney may, if he

thinks fit, execute or do any instrument or thing in and with his own name and
signature, and his own seal, where sealing is required, by the authority of the donor
of the power; and every instrument and thing so executed and done, shall be as
effectual in law as if it had been executed or done by the donee of the power in the
name, and with the signature and seal, of the donor thereof.
 From this section certain principles can be laid down :

a) That a Donee (GPA Holder) if he thinks fit executes any instrument or thing
with his own name and signature provided the Donor (Principal) has authorised
him to do so.
b) The instrument executed by the Donee on behalf of the Donor for which he has
been authorised to do so shall be as effective as it would have been if the donor
himself/herself would have executed such instrument.
c) The Donee cannot execute any such instrument on behalf of the Donor for
which he has not been authorised to do so by the Donor.

Therefore from the abovestated section, It can be inferred that in the present scenario the GPA
Holder who is also the Karta of the HUF can execute a gift deed in favour of the HUF even if he
is the Karta of the HUF, provided that the GPA arrangement allows him to do so. The scope of
the powers of the GPA should be well laid down and should allow the GPA Holder to execute a
gift deed of the property to HUF on the behalf of the grantor. Since HUF is a separate legal entity
and the GPA holder is only an agent who is executing a gift deed of the said property on behalf
of the grantor the transaction should be valid.

Question 4. Gift to HUF by GPA holder will be exempted from taxation or not ?

Please elaborate the query since by using the word taxation, are we referring to Capital
Gains tax or what ?