Inheritance of money and Section 56(2)

Name: Ashok K Malhotra,
email:akmconnect @ yahoo.com
Dear Sir,
Here are my queries. I would request you to respond as per your convenience
Income Tax query for the Assessment year 2007-08

Query #1
As to whether property in Mutual fund inherited on the death of my mother is taxable in my hand during the month of April/May 2007?
Query #2
As to whether the amount gifted by me to my wife and son will be taxed in there hands separately, if the transfer of money is on irrevocable basis?
Query #3
Whether provisions of sections 60 to 64 are applicable or not?
Facts of the case:

I am the only successor of my parents. My father expired in 1976 and my mother died in Jan 2004. She had invested in Mutual Funds (Debt Scheme) and in saving bank long back. The sum total of investment at today’s NAV was over Rupees ten lakhs. The investments in Mutual Fund were made by her in the year 2000-01, 2001-02 and 2002-03. The accretion in bank balance was less than Rs. one lakh till 2007.Total investment made by her was to the tune of over Rs. ten lakhs.

Based on her death certificate as well as survivorship certificate, the Mutual Funds redeemed the units in my favour and the fund was received in my bank account at the latest NAVs. I gifted the whole redeemed amount to my wife and only son. Incidentally my son is no more a minor. He is 20 years of age. They have now invested the funds in various Mutual Funds.
As per my understanding the provisions of section 56(2) of the Income Tax Act 1961 are not applicable. The receipt of money without consideration by a relative is outside the scope of the section. I am the lineal descendant of my mother and received the redeemed amount by way of inheritance.
Likewise I have gifted the whole of redeemed amount to my wife and son. All the earning henceforth from the investment shall taxed in the hands of wife and son.

Thanking you,
Regards
Ashok