Case Law Details
Facts of the case:
Assessee being an individual offered income from house property, interest and share incomes from firms and other sources. In the course of assessment, A.O. noticed that assessee has received an amount of Rs.2,50,000 as gift from HUF and also noticed that amount of Rs.90,000 was found credited to his loan account which is not reflected the firms accounts. Holding that HUF is not a ‘relative’ under section 56(2), A.O. treated the amount of Rs.2,50,000 as income of the assessee. Likewise, an amount of Rs.90,000 was also treated as income on the reason that the same was not reflected in the ledger account copy of the firm.
Question of Law:
Whether HUF could be treated as relative u/s 56(2)(vi)?
Contention of the Assessee:
The ld. Counsel for the assessee while relying on the Judgment of the coordinate bench where it was held that an HUF is a person within the meaning of s. 2(31) of the IT Act and is a distinctively assessable unit under the Act. The expression “HUF” must be construed in the sense in which it is understood under the Hindu law “HUF” constitutes all persons lineally descended from a common ancestor and includes their mothers, wives or widows and unmarried daughters. All these persons fall in the definition of “relative” as provided in Explanation to cl. (vi) of s. 56(2) of the Act. It is not expressly defined in the Explanation of section 56(2)(vi) that the word “relative” represents a single person. That though for taxation purpose, an HUF is considered as a single unit.
Contention of the Revenue
HUF could not be treated as the relative of the assessee and the money he received from the HUF would be treated as an income and hence taxable u/s 56(2).
Decision of the Tribunal:
The Hon’ble tribunal while upholding the contentions of the Assessee held that the HUF would be come under the purview of “relative” and relying on the Judgement of the coordinate bench the Hon’ble Tribunal held that the Assessee would not be liable to tax u/s 56(2).
