Case Law Details
Gyanchand M. Bardia Vs. ITO (ITAT Ahmedabad)
The first dispute between the parties is qua validity of assessee’s gift claim as received from the HUF amounting to Rs. 1,02,00,000/- coming through banking channel. Both the lower authorities are of the view that an HUF does not come under the specified category of a relative in Section 56(2)(vii) as applicable w.e.f. 01.10.2009. The assessee’s main reliance is on this tribunal’s Rajkot bench decision in Vineetkumar Raghavjibhai Bhalodia vs. ITO (supra) accepting a similar gift claim of individual assessee from HUF. The Revenue has preferred Tax Appeal No. 1326/2011 against the same before the Honorable jurisdictional high court. The same stood admitted on 23.10.2012 for final adjudication. The fact however remains that much water has flown down the stream since the above co-ordinate bench decision. The assessment year therein is 2005-06. Relevant statutory provision at that point of time was Section 56(2)(v) of the Act. This followed clause (vi) in Section 56(2) increasing the amount of Rs.50,000/- from earlier limit of Rs. 25,000/- as applicable up to 01.10.2009. Then came clause (vii) w.e.f. 01.10.2009 specifying the same to be applicable both in case of an individual as well as HUF recipients. The legislature substituted clause (e) to Explanation in Section 56(2)(vii) defining the term of “relative” to be applicable in case of an individual assessee as well as HUF; with retrospective effect from 01.10.2009. The assessee is fair enough in not disputing the fact that the former category in clause (i) of (e) defining a “relative” qua an individual recipient does not include an HUF as a donor. The legislature has incorporated clause (ii) therein to deal with an instance of an HUF donee only receiving gifts from its members. We refer to Board’s circular no. 1/2011 r.w. explanatory circular for Finance Act, 2009, makes it clear in latter’s clause no.24.2 that Section 56(ii) is an anti-abuse provision. We also quote Honorable apex cout’s judgment in CIT v. Sodra Devi [1957] 32 ITR 615 (SC), Smt. Tarulata Shyam v. CIT (1977) 108 ITR 345 (SC) and Keshavji Ravji & Co. v. CIT (1990) 183 ITR 1 (SC) to observe that principles of literal interpretation in respect of the relevant context vis-а-vis the legislation intention have to be applied here as there is no ambiguity in definition of a “relative” in respect to an individual donee in the above definition clause. Coupled with this, the legislature itself has accepted an HUF to be a donee in clause (ii) of the “relatives” definition. We apply necessary implication principle to conclude in these facts that the legislative intent is very clear that an HUF is not to be taken as a donor in case of an individual recipient. Learned counsel’s reliance on Surjit Lal Chhabda (supra) is therefore not acceptable in this peculiar legislative backdrop of facts and circumstances. Learned co-ordinate bench (supra) seem to have followed “Bholadia” case law which is no more applicable in view of subsequent legislative developments vide Finance Act, 2012 w.e.f. 01.10.2009 (supra). We thus do not treat the same as finding precedents as per (1993) 202 ITR 222 (AP) CIT vs. B. R. Constructions (FB). The assessee’s former plea of having received a valid gift from his HUF is therefore declined.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
This assessee’s appeal for assessment year 2012-13 arises against the CIT(A)-4, Ahmedabad’s order dated 14.03.2016, in case no. CIT(A)-4/467/wd-1(2)(2)/15-16 (Old appeal no.: CIT(A) 10/640/wd- 1(2)(2)/14- 15), affirming Assessing Officer’s action making addition of Rs. 1,02,00,000/- qua gift received from HUF, in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short “the Act”.
Heard both the parties. Case file perused.
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Very poor judgement. The one decided by ITAT Mumbai was logical – https://taxguru.in/income-tax/gift-received-from-a-huf-by-a-member-of-huf-is-exempt-from-tax.html