Case Law Details
Gyanchand M. Bardia Vs ITO (ITAT Ahmedabad)
We have also gone through all the decision as above and we find that interpreting the said section ,it has been noted in the said decisions that the section provides an exception to its applicability ,by way of proviso ,providing therein that sums received from relatives ,as defined in the section, will not qualify for taxability under the section. In all of the above decisions, except in the case of Pankil Garg (supra), the ITAT has consistently held that the gift given by HUF to its members falls within the contours of gift from such specified relatives, and accordingly are excluded from the applicability of the said section. The ITAT has held that the term relative defined in the section is not confined to gift from a single relative but can also include gift from group of relatives, which is the case in the case of HUF’s who are group of relatives as defined in Section 56(2)(vii) of the Act. We have also noted that the ITAT has also referred to the exemption provision u/s. 10(2) of the Act which exempt amounts given to members of HUF from the HUF income which has been subjected to tax. Referring to the said Section ITAT has held that the amount gifted to a member being out of its taxable income, is exempt from tax when given to a member of the HUF as per Section 10(2) of the Act.
Further, we find that the decision of the ITAT Chandigarh Bench in the case of Pankil Garg (supra) has dealt with the issue in a totally different perspective, from the standpoint of the different aspects of Hindu Undivided Family and has held that as per the Hindu Law every member of HUF has a pre-existing right in the property of the HUF and any amount given to a member therefore from the HUF property tantamounts to only giving him what actually belonged to him and there is no question therefore of the same being any amount given for no consideration or in the nature of gift, which are covered in the scope of Section 56(2)(vii) of the Act.
In the case of assessee in the assessment year i.e. 2012-13, the issue has been decided against the assessee by the ITAT holding that HUF per se is not covered in the definition of relative u/s. 56(2)(vii) of the Act and therefore gifts from HUF to members are not covered in the exception provided to the said section. The ITAT has also pointed out that while the reverse of gift from member to HUF is covered in the exception, the legislature has deliberately left out the reverse and therefore the intention of the legislature is clear being treating the gifts from HUF to members as taxable.
Considering the consistent decisions of the ITAT in favour of the assessee, more particularly that of the ITAT Chandigarh Bench in the case of Pankil Garg(supra) which has been rendered subsequent to the decision of the ITAT in the case of assessee itself ,having been pronounced on 17/03/2019 while the decision in the case of assessee is dated 21st February 2018, and noting particularly that the ITAT in the said case held the amount given by HUF to its member as not qualifying as gift itself, the decision in the case of assessee in the preceding year, we find, stands clearly distinguished wherein we find that the ITAT has proceeded on the premise that the amount given by the HUF to its members is a gift, which premise has been found to be incorrect in law by the ITAT Chandigarh Bench in the case of Pankil Garg (supra).
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