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2011 (5) TMI 584 - AT - Income TaxPenalty u/s 271(1)(c) - addition u/s 56 on account of receipt by the assessee from the HUF of which the assessee was the member - alternative contention of the assessee that the receipt is otherwise exempt under section 10(2) - Held that:- Though for taxation purpose, an HUF is considered as a single unit, rather, an HUF is "a group of relatives" as it is formed by the relatives. Therefore the "relative" explained in Explanation to section 56(2)(vi) includes "relatives" and as the assessee received gift from his "HUF", which is "a group of relatives", the gift received by the assessee from the HUF should be interpreted to mean that the gift was received from the "relatives" therefore the same is not taxable under section 56(2)(vi). No penalty levy. Claim of exemption u/s 10(2) - Held that:- Income earned by a HUF is assessable in its own hands, so as to avoid double taxation of one and same income once in the hands of the HUF which earns it, and again in the hands of the member whom, it is paid - the assessee received gift from HUF and has satisfied both the conditions of section 10(2) that the assessee is a member of HUF and received amount out of the income of family. There is no material on record to hold that the gift amount was part of any assets of HUF. It was out of income of family to a member of HUF, therefore, the same is exempt under section 10(2). Applicability of section 64(2) - Held that:- The income derived from the converted property or any part thereof shall be deemed to arise to the individual and not to the family - he transaction between a member of HUF and the HUF the Income-tax Act provides section 10(2) and section 64(2). Section 10(2) is not similar to section 64(2) - assessee received gift from HUF and has satisfied both the conditions of section 10(2) that the assessee is a member of HUF and received amount out of the income of family - Held that exemption is available - in favour of assessee.
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