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2019 (9) TMI 337 - AT - Income TaxRevision u/s 263 - PCIT has set aside the assessment order passed by the AO with a direction to make assessment afresh u/s 143(3) read with section 147 - taxability of gift received from 'HUF' - HELD THAT:- In this case, originally, the assessment was framed u/s 143(3) of the Act accepting the returned income. The assessment was reopened u/s 147 of the Act only to examine the issue as to the taxability of the amount of gift received by the assessee from his 'HUF'. The issue was examined by the Assessing Officer and he accepted the returned income holding that the gift received from 'HUF' was not exigible to tax by relying upon the decisions of Vineetkumar Raghavjibhai Bhalodia vs ITO’ [2011 (5) TMI 1100 - ITAT RAJKOT] and ‘Mr.Biravelli Bhaskar vs ITO’ [2015 (8) TMI 121 - ITAT HYDERABAD] The decisions of the higher judicial authorities were binding upon the Assessing Officer and the Assessing Officer accordingly followed the same. In view of this, the Assessing Officer took a possible view in the light of the direct judicial decisions on the issue. Under the circumstances, the order of the Assessing Officer cannot be said to be erroneous. Taxability of gift received from 'HUF' - Family income flows into a common pool from which resources are drawn to meet needs of all the members which are regulated by the head of the family. In such circumstances, any amount received by a member of the 'HUF', even out of the capital or estate of the 'HUF' cannot be said to be income of the member exigible to taxation. Since such a member himself has a pre-existing right in the property of the 'HUF', hence, it cannot be said to be a gift without consideration by the 'HUF' or by the other members of the 'HUF' to that recipient member. Provisions of section 56(2)(vii) are not attracted in case an individual member receives any sum either during the subsistence of the 'HUF' for his needs or on partition of the 'HUF' in lieu of his share in the joint family property. Converse is not true i.e. to say in case an individual member throws his self-acquired property into common pool of 'HUF'. The 'HUF' or other members of the 'HUF' do not have any pre-existing right in the self-acquired property of a member. If such an individual member throws his own/self-earned or self-acquired property in common pool, it will be an income of the 'HUF', however, the same will be exempt from taxation as the individual members of an 'HUF' have been included in the meaning of ‘relative’ as provided in the explanation to section 56(2)(vii) of the Act. It is because of this salient feature of the HUF that in case of individual, the HUF has not been included in the definition of relative in explanation to section 56(2) (vii) as it was not so required whereas in case of HUF, members of the HUF find mention in the definition of ‘relative’ for the purpose of the said section. Amount received by the assessee from the ‘HUF’, being its member, is a capital receipt in his hands and is not exigible to income tax. - Decided in favour of assessee.
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