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2023 (5) TMI 480 - AT - Income TaxAddition as gift from assessee HUF which was exempted u/s 56(2)(VII) - AO noted that assessee has shown gift from Ranjibhai D. Panchal (HUF), wherein the assessee is a Karta (Manager) of such HUF - AO disallowed and added back the gift to the total income of assessee by taking view that HUF does not fall in the list of relative - HELD THAT:- If a member does not opt to receive his share out of the profits of the firm and opts that the same be added towards his capital in the firm, even then, when the said partner either on dissolution of the firm or otherwise receives back his capital, the said capital is not taxable as an income of the partner, rather, the same is taken as a capital receipt. In the case of 'HUF', or to say in the strict sense in case of 'coparcenary', the individual members receive their share on partition. However, during the subsisting coparcenary or to say broadly 'HUF', no member is entitled to receive any definite share out of the income of the 'HUF'. It is left to the prudence and wisdom of the manager who has to manage the affairs of the 'HUF', he may spend the money or property of the 'HUF' in the case of a need of a member, such as on the marriage of a unmarried female member or in case of certain treatment of any disease of the member or in case of educational needs of any children in the 'HUF'. The amount spent may be more than that the member may have gotten on the partition of the 'HUF'. The Karta of the 'HUF', even can gift the 'HUF' property for pious purpose and even he can contract a debt for the legal necessity and for family purposes and can bind the other members to the extent of their interest in the family property. Thus, in view of the above factual and legal discussion and respectfully following the decision in Pankil Garg [2019 (9) TMI 337 - ITAT CHANDIGARH] direct AO to delete the addition u/s 56(2)(vii). Ground of appeal raised by the assessee is allowed.
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