TMI Blog2011 (5) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - IT APPEAL NOS. 583 (RJT.) OF 2007 AND 601 (RJT.) OF 2008 - - - Dated:- 17-5-2011 - A.L. GEHLOT, N.R.S. GANESAN, JJ. N.R. Soni for the Appellant. Manish Shah for the Respondent. ORDER AL Gehlot, Accountant Member. ‑ Appeal in ITA No.583/Rjt./2007 is a quantum appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 10(2) of the Act if the sum is received by any coparcener of HUF on partial or total division is exempt. The case under consideration is not a case that the said amount of Rs. 60 lakhs received by way of total or partial partition of the HUF. The CIT(A) further observed that the above section speaks about sum received by a member of HUF if the same is out of income of the estate belonging to the family. If section 10(2) is read with section 64(2) of the Act, what is to be seen is that sum received by a member of the HUF from the income of the HUF cannot exceed the amount which can be apportioned to his share in the estate or property or asset of the HUF. The CIT(A) held that the assessee has failed to make out a case either before the assessing officer or before him to prove and to establish that Rs. 60 lakhs received from HUF is equal to or less than the income which can be apportioned to his share of income in the HUF. The CIT(A) has also considered section 10(2A) of the Act and compared with share in partnership firm. The CIT(A) held that the said section 10(2A) is clear that only that much share from the total income of the firm is exempt in the hands of the partner as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex Court in the case of CIT v. Shaan Finance (P.) Ltd. [1998] 231 ITR 308/97 Taxman 435. 7. With regard to applicability of provisions of section 56(2) of the Act, the ld. AR submitted that an HUF is a conglomeration of relatives as defined under section 56(2)(v) of the Act section 56(2)(v) should be interpreted in such a way that interpretation must avoid absurdity. The ld. AR relied upon the following judgments, for this proposition: K. Govindan Sons v. CIT [2001] 247 ITR 192/114 Taxman 94 (SC). Shashikant Singh v. Tarkeshwar Singh [2002] 5 SCC 738 (SC) Rambhai L. Patel v. CIT [2001] 252 ITR 846/[2003] 129 Taxman 866 (Guj.) 8. The ld.AR lastly submitted that if two views are possible, the one beneficial to the assessee has to be adopted. For this proposition the ld. AR relied upon the judgment of the Hon'ble Apex Court in Union of India v. Onkar S. Kanwar [2002] 258 ITR 761/125 Taxman 121. 9. The ld. DR on the other hand relied upon the order of CIT(A) and submitted that the CIT(A) has analysed the case in detail at paragraph 6 of his order before confirming the order of the assessing officer. The CIT(A) has also considered the alternative submissions made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individual; (v) any lineal ascendant or descendant of the individual; (vi) any lineal ascendant or descendant of the spouse of the individual; (vii) spouse of the person referred to in clauses (ii) to (vi)." 11.1 A Hindu Undivided Family is a person within the meaning of section 2(31) of the Income-tax Act and is a distinctively assessable unit under the Act. The Income-tax Act does not define expression 'Hindu Undivided Family". It is well defined area under the Hindu Law which has received recognition through out. Therefore, the expression "Hindu Undivided Family" must be construed in the sense in which it is understood under the Hindu Law as has been in the case of Surjit Lal Chhabda v. CIT [1975] 101 ITR 776(SC). Actually a 'Hindu Undivided Family" constitutes all persons lineally descended from a common ancestor and includes their mothers, wives or widows and unmarried daughters. All these persons fall in the definition of "relative" as provided in Explanation to clause (vi) of section 56(2) of the Act. The observation of the CIT(A) that HUF is as good as 'a body of individuals' and cannot be termed as "relative" is not acceptable. Rather, an HUF is 'a group of rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding to the circumstance/ situation. To quote an example, the phrase "a lot". Here, the phrase "a lot" remains as such, i.e. plural, in all circumstances and situations, where in the case of "one of the friends" or "one of the relatives", the phrase remains singular only as the phrase states so that one amongst the relatives and at no stretch of imagination it could mean as plural whereas in the phrase "a lot" the words "a" and "lot" are inseparable and if split apart both give distinctive numbers, i.e. "a" singular and "lot" plural and whereas when read together, it can only read as plural in number unlike in the case of "one of the relatives" where "one" is always singular in number whereas "relatives" is always plural in number, but when read together it could read as singular in number. Applying this description with the case on hand, we have already found 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, in our considered view, the "relative" explained in Explanation to section 56(2)(vi) of the Act includes "relatives" and as the assessee received gift from his "HUF", ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m its member is provided in section 64(2) of the Act. Section 64(2) was inserted by the Taxation Laws (Amendment) Act, 1970 with effect from 1-4-1971. This section was inserted to avoid creation of multiple HUFs and others. Similar provisions was also inserted in the Gift-tax Act, 1958 and accordingly transfer of assets in such case was termed as deemed gift. The provisions of section 64(2) provides that where in the case of an individual being a member of a Hindu undivided family, any property having been the separate property of the individual has been converted by the individual into property belonging to the family through the act of impressing such separate property with the character of property belonging to the family or throwing it into the common stock of the family or been transferred by the individual, directly or indirectly, to the family otherwise than for adequate consideration then, notwithstanding anything contained in any other provisions of this Act or in any other law for the time being in force, for the purpose of computation of the total income of the individual under this Act. The individual shall be deemed to have transferred the converted property, though th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nant with justice and purposes of the Act. The object and scope of section 14 is to prevent the crown from taxing twice over. If there is any section in the Act which enables the holder of the estate in making his returns to deduct the amounts paid by him to widows of deceased coparceners, then the effect of the above construction would be to prevent the crown from taxing the income even once. But it is admitted before us that there is no such provision in the Act. If widows are not exempted by reason of the above construction, the crown would undoubtedly being taxing twice over. Our construction makes the result with equation of the case." 13. In the light of above discussion, we find that 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) of the Act. We hold accordingly. 14. The other issue in the appeal pertains to charging of interest under section 234B and 234C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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