TMI Blog2013 (11) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 - ITAT RAJKOT] - Decided in favour of assessee. - ITA No.1527/Ahd/2010 - - - Dated:- 26-4-2013 - Mukul Kr Shrawat and Anil Chaturvedi, JJ. For the Appellant : Shri M K Patel For the Respondent : Shri D K Singh, Sr.DR ORDER:- Per: Mukul Kr Shrawat: This is an appeal filed by the Assessee arising from the order of ld.CIT(Appeals)-Gandhinagar dated passed for A.Y. 2005-06 and the grounds raised are reproduced below:- (1) That on facts and in law, the learned CIT(A), has grievously erred in confirming addition of Rs.7,00,000/- u/s.56(2) of the Act. (2) That on facts and in law, it ought to have been held that the provisions of section 56(2) of the Act are not applicable. (3) Without prejudice the learned CIT(A) has grievously erred in holding that the transfer of money from individual to HUF account is a gift. (4) Without prejudice, it ought to have been held that the appellant s case is covered by the exception provided in section 56(2)(v) itself. 2. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) of the IT Act dated 30/03/2007 were that the assessee is assessed to tax under the status of HUF . Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld.CIT(A) has also called for a Remand Report from the AO. The assessee has explained that a gift was received from Ishwarlal Ambalal Vaidhya of Rs.7 lacs on 1/10/2004 on behalf of the HUF. It was also claimed that there was a relationship between the donor and the donee as prescribed in the Explanation to section 56(2)(v) of the Act. The gift was received from the brother of parents, hence within the definition of Relatives as prescribed in the Explanation. There was a change in the stand on the part of the assessee that the gift was not made to Harshad D.Vaidhya- HUF but the gift was made to Harshad D.Vaidhya-individual. Because of the said change, the assessee has also revised the grounds of appeal before ld.CIT(A). As far as the transaction was concerned, it was informed that the said sum of Rs.7 lacs was gifted by the donor, namely Ishwarlal Ambalal Vaidhya vide cheque No.520601 of bank of Baroda which was given to Harshad D.Vaidhya and deposited by him in the individual account of BOB. It has also been explained that the HUF had received the said sum on 23/10/2004 vide cheque No.3436 of Kheralu Nagarik Sahakari Bank Ltd. of Rs.7 lacs from the individual account of Harshad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... donor, statement recorded of the donor, etc. He has also argued that in one of the decision pronounced in the case of Vineetkumar Raghavjibhai Bhalodia vs. ITO, ITAT Rajkot Bench in ITA No.583/Rjt/2007 for A.Y. 2005-06 reported in (2011) 140 TTJ (Rajkot) 58, dated 17/05/2011, for the legal proposition that the gift received by the assessee as a member of HUF, is a gift received from relatives; hence held not taxable u/s.56(2)(vi) of the Act. He has also placed reliance on one of the observation of the Tribunal, i.e., quote Therefore, the relative explained in Explanation to s.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 s.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 s.56(2)(vi). Unquote. 5. From the side or the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Finance ((No.2) Act, 2004 w.e.f. 1.4.2005 and the relevant section reads as follows:- Section 56 (1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head "Income from other sources", if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E. (2) In particular and without prejudice to the generality of the provisions of subsection (1), the following income shall be chargeable to income-tax under the head "Income from other sources", namely :- ...... [(v) where any sum of money exceeding twenty-five thousand rupees is received without consideration by an individual or a Hindu undivided family from any person on or after the 1st day of September, 2004, [but before the 1st day of April, 2006,] the whole of such sum: Provided that this clause shall not apply to any sum of money received- (a) from any relative; or (b) on the occasion of the marriage of the individual; or (c) under a will or by way of inheritance; or (d) in contemplation of death of the payer. [(e) from any local authority as defined in the Expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6(2) do not restrict to an individual but it governs individual as well as a HUF . With this understanding/interpretation of the main provisions, we have to examine the definition of relative given in Explanation annexed to this section. The position shall be absolutely clear that even in case of HUF if a sum of money is received from any relative and that relative is as defined in Explanation, then also fall within the exception as prescribed in this section. 7.2. On our study, we have pondered upon the commentary of Sampath Iyengar Law of Income Tax 10th Edition page 4611 and the comments are reproduced below:- Explanation to clause (v) The Explanation to clause (v), which defines a relative, is wide enough to include spouse, brother or sister, their spouses, brother or sister of either parents of the individual and lineal ascendant or descendant of both the individual and his/her spouse and the spouse of any of the persons mentioned herein before. Hence, the definition covers only relatives of the individuals, so that the explanation seems to have overlooked the provision in the main section sparing liability for Hindu Undivided Family (HUF) in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UF be exempt from taxation and would, if a gift collectively given by the group of relatives from the HUF not exempt from taxation. Unquote. 7.4. The Respected Co-ordinate Bench has also examined the intention of the legislature and thereupon made an observation that, quote 11.2. Further, from a plain reading of s. 56(2)(vi) along with the Explanation to that section and on understanding the intention of the legislature from the section, we find that a gift received from relative , irrespective of whether it is from an individual relative or from a group of relatives is exempt from tax under the provisions of s.56(2)(vi) of the Act as a group of relatives also falls within the Explanation to s.56(2)(vi) of the Act. It is not expressly defined in the Explanation that the word relative represents a single person. And it is not always necessary that singular remains singular. Sometimes a singular can mean more than one, as in the case before us. In the case before us the assessee received gift from his HUF. The word HUF , though sounds singular unit in its form and assessed as such for income-tax purposes, finally at the end a HUF is made up of a group of relatives . Unqu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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