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Mr. Biravelli Bhaskar Versus Income Tax Officer, Ward-4 Karimnagar

2015 (8) TMI 121 - ITAT HYDERABAD

Gift from HUF - Holding that HUF is not a ‘relative’ under section 56(2), A.O. treated the amount as income of the assessee - Held that:- The issue of HUF being treated as ‘Relative’ so as to get exemption as per the provisions of section 50(2)(vi) has been considered in the case of Vineetkumar Raghavjibhai Bhalodia vs. ITO (2011 (5) TMI 584 - ITAT RAJKOT ) wherein similar issue was considered to hold that HUF can be treated as a ‘relative’ under the provisions of section 56(2) so as to exclude .....

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be treated as a gift under the provisions of section 56(2). However, since A.O. did not examine the ledger account nor Ld. CIT(A) consider it in his order, we set aside the same to the A.O. to verify the ledger accounts of the firm and delete the same. With these directions, the issue is restored to the file of A.O. to do accordingly. - Decided in favour of assessee for statistical purposes. - ITA No. 398/Hyd/2015 - Dated:- 17-6-2015 - B Ramakotaiah, AM,J. For the Appellant : Mr P Raviseshagiri .....

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ccount which is not reflected the firms accounts. Holding that HUF is not a relative under section 56(2), A.O. treated the amount of ₹ 2,50,000 as income of the assessee. Likewise, an amount of ₹ 90,000 was also treated as income on the reason that the same was not reflected in the ledger account copy of the firm M/s. Mahalaxmi Modern Rice Mill. Aggrieved, assessee preferred an appeal before the Ld. CIT(A) and made detailed submissions. However, Ld. CIT(A) without extracting the subm .....

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97 (Rajkot) wherein similar issue was considered. The Coordinate Bench while considering whether HUF can be considered as Relative under the provisions of section 56(2) has held as under : "11.1. An HUF is a person within the meaning of s. 2(31) of the IT Act and is a distinctively assessable unit under the Act. The IT Act does not define expression "HUF". It is well defined area under the Hindu law which has received recognition throughout. Therefore, the expression "HUF&quo .....

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at HUF is as good as a BOI and cannot be termed as "relative" is not acceptable. Rather, an HUF is a group of relatives . Now having found that an HUF is a group of relatives , the question now arises as to whether would only the gift given by the individual relative from the HUF be exempt from taxation and would, if a gift collectively given by the group of relatives from the HUF not exempt from taxation. To better appreciate and understand the situation, it would be appropriate to il .....

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mple would be that the gift presented by the secretary of the club represents the gift given by him on behalf of the members of the staff club and it is the collective gift from all the members of the club and not the secretary in his individual capacity. And if it is held otherwise, it will lead to an absurdity of interpretation which is not acceptable in interpretation of statutes as has been held by the Hon ble apex Court in the case of K. Govindan & Sons vs. CIT (supra). 11.2. Further, f .....

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he 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". Thus, in our opinion, a singular word/words could .....

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ds "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, .....

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an that the gift was received from the "relatives" therefore the same is not taxable under s. 56(2)(vi) of the Act, we hold accordingly." 4. In view of the above, respectfully following the same, we hold that HUF can be treated as a relative under the provisions of section 56(2) so as to exclude the amount received from HUF by the assessee-individual. Accordingly, we set aside the order of the Ld. CIT(A) and A.O. on this issue and direct the A.O. to treat the amount of ₹ 2,2 .....

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payment by Mahalaxmi MRM". This payment of ₹ 90,000 was made by the above firm on behalf of the assessee towards the repayment of housing loan. This fact was also accepted by the A.O. However, he noted that the ledger extract of M/s. Mahalaxmi Modern Rice Mill does not have any debit to his capital account. On that reason the payments made by the firm were treated as gift made to the assessee. Accordingly, he brought amount of ₹ 90,000 to tax. 6. As briefly stated above, Ld. CIT .....

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s. It is further submitted that the said relevant ledger extracts are also submitted to the A.O. as well as to the Ld. CIT(A) who not only ignored the above but brought the amount to tax in spite of clear mention that the amounts were paid by the firm. 7. After considering the rival contentions and perusing the paper book, we are of the opinion that both the authorities have misled themselves in bringing the amount to tax. As seen from the ledger account furnished there was debit of ₹ 90,0 .....

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