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2016 (4) TMI 669 - ITAT HYDERABAD

2016 (4) TMI 669 - ITAT HYDERABAD - TMI - Receipt by the assessee from the HUF of which the assessee was the member - term ‘relative’ under the provisions of section 56(2) of the I.T. Act - treatment to gift received - Held that:- the "relative" explained in Explanation to s. 56(2)(vi) of the Act 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 rec .....

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:- 24-2-2016 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Assessee : Mr. P. Raviseshagiri Rao For The Revenue : Mr. B. Kurmi Naidu ORDER PER SMT. P. MADHAVI DEVI, J.M. This appeal is filed by the assessee against the order of the Ld. CIT(A) in confirming the additions made by the A.O. The two additions challenged by the assessee are (1) ₹ 1 lakh under section 56(2)(vi) of the I.T. Act on account of receipt by the assessee from the HUF of whic .....

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the assessment proceedings under section 143(3) of the I.T. Act, the A.O. noticed that the assessee has received an amount of ₹ 1 lakh as cash gift from Mr. Biravelli Bhaskar (HUF). The A.O. noticed that as per the provisions of section 56(2), if any sum or money exceeding ₹ 50,000 is received without consideration from any person, the aggregate value of such sum is taxable as income of the recipient. He observed that there are some exceptions provided to this clause wherein the sum .....

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nation and held that the assessee did not show any substantial withdrawals from her capital account to make a fresh investment. He therefore, disallowed the same and brought it to tax. Aggrieved, assessee preferred an appeal before the Ld. CIT(A) who confirmed the addition made by the A.O. as far as ₹ 1 lakh is concerned and failed to deal with ground No.2. Aggrieved, the assessee is in appeal before us raising grounds of appeal against both the additions. 3. At the time of hearing, the Ld .....

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, he has submitted that though the assessee had raised the ground of appeal and give an explanation about the source of investment, the Ld. CIT(A) has not dealt with the same. 4. The Ld. D.R. however, relied upon the orders of the authorities below. 5. Having regard to the rival contentions and the material available on record, we find that the SMC Bench of this Tribunal in the case of assessee s husband in ITA.No.398/Hyd/2015 vide order dated 17.06.2015 has dealt with the definition of the term .....

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ench 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" must be construed in the sense in which it is understood under the Hi .....

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; 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 illustrate an example, thus-an employee amongst the staff members of an .....

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resents 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, from a plain reading of s. 56(2)(vi) along with the Explanation to that .....

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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 incometax purposes, finally at the end a "HUF" is made up of "a group of relatives". Thus, in our opinion, a singular word/words could be read as plural also, according to the circumstance/situation. To qu .....

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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 consi .....

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