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2016 (11) TMI 1121 - ITAT MUMBAI

2016 (11) TMI 1121 - ITAT MUMBAI - TMI - Unexplained credit u/s 68 - gift of Indian Millennium Deposit ("IMD‟) bond - whether proceeds of India Millennium Deposit cash not be brought to tax in the hands of appellant by invoking provisions of Section 56(2)(v)? - Held that:- We accept this gift as genuine because the identity and the creditworthiness of the donor have been established on record. The reason for making this gift is also stated and its genuinity stands proved. Entire evidences, .....

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proof of source with further evidence, inter alia, go to prove the claim of the assessee. Therefore, we delete the impugned addition. - Further, gift in question does not fall within the ambit of Section 56(2)(v) of the Act and same is exempt See case of Nilesh Jhaveri (HUF) [2016 (8) TMI 775 - ITAT MUMBAI ] - Decided in favour of assessee - I.T.A. No.4981/Mum/2014 - Dated:- 22-9-2016 - SHRI MAHAVIR SINGH, JM AND SHRI RAJESH KUMAR, AM For The Assessee : Shri Anuj Kishnadwala For The Revenue .....

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eposit cash not be brought to tax in the hands of appellant by invoking provisions of Section 56(2)(v) of the I.T. Act, 1961. 2. The issue raised in this appeal is against the confirming the addition of ₹ 82,39,653/- by ld. CIT(A) by upholding the action of the AO of treating the gift of Indian Millennium Deposit (hereinafter called as IMD‟) bond as unexplained credit u/s 68 of the Income Tax Act, 1961 and the Ground No.2 is with regard to raising the issue of India Millennium Deposi .....

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and interest. During the course of assessment proceedings, the AO found that the assessee has claimed IMD bonds of ₹ 82,39,653/- in the bank account as gift and claimed the same as exempt under the provisions of Section 10(15)(iid)(c) of the Act. The assessee submitted before the Assessing Officer that gift from three persons aggregating to ₹ 120 US$ = ₹ 52.81 lakhs in terms of Indian currency was received by the assessee. The said gifts were transferred by the donors in favou .....

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As regards the taxability of interest on the IMD Bonds the assessee submitted that the same was exempt u/s 10(15)(iid)(c) of the Act. The assessee also specifically asked by the AO that as to how the gift received in the month of September, 2005 was exempt from tax as the provisions of section 56(2)(v) have undergone changes after September, 2004 i.e. any gift received from non relative is liable to be taxed in the hands of the donee exceeding ₹ 25000/- which is received after September, .....

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ench of the Tribunal in the case of Nilesh Jhaveri (HUF) V/s ITO in ITA. No. 4980/Mum/2014(AY:2006-07) dated 04.08.2016 and be allowed accodingly. 5. On the other hands, the ld. DR while strongly opposing the arguments of the ld.AR submitted that the provisions of section 56(2)(v) of the Act were amended retrospectively and therefore any gift received from non relative is taxable under the said section. The ld. DR heavily relied on the orders of authorities below. 6. We have carefully considered .....

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been decided by the Co-ordinate Bench of the Tribunal in the case of Nilesh Jhaveri (HUF) (supra) in another family HUF family of assessee on identical facts, where the Tribunal has decided the issue as under: 2.2 Matter was carried before the First Appellate Authority, wherein various contentions were mainly raised with regard to IMDs are not any sum of money and further, regarding genuineness of creditor. Assessee raised various submissions and considering the same, CIT(A) confirmed the order .....

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interest amount of ₹ 23,65,467/- and that the said amount was claimed as non taxable by the assessee. iii. It was further submitted that the IMD certificate is not "any sum of money" and therefore it would not fall within the ambit of Section 56(2)(v) r.w.s. 2(24)(xiii) of the Act. iv. It was further contended that gifts are genuine as the identity of the donor i.e. Shri Sunil Kumar Khimchand Gandhi was proved through his Indian Passport. It was further submitted that although he .....

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ift. viii. It was also submitted that the donor Shri Sunil Kumar K Gandhi was having annual income of US$ 15,00,000/- and therefore the gift of US$ 1,00,000/- to a close family friend was not unusual. ix. The creditworthiness of the donor got proved as the donor was holding IMDs for substantial period. Assessee ultimately contended that the genuineness of these gifts of IMD from close family friends need not be doubted. x. To prove the creditworthiness, assessee had submitted net worth certifica .....

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bt; (b) gift was given by a declaration deed; (c) donor had given an affidavit affirming the making of the gift; (d) there was a confirmation through post of gift per demand draft; (e) affirmation of the assessee in examination on oath recorded by the Assessing Officer; (f) affirmation of the donor in examination on oath recorded; (g) direct reply of the donor to the Assessing Officer confirming the gift; (h) donor was stated to be a friend of the assessee‟s father; (i) donor was doing som .....

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i) that the gift was not on any occasion or function; (iii) that the donor visited his house one or two times though never beyond the drawing room; (iv) that the donor was a person of low financial status having monthly income of less than ₹ 5,000/- and has shown withdrawals from his capital account less than ₹ 3,000/- per month; (v) that the donor has no house, no telephone number, no fixed deposit and not any other immovable assets; or that the original deposit by the donor of S .....

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he sum credited in assessee‟s books of account as income of assessee if assessee offers no explanation about the nature and sources of sum so credited or if the explanation offered by assessee thereof was not satisfactory. On the facts and circumstances as narrated above, in my opinion, are such as satisfactorily explains the nature and sources of the credit by way of gift. Therefore, gift could not be said to be credit, the sources of which were not explained satisfactorily. It was a genu .....

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ssessee on 29.12.2005 including interest totaling to ₹ 68,66,378/-. In regard to issue of taxability of gifts the assessee's main stand has been that section 56(2)(v) of the Act mentions the word "any sum of money" and according to the assessee the gift of IMDs did not fall within the purview "any sum of money". Assessee also claimed that in the instant case the gift was received before 01.09.2004, which was much prior to the insertion of section 56(2)(v) of the Act .....

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ther in favour of the Revenue, which view should be accepted is a million dollar question before us. The view in favour of the assessee is fortified with numerous evidences which forms a complete chain of events, as has been discussed above. The occasion of having made this gift has been explained by the donor himself that he was obliged by the father of the donee in the year 1994 during his visit to deity Vaishno Devi when the father of the assessee helped him and his family members. Thus, the .....

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es. In these circumstances, it would be too harsh and too illogical to decide against the assessee who has produced entire evidences desired, required and insisted on by learned AO and that would result in an illegality and injustice. We have to go by evidences available on the record. The possibilities and realities of life come only thereafter, and when the adverse possibilities are also found to be explained there should be an end of these "possible realities", otherwise no gift wou .....

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like the declaration of gift, affidavit of donor, direct letter sent to AO, statement on oath both of donor and the donee, proof of source of the draft of ₹ 2,50,000 with further evidence, inter alia, go to prove the claim of the assessee. Therefore, we delete the impugned addition and allow this appeal. 2.8 Nothing contrary was brought to our knowledge. Facts being similar, so, following same reasoning, this issue is decided in favour of assessee. 2.9 Regarding interest, assessee relied .....

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