TMI Blog2017 (5) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was also member of HUF. - Decided against revenue - ITA No. 1906/Mum/2014 - - - Dated:- 19-4-2017 - Shri Joginder Singh, Judicial Member And Shri Rajendra, Accountant Member Revenue by Shri R.P. Meena CIT-DR Assessee by Shri Hari Raheja ORDER Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 24/12/2013 of the Ld. First Appellate Authority, Mumbai, deleting the disallowance of ₹ 85 lakhs received as gift from HUF without appreciating the fact that HUF does not come under the term group of relatives defined u/s 56(2) of the Income Tax Act, 1961. 2. During hearing, Shri R.P. Meena, ld. CIT-DR, defended the addition made by the Ld. Assessing Officer by advancing arguments, which is identical to the ground raised by contending that the terms HUF does not come under the term group of relatives defined u/s 56(2) of the Act. 2.1. On the other hand, Shri Hari Raheja, ld. Counsel for the assessee, defended the impugned order by contending that the case of the assessee is squarely covered by the decision of the Rajkot Bench of the Tribunal in the case of Veenit Kumar Rahgavjibhai Bhalodia vs ITO (2011) 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifically mentioned so in the definition of relatives . The CIT(A) also considered the alternative submissions of the assessee that the said gift is exempt u/s 10(2) of the Act. The CIT(A) observed that section 10(2) of the Act read with section 64(2) of the Act, which means section 10(2) of the Act speaks about only that sum being exempt in the hands of the coparcener which is equal to his share in HUF. In other words, u/s 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 ₹ 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption and relief should be construed reasonably. It is also the submission of the ld.AR that in case of ambiguity in the language employed, the provision must be construed in a manner that benefits the assessee. For this proposition the ld.AR relied upon the judgment of the Supreme Court in the case of CIT vs Gwalior Rayon Silk Manufacturing Co Ltd 196 ITR 149 (SC). He has also relied upon the judgment of the Apex Court in the case of CIT vs Shaan Finance (P) Ltd 231 ITR 308 (SC). 7. With regard to applicability of provisions of section 56(2) of the Act, the ld.R AR submitted that an HUF is a conglomeration of relatives as defined u/s 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 vs CIT (2001) 247 ITR 192 (SC) Shashikant Singh vs Tarkeshwar Singh (2002) 5 SCC 738 (SC) Rambhai L Patel vs CIT (2001) 252 ITR 846 (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of relative. The said Explanation reads as under: Explanation.- For the purposes of this clause relative means (i) spouse of the individual; (ii) brother or sister of the individual; (iii) brother or sister of the spouse of the individual; (iv) brother or sister of either of the parents of the 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 clause (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 throughout. 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 Chhabra vs CIT 101 ITR 776(SC). Actually a Hindu Undivided Family constitutes all persons lineally descended from a common ancestor and includes their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case before us. In the case before us the assessee received gift from his HUF. The word Hindu Undivided Family , though sounds singular unit in its form and assessed as such for income-tax purposes, finally at the end a Hindu Undivided Family is made up of a group of relatives . Thus, in our opinion, a singular words / words could be read as plural also, according 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in consideration of his pre-existing right in a property or income covers by section 10(2) of the Act. 12.1 There are two ways involved in a transaction, i.e. (i) amount given and (ii) the amount received. If we relate the provisions of Income-tax Act to these ways of given and received in case of an HUF we find that the case of amount received by an HUF from 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 01-04-1971. 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, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re there was a joint family and petitioner was entitled to maintenance as the widow of a deceased coparcener and received it as member of HUF and the court held as under: The only further question that arises is, whether there is anything in the Act which produces anomalous result if we adopt the above construction. Far from those being any anomaly we find the result is consonant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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