TMI Blog2012 (2) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... hich she was a member was paid out of its income. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in overlooking the provision of Sec.56(2)(v) of the Act relating to definition of relative which is exclusive. 3. We have heard rival contentions and gone through the facts and circumstances of the case. Briefly stated, the facts on the above issues are that the assessment year involved is 2005-06. The A.O. during the course of assessment proceedings noticed from the capital account filed along with return of income that assessee had received a gift of ₹ 10 lakhs from her HUF, M/s. R.P.Nevatia Sons, HUF, on 21/02/2005 through cheque. The A.O. after going through the provisions of sec. 56(2)(v) of the Act required the assessee to explain why the said sum should not be added back to the total income of the assessee as income from other sources. The assessee explained that this gift did not violate provisions of sec. 56(2)(v) of the Act, because assessee being member of HUF comes within the definition relative , as provided in Explanation to sec. 56(2)(v) of the Act. The A.O. did not accept the explanation of the assessee and added, receipt of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.1994 29-31 31.3.1994 20847 25.11.1994 32-34 31.3.1995 691496 29.12.1995 35-37 31.3.1996 21000 19.3.1998 38-39 31.3.1997 30800 19.3.1999 40-41 31.3.1998 72910 26.5.1999 42-43 31.3.1999 1005759 10.8.2000 44-48 31.3.2000 408862 8.3.2001 49-51 31.3.2001 272164 31.1.2002 52-54 31.3.2002 368123 25.7.2002 55-57 31.3.2003 311260 22.9.2003 58-60 31.3.2004 218693 23.8.2004 61-63 31.3.2005 121284 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in addition to the grant. Before Hon ble High Court the question was, whether this sum of ₹ 48,000 was taxable as income of the assessee and Hon ble High Court answered that the assessee and the Maharaja were members of a joint Hindu family and as the allowance in question was paid to the assessee out of the joint family property it was not assessable to income-tax in the assessee's hands in view of the provisions of section 14, sub-section (1) of the Indian Income-tax. 5. From the above facts that the assessee has received gift out of accumulated income of earlier years and whether the same is exempt u/s. 10(2) of the Act or not . In our view, in order to claim exemption the amount should have been paid out of the income of HUF and here income means income of the year under consideration and not accumulated income of earlier years because that becomes impartible estate of HUF and in any case if that property is to be divided then that can be divided only on disruption of HUF i.e. by way of partition of HUF or the accumulated funds can be received by coparceners or members only on partition and not otherwise. Even otherwise, this exemption has a qualificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative; 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; or (e) from any local authority as defined in the Explanation to clause (20) of section 10; or (f) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or (g) from any trust or institution registered under section 12AA.] 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 clauses (ii) to (vi); It is a fact that the assessee has received this sum being a member of HUF, even we can say that after amendment w.e.f. 01/4/2003 in the Hindu Succession Act, the females are entered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. In the case before Hon ble High Court when the sole member gifted the property in favour of his wife, it was in his capacity as an individual with all the powers vested in him for the disposition of joint family property as if it were his separate property. Accordingly, he should be deemed to have acted in his individual capacity while making the gift in favour of his wife. Hon ble Court further observed that the same result would be reached even if the father-karta was the sole surviving coparcener or the only male member of a joint family. A father coparcener has certain special powers of disposing of the joint family or coparcenary property. He can alienate without the consent of the other coparceners to the extent authorised by the Hindu law. He can also make a gift, within reasonable limits, of movable property belonging the family. While making such a gift the karta does not act in a representative capacity but in his individual capacity. In the case before the Hon ble High Court, the gift was out of affection and was within reasonable limits and hence was a valid gift made by the karta in his individual capacity and not by the HUF. Hon ble Court further observed that in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here would be no scintilla of doubt that a person who is competent to transfer the property in whole or part and absolutely or with attachment of conditions he can be a donor. As per Hindu law the karta of the Hindu family has a right to dispose of the property by way of gift under certain circumstances. If circumstances or conditions precedent are satisfied, the karta -donor is competent to transfer. This being the centripodal issue and the core question, it is necessitous to understand the basic concept of a Hindu undivided family. If it is held that a Hindu undivided family can consist of a single member, his wife and his unmarried daughter, in that context a male member is entitled to deal with his coparcenary property as if it were his separate property. In this regard we may refer with profit to the case of Jana Veera Bhadrayya v. CGT [1966] 59 ITR 176 wherein the High Court of Andhra Pradesh accepted the proposition that the karta of a Hindu undivided family can make a gift of certain joint family property to his wife and that there is no obstacle or impediment in the way of applicability of section 5(1)(viii) of the Act. Similar view was expressed by the Punjab and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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