TMI Blog2017 (3) TMI 1643X X X X Extracts X X X X X X X X Extracts X X X X ..... om Dinesh J. Shah HUF u/s. 56 - Held that:- The Hyderabad Tribunal in ITO vs. Dr. M. Shobha Ravhuveera [2014 (5) TMI 41 - ITAT HYDERABAD] while considering the identical ground hold that HUF is nothing but the group of relative. Merely because it has given a legal status as a HUF, the individual do not lose their identity as relative and such group of relative, who are member of HUF clearly falls within the definition of term 'relative' as prescribed in the Explanation to Clause-5 of sub-section 2 of section 56 - Decided in favour of assessee Treatment of gift from Pankaj J Shah HUF as income under the head 'income from other source' - assessee explained that Pankak J Shah HUF consist of Pankaj J Shah ( brother of assessee's father), Mrs Bharti P Shah ( wife of Pankaj J Shah) and Amish P Shah ( son of Pankaj J Shah) and Mrs. Bharti Shah/ Cousin of assessee. However - Held that:- In our intervention that if there is any decision in his favour on this issue, since the assessee is not a member of Pankaj J Shah HUF. The ld AR for the assessee fairly conceded that this gift received from Pankaj J Shah HUF in wherein the assessee is not a member. And some of the members are not cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR for the assessee argued that the ld CIT(A) not considered the assessee's plea that loss was suffered due to the business activity of the assessee. The Ld. DR for the Revenue supported the order of authorities below. 4. We have considered the rival contention of the parties. We have noticed that the assessee in the statement of fact before ld CIT(A) pleaded that assessee has given advances/deposit of ₹ 3,00,000/- in Financial Year (FY) 2006-07 to M/s Man Finance. The name of Man Finance is changed to Sify India Pvt. Ltd. the assessee received back of ₹ 2,00,000 out of ₹ 3,00,000/- in November 2009 and the balance amount of ₹ 1,00,000/- is claimed by assessee as bad-debts. The AO disallowed the bad debts holding that the amount was not offered in earlier as income and it does not related to trade debts and that the assessee has just made the general statement and not been able to prove that the debt of ₹ 1,00,000/- has now become bad or was offered as income in earlier years. The ld. CIT(A) while considering this ground of appeal observed that the assessee could recover ₹ 89,216/- in February 2011 and the same is offered in income of AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of Ahmadabad Bench in Harshabhai Dahyalal Vaidhya (HUF) V/s. ITO (155 TTJ (Ahd) 71) hold that HUF is ITA No.2627/M/201 Shri Hemal D. Shah nothing but the group of relative. Merely because it has given a legal status as a HUF, the individual do not lose their identity as relative and such group of relative, who are member of HUF clearly falls within the definition of term 'relative' as prescribed in the Explanation to Clause-5 of sub-section 2 of section 56. The Co-ordinate Bench of Hyderabad Tribunal referred the ratio of Harshabhai Dahyalal Vaidhya (HUF) V/s. ITO (supra) as under: 7.1 For the year under consideration, i.e. AY 2005-06 the definition of relative was in respect of the relationship by an individual donee with close-relatives as defined therein. However, it is very pertinent to note that the operative section i.e. section 56(2)(v) was in respect of (i) individual, and (ii) Hindu Undivided Family (HUF). Meaning thereby the legislature has clear intention to include both the statuses i.e. Individual as well as HUF within its scope; as well as; within its operation. Thus, the Section is applicable in respect of money exceeding ₹ 25,000/- receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e HUF. In the case of HUF, since the joint family ITA No.2627/M/201 Shri Hemal D. Shah refers to a group of persons, it either means that the exemption is available for gifts received by the HUF from any person related to the karta or any other family member or it may mean that since HUF cannot have relatives, all the gifts received by the HUF will be taxable. This inference does not obviously fall in line with the intent, because the provision does contemplate exemption of the gifts received by HUF, but has not indicated the relationship that is necessary for the purposes of HUF, because the definition of 'relative' in the Explanation refers to the relatives of the individual and not HUF, with the result that the exemption of gift from relatives is alive only to the extent of possible exemption for gifts by will or in contemplation of death. 7.3. Our above view gets support from an order of Respected Rajkot Bench pronounced in the case of Vineetkumar Raghavjibhai Bhalodia vs. ITO reported at (2011) 140 TTJ (Rajkot) 58. In that cited decision, an individual has received a gift from HUF. The AO was of the view that the HUF being not covered within the definition of rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion has buttressed our view, however, in addition to the above observation of a Coordinate Bench, we have also noted that at some later stage, the legislature became conscious of the problem, therefore while drafting the analogous provisions ITA No.2627/M/201 Shri Hemal D. Shah of section 56(2)(vii), it was added in the definition of relative (ii) in case of a Hindu Undivided Family, any member thereof. This section is inserted by Finance (No.2) Act of 2009 w.e.f. 1/10/2009 which prescribes that where an individual or HUF receives in any previous year on or after 1st day of October- 2009 any sum of money without consideration exceeding ₹ 50,000/- the whole of the aggregate value of such sum shall be chargeable to income-tax. Provided that the charging clause shall not to apply to any sum of money received from any relative. As per this newly inserted clauses, (a) relative means in case of HUF any member thereof . Although this subsequent change in the Act do not apply for the year under consideration being incorporated by Finance Act, 2009 but it appears that by insertion of these words Hon'ble Legislatures have visualized the difficulty, hence streamlined the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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