CHHAYA VASUDEO ANGNE ,MUMBAI V. ITO WARD 28(1)(1), MUMBAI

ITA 286/MUM/2025

AI Insights

The case revolves around the taxability of a gift received by the assessee, Chhaya Vasudeo Angne, from her daughter-in-law, Smt. Nazia Angne, amounting to Rs. 6,11,000. The Assessing Officer initially treated this gift as taxable income under section 56(2)(vii) of the Income Tax Act, 1961, because he did not consider the daughter-in-law as a 'relative' as defined under the Act. The Commissioner of Income Tax (Appeals) upheld this decision. However, the Tribunal, referencing a similar case and the definitions provided in the Act, concluded that the daughter-in-law is indeed a relative, and thus, the gift is exempt from tax.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32223 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: ITO (Exemption) vs. Vaibhav Medical and Education Foundation
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: USHA GAIKWAD
• Assessee Lawyers: PRAKASH JOTWANI
• Keywords: Set aside; Gift; Charitable institution
• Section: 13

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “SMC” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA No. 286/Mum/2025 Assessment Year : 2017-18 Chhaya Vasudeo Angne, Flat No. 201, Shiv Parvati CoOp HSG Society Ltd., Sector 28, Plot 42/A, Nerul West, Navi Mumbai PAN :ASNPA7051N vs. Income Tax Officer, Ward-28(1)(1), Tower No. 6, Vashi Railway Station, Commercial Complex, Vashi, Navi Mumbai (Appellant) (Respondent) Assessee by : Shri Prakash Jotwani Revenue by : Smt. Usha Gaikwad, Sr.DR Date of Hearing : 04-03-2025 Date of Pronouncement : 07-03-2025 ORDER PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dt.26-11-2024 passed by the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟] and it relates to AY. 2017-18. The only issue urged in this appeal is whether the gift of Rs. 6,11,000/- received by the assessee from her daughter-in-law is assessable to tax u/s. 56(2)(vii) of the Income Tax Act, 1961 („the Act‟). 2. The facts relating to the issue are that the assessee is an individual and it was noticed by the AO that the assessee has deposited 2 ITA No. 286/Mum/2025 a sum of Rs.13.77 lakhs into her bank account during the year under consideration. The AO noticed that the assessee has not filed her return of income for the year under consideration. Hence, the AO reopened the assessment of the year under consideration by issuing a notice u/s. 148 of the Act in order to examine the sources of above said deposits. 2.1. With regard tothe sources of deposits, the assessee explained that she has received gifts from her son and daughter in law. The assessee stated that she has received a gift of Rs. 10,56,000/- from her son, Mr. Rohan Angne and a sum of Rs. 6,11,000/- from her daughter-in-law, Smt. Nazia Angne. Though AO accepted the genuineness of receipt of gifts, yet he took the view that the gift of Rs. 6,11,000/- received by the assessee from her daughter-in-law would be taxable as income of the assessee under the head Income from other sources, since the AO appears to have taken the view that “daughter in law” cannot be considered as a “relative” of the assessee within the meaning of Income tax Act. Accordingly, the AO assessed the same as income of the assessee. The Ld.CIT(A) also confirmed the same. 3. We heard the parties and perused the record. The AO has assessed the impugned gifts received by the assessee from her daughter in law as income of the assessee, apparently u/s 56(2)(vii) of the Act. Under that section, any sum of money received by an individual or Hindu Undivided Family in excess of Rs.50,000/- without consideration is liable to be taxed as income in the hands of that individual/HUF. However, the fourth proviso to sec.56(2)(vii) of the Act provides exemption from taxation, if the said amount is received from any relative. Hence gift received by an individual/HUF from his relatives (as defined under that section) is not taxable u/s.56(2)(vii) of the Act. 3 ITA No. 286/Mum/2025 4. Now the question that arises for adjudication is whether or not the “daughter in law” (Donor) of the assessee falls under the category of “relative” of the assessee, being the mother in law of the donor. We notice that the word “Relative” is defined in the Explanation(e) to sec. 56(2)(vii)of the Act as under:- (e) “relative” means,- (i) in case of an individual- (A) spouse of the individual: (B) brother or sister of the individual; (C) brother or sister of the spouse of the individual; (D) brother or sister of either of the parents of the individual; (E) any lineal ascendant or descendant of the individual; (F) any lineal ascendant or descendant of the spouse of the individual; (G) spouse of the person referred to in items (B) to (F); and (ii) in case of a Hindu undivided family, any member thereof;] 5. The Ld.AR submitted that the son of the assessee would a lineal descendant as per item (E) mentioned above and hence he will fall under the definition of “relative”. Further, item (G) mentioned above included “spouse” of persons referred to in items (B) to (F). The Daughter-in-law, being spouse of son covered in item(E), would be covered by item (G) to Explanation(e) to sec. 56(2)(vii) of the Act. Accordingly, the Ld A.R submitted that the “daughter in law” will fall under the category of “relative” defined in sec.56(2)(vii) of the Act. In this connection, the Ld.AR placed reliance on the decision rendered by 4 ITA No. 286/Mum/2025 the Co-ordinate Bench of the Tribunal in the case of ITO (Exemption) vs. Vaibhav Medical and Education Foundation in ITA No. 5494/Mum/2024, dt. 24-02-2025, wherein the Co-ordinate Bench has decided the issues in the context of section 13 of the Act applicable to charitable trusts/institutions. One of the questions that was examined by the co-ordinate bench was whether a daughter in law is a relative to the settlor of the Trust, who happened to be her mother in law. The Co-ordinate Bench held that the daughter in law is a relative to the settlor of the trust, who was her mother in law. The Ld.AR submitted that term “relative” has also been defined in Explanation-1 to sec. 13 of the Income tax Act and the said list contains identical terms “lineal descendant….. Spouse of lineal descendant…” Accordingly, the Ld.AR submitted that the above said decision supports the case of the assessee. 6. The Ld.DR, however, supported the orders passed by the tax authorities. 7. On hearing rival contentions and upon going through the Act, we find merit in the submissions made by Ld A.R. The son of the assessee is the lineal descendant and he will be a relative as per item (E) and as per item (G), his spouse will also fall under the category of relative. Hence the daughter-in-law would be covered by the definition of “Relative” as per Explanation(e) to sec. 56(2)(vii)of the Act. Accordingly, the gift received by the assessee from her daughter-in-law cannot be treated as income within the meaning of sec.56(2)(vii) of the Act. We notice that an identical view has been expressed by the co-ordinate bench in the case of Vaibhav Medical and Education Foundation (supra) in the context of sec.13 of the Act. 5 ITA No. 286/Mum/2025 8. In view of the foregoing discussions, we set aside the order passed by the Ld.CIT(A) and direct the AO to delete the addition of Rs.6,11,000/- made by the AO u/s.56(2)(vii) of the Act. 9. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 07-03-2025 Sd/- Sd/- [SANDEEP GOSAIN] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 07-03-2025 TNMM Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "