Dr. Mrs. Chaitali Santosh Sabnis, Pune V. ITO, Wd.-9(4), Pune

ITA 1164/PUN/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67093 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-06-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 15-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Gift
• Section: 56(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI R.K. PANDA, AM I.T.A. NO. 1164/PN/2011: A.Y. 2006-07 DR (MRS) CHAITALI SANTOSH SABNIS PLOT NO. 5, SACHIN APARTMENT HOSPITAL COLONY, TALEGAON, CHAKAN ROAD, TALEGAON DABHADE PUNE. PAN APSPS 3055 G APPELLANT VS. I.T.O. WARD 9(4) PUNE RESPONDENT APPELLANT BY : SHRI KISHOR PHADKE RESPONDENT BY: SMT. ANN KAPTHUA MA DATE OF HEARING: 11-6-2013 DATE OF PRONOUNCEMENT: 20-6-2013 ORDER PER SHAILENDRA KUMAR YADAV JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (A)-V PUNE DATED 29-07-2011 FOR A. Y. 2006-07 ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A)V PUNE ERRED IN LAW AND ON FA CTS IN MAKING ADDITION OF RS. 7,00,000/- TO THE TAXABLE INCOME RETURNED BY THE APPELLANT. 2. THE LEARNED CIT(A) V PUNE ERRED IN LAW AND ON F ACTS IN NOT APPRECIATING THAT THE GIFTOR FALLS UNDER THE LIST OF RELATIVES IN THE EXPLANATION TO SEC. 56(2)(V). 3. THE LEARNED CIT (A)-V PUNE ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE SAID GIFT WAS MA DE IN CONTEMPLATION OF DEATH BY THE GIFTOR. 2. THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS . 7,00,000/- TO THE ASSESSEES INCOME ON ACCOUNT OF G IFT RECEIVED WHICH WAS TREATED AS INCOME FROM OTHER SOURCES U/S 56(2) OF THE ACT. THE ASSESSING OFFICER NOTICED THAT THE AS SESSEE HAS ITA 1164/PN/2011 CHAITALI SABNIS A.Y. 2006-07 2 CREDITED RS. 7,00,000/- IN HER CAPITAL ACCOUNT ON A CCOUNT OF GIFT RECEIVED FROM MR. & MRS G.K. WAGADARIKAR WHO H AD GIVEN THE UNSECURED LOAN OF RS. 4,00,000/- ON 12-2-2005 A ND RS. 3,00,000/- ON 19-3-2005 TOTALING TO RS. 7,00,000/-. THIS LOAN OF RS. 7,00,000/- WAS CONVERTED INTO GIFT VIDE GIFT DEED DT. 23- 8-2005. THE ASSESSEE ALSO FURNISHED A COPY OF WILL OF MR. & MRS. G.K. WAGADARIKAR DATED 8-9-2005 BEFORE THE ASS ESSING OFFICER, INTER-ALIA MENTIONING THAT THE AMOUNT OF R S. 7,00,000/- WAS ALREADY GIFTED BY THEM TO DR. CHAITA LI S. SABNIS (WIFE OF THEIR NEPHEW). IT WAS EXPLAINED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THIS GIF T WAS EXEMPT U/S 56(2)(V) OF THE ACT, THE DONOR BEING THE ASSESS EES HUSBANDS FATHERS SISTERS HUSBAND. THE ASSESSING OFFICER OBSERVED THAT THE DONOR IN ASSESSEES CASE WAS NOT QUALIFIED UNDER THE TERM RELATIVE AS DEFINED IN THE EXPLANA TION. THEREFORE, THE GIFT WAS NOT EXEMPTED U/S 56(2)(V) O F THE ACT AND WAS ADDED TO THE ASSESSEES INCOME BY THE ASSES SING OFFICER. THE MATTER WAS CARRIED BEFORE THE FIRST AP PELLATE AUTHORITY WHO CONFIRMED THE SAME. 3. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE INITIALLY TOOK LOAN FRO M THE ABOVE TWO PERSONS VIZ. MR. & MRS. G.K. WAGADARIKAR, WHO H AD GIVEN THE UNSECURED LOAN OF RS. 4,00,000/- ON 12-2-2005 A ND RS. 3,00,000/- ON 19-3-2005 TOTALING TO RS. 7,00,000/- WHICH WAS CONVERTED INTO GIFT VIDE GIFT DEED DATED 23-8-2005. SUBSEQUENTLY, THE WILL WAS ALSO EXECUTED ON 8-9-200 5, ITA 1164/PN/2011 CHAITALI SABNIS A.Y. 2006-07 3 INTERALIA SUBMITTED THAT MR. & MRS. G.K. WAGADARIKA R DID NOT HAVE ANY CHILD. THE ASSESSEE IS WIFE OF NEPHEW OF DONOUR COUPLE WAGADARIKARS. THE ASSESSEE WAS LOOKING AFTE R LATE WAGADARIKARS IN THEIR LAST TENURE OF LIFE. AS PER THE WILL DATED 8-9-2005, THE AMOUNT OF RS. 7,00,000/- WAS MENTIONE D TO HAVE BEEN GIFTED BY THE DONORS TO DR. CHAITALI S. S ABNIS WIFE OF THEIR NEPHEW DURING THEIR LIFE TIME OUT OF NATURAL LOVE AND AFFECTION AS SHE HAS BEEN TAKING CARE OF THEM. ACC ORDING TO THE LEARNED AR THE AMOUNT FALLS WITHIN THE PURVIEW OF SEC. 56(2)(V)(D) OF THE ACT. THE LEARNED AUTHORISED REP RESENTATIVE ALSO DREW OUR ATTENTION TO THE FACT THAT THERE IS E XEMPTION U/S 5(1)(XI) OF THE GIFT-TAX ACT WHEREBY THE GIFT IS EX EMPT IN CASE SAME IS GIVEN IN CONTEMPLATION OF DEATH. THE HONB LE MADRAS HIGH COURT IN THE CASE OF C.G.T. VS. LATE C.V.CT. T HERVANAI ACHI (285 ITR 31 (MAD), HELD THAT A PERSON OF 90 YE ARS OLD WILL ALWAYS BE IN THE BELIEF THAT HE/SHE WILL SHORTLY DI E OF ILLNESS CAUSED BY OLD AGE. THE FACT OF 90 YEARS OF AGE ITS ELF LEADS TO CONCLUSION THAT THE DONOR EXPECTS TO DIE SHORTLY AN D SHE DIED A WEEK LATER AFTER MAKING A WILL. IN SUCH A SITUATI ON THE GIFT OF JEWELRY MADE BY THE DONOR WAS HELD TO BE MADE IN CONTEMPLATION OF DEATH AND THE SAME WAS HELD AS EXE MPT U/S 5(1)(XI) OF THE GIFT-TAX ACT. THE AUTHORISED REPRE SENTATIVE SUBMITTED THAT THE WILL AT THE AGE OF ABOUT 90 YEAR S OLD IS ALSO IN CONTEMPLATION OF DEATH. SO EVEN IF THE GIFT WAS GIVEN THE SAME WAS FOLLOWED BY A WILL, AND IT HAS TO BE LOOKE D IN CONTEMPLATION OF DEATH AND THE SAME SHOULD NOT BE T AXED. THE LEARNED DR SUPPOSED THE ORDER OF THE CIT(A). ITA 1164/PN/2011 CHAITALI SABNIS A.Y. 2006-07 4 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT IT IS UNDISPUTED FACT THAT THE ASSESSEES HUSBAND IS THE NEPHEW OF THE ABOVE MENTIONED DONORS . THE ASSESSEE HAS RECEIVED UNSECURED LOAN FROM MR. & MRS . G.K. WAGADARIKAR OF RS. 4,00,000/- ON 12-2-2005 AND RS. 3,00,000/- TOTALING TO RS. 7,00,000/-. THIS LOAN O F RS. 7,00,000/- WAS CONVERTED INTO GIFT VIDE GIFT DEED D ATED 23-8- 2005. SUBSEQUENTLY, THE SAME WAS RE-CONFIRMED BY W AY OF THE WILL DATED 8-9-2005. AS PER THE PROVISIONS OF SEC. 56(2)(V) OF THE ACT, ANY SUM OF MONEY EXCEEDING RS. 25,000/- IS RECEIVED WITHOUT CONSIDERATION BY AN INDIVIDUAL OR A HUF FRO M ANY PERSON ON OR AFTER THE 1 ST DAY OF SEPTEMBER 2004 BUT BEFORE THE 1 ST DAY OF APRIL 2006 THE WHOLE OF SUCH SUM SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD INCOME FRO M OTHER SOURCES PROVIDED THE SAME IS NOT RECEIVED IN CONTE MPLATION OF DEATH OF THE PAYER. IN THIS CASE AS STATED ABOVE, THE SUMS HAVE BEEN RECEIVED AS LOAN WHICH WAS CONVERTED INTO GIFT DATED 23-8-2005 AND THE SAME WAS CLEARLY MENTIONED IN THE WILL DATED 8-9-2005. IT IS NOT IN DISPUTE THAT THE DONO RS WERE OLD AGED PERSONS AT RELEVANT POINT OF TIME BUT MAKING O F WILL DATED 8-9-2005 IN PARA (F) IT HAS BEEN SPECIFICALLY MENTI ONED THAT THE AMOUNT OF RS. 7,00,000/- WAS GIVEN TO THE ASSESSEE. FURTHER, IT WAS MENTIONED IN THE SAID WILL THAT AFTER THE DE ATH THE AMOUNT OF RS. 7,00,000/- WHICH HAS ALREADY BEEN GIF TED BY THE SAID COUPLES TO THE ASSESSEE DURING THEIR LIFE TIME OUT OF LOVE AND AFFECTION AS SHE HAS BEEN TAKING CARE OF IN THE IR ROUTINE LIFE WITH LOT OF DEDICATION AND DEVOTION. ACCORDIN GLY, THE SAME ITA 1164/PN/2011 CHAITALI SABNIS A.Y. 2006-07 5 WAS GIFTED RE-AFFIRMED IN THE WILL AS WELL. NOW, THE QUESTION IS WHETHER THE AMOUNT IN QUESTION WAS GIVEN TO THE ASS ESSEE IN CONTEMPLATION OF DEATH. WE ANSWER THIS QUESTION IN AFFIRMATIVE BECAUSE THE WILL IS NORMALLY MADE IN CONTEMPLATION OF DEATH. MOREOVER, THE DONOR COUPLES WERE OLD AGED PERSONS. THE AMOUNT IN QUESTION IS FINDING PLACE IN THE WILL AS DISCUSSED ABOVE AND ACCORDING TO US THE AMO UNT IN QUESTION IS COVERED BY SEC. 56(2)(V)(D) OF THE ACT BECAUSE MONEY IN QUESTION HAS BEEN GIVEN BY DONOR COUPLES T O NEPHEW S WIFE OUT OF LOVE AND AFFECTION COUPLED WITH CONT EMPLATION OF DEATH SO IT FALLS OUT OF RIGORS OF PROVISIONS OF SE C. 56(2)(V) OF THE ACT. SO, IT IS NOT CHARGEABLE TO INCOME-TAX UNDER T HE HEAD INCOME FROM OTHER SOURCES. ACCORDINGLY, THE SAM E IS HELD TO BE NOT TAXABLE. THE ASSESSING OFFICER IS DIRECTED TO DELETE THE SAME. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE 2013. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 20 TH JUNE 2013 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT(A) V PUNE (4) CIT- V PUNE (5) THE D.R. PUNE BENCH A PUNE BY ORDER SENIOR PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE ITA 1164/PN/2011 CHAITALI SABNIS A.Y. 2006-07 6