M.Veluswamy, Udamalpet V. ITO, Pollachi

ITA 1539/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73729 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 10-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 15-07-2013
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: R SIVARAMAN
• Keywords: Gift; Retrospective amendment
• Section: 56

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !' , # $! % BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 1539/MDS/2013 / ASSESSMENT YEAR : 2008-09 M.VELUSWAMY, 133-A, PALANI ROAD, UDUMALPET 642 128 [PAN: AADHV 1785 J] ( '& /APPELLANT) VS INCOME TAX OFFICER, WARD-I(1), POLLACHI ( '('& /RESPONDENT) / APPELLANT BY : SHRI R.SIVARAMAN, ADVOCATE / RESPONDENT BY : SHRI GURU BHASHYAM, JCIT / DATE OF HEARING : 10-02-2014 ! / DATE OF PRONOUNCEMENT : 12-03-2014 $) / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II, COIM BATORE DATED 28-05-2013 RELEVANT TO THE ASSESSMENT YEAR (AY) 200 8-09. 2. THE ASSESSEE HAS FILED ITS RETURN OF INCOME IN T HE STATUS OF HUF FOR THE AY. 2008-09 ON 26-02-2009 DECLARING ITS TOTAL INCOME I.T.A. NO. 1539/MDS/2013 2 AS ` 1,40,560/- AND AGRICULTURAL INCOME AS ` 21,72,720/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTIC E U/S.143(2) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE ASSESSEE. DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAS RECEIVED GIFTS TO THE TUNE OF ` 13,17,300/-. THE GIFTS WERE RECEIVED BY THE ASSESSEE-HUF FROM ITS MEMBERS AND O THER RELATIVES. THE ASSESSING OFFICER HELD THAT SINCE K ARTA AND/OR MEMBERS OF HUF DO NOT FIGURE IN THE LIST OF RELATIV ES OF THE DONEE UNDER EXPLANATION TO PROVISO TO SECTION 56(2)(VI), THE ALLEGED GIFT AMOUNTS ARE LIABLE TO BE TAXED IN THE HANDS OF THE HUF. THE ASSESSING OFFICER MADE ADDITION INTER-ALIA ON ACCOUNT OF GIFT RECEIVED BY THE ASSESSEE IN THE INCOME RETURNED. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 21-12- 2010, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APP EALS). THE CIT(APPEALS) VIDE ORDER DATED 28-05-2013 UPHELD THE FINDINGS OF THE ASSESSING OFFICER ON THE ISSUE AND DISMISSED TH IS GROUND OF APPEAL OF THE ASSESSEE. NOW, THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE ORDER OF C IT(APPEALS). 3. SHRI R.SIVARAMAN, APPEARING ON BEHALF OF THE ASS ESSEE SUBMITTED THAT THE KARTA OF THE ASSESSEE HAD RECEIV ED GIFTS FROM I.T.A. NO. 1539/MDS/2013 3 HIS SON, WIFE, MOTHER, DAUGHTER AND OTHER RELATIVES TO THE TUNE OF ` 13,17,300/- ON HIS 60 TH BIRTH DAY. THE KARTA BLENDED THE GIFTS RECEIVED BY HIM WITH THE HUF ACCOUNT. THE CASH AMO UNTS WERE RECEIVED BY THE KARTA IN HIS INDIVIDUAL BANK ACCOUN T AND THE SAME AMOUNTS WERE TRANSFERRED TO THE HUF BY JOURNAL ENTR Y. THE LD.COUNSEL SUBMITTED THAT GIFTS RECEIVED FROM SON, WIFE, MOTHER AND DAUGHTER AMOUNTED TO ` 12.00 LAKHS AND ALL THESE PERSONS HAVE PAN NUMBER. THE DETAILS OF THE GIFTS ALONG WITH PA N OF THE DONORS WERE FURNISHED TO THE ASSESSING OFFICER AND THE GIF TS WERE RECEIVED THROUGH BANKING CHANNEL, THEREFORE, THERE SHOULD BE NO DISPUTE WITH REGARD TO SOURCE OF GIFTS RECEIVED. AS REGARD S THE ELIGIBILITY OF HUF IN RECEIVING GIFTS, THE LD.COUNSEL SUBMITTED TH AT AS PER AMENDED CLAUSE(VII) OF EXPLANATION TO SECTION 56(2 )(VI), THE HUF FALLS WITHIN THE DEFINITION OF RELATIVE AND IS THUS ENTITLED TO RECEIVE GIFTS FROM ANY PERSON OR PERSONS WITHOUT ANY LIABIL ITY TO PAY TAX ON THE GIFT AMOUNT. 4. ON THE OTHER HAND, SHRI GURU BHASHYAM, APPEARING ON BEHALF OF THE REVENUE SUBMITTED THAT THERE IS NO DI SPUTE WITH REGARD TO SOURCE OF GIFTS BUT CLAUSE (VII) IN EXPLA NATION TO SECTION 56(2)(VI) WHICH INCLUDED HUF AS RELATIVE WAS INSERT ED BY THE I.T.A. NO. 1539/MDS/2013 4 FINANCE ACT ON 2009 W.E.F. 01-10-2009. THE CASE IN HAND RELATES TO THE AY.2008-09, THEREFORE, THE PROVISIONS ON WHI CH THE LD.COUNSEL FOR THE ASSESSEE IS RELYING DO NOT APPLY IN THE AY UNDER CONSIDERATION. THE LD.DR FURTHER SUBMITTED THAT TH E CIT(APPEALS) HAS GIVEN A CATEGORIC FINDING THAT THE GIFT AMOUNTS WERE CREDITED IN THE ACCOUNT OF HUF. THE CONTENTION OF THE ASSESSEE THAT THE AMOUNTS WERE IN FACT RECEIVED BY THE KARTA ON HIS 6 0 TH BIRTHDAY AND THERE AFTER BLENDED WITH THE FUNDS OF HUF IS NOT TE NABLE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE ORDERS OF THE AUTHORITIES BELOW. THE DISPUTE IN AP PEAL IS: WHETHER THE CASH GIFTS ARE RECEIVED BY THE INDIVIDUAL AND T HEREAFTER BELNDED WITH THE FUNDS OF HUF OR THE SAME HAVE BEEN DIRECTL Y RECEIVED BY HUF? IF THE CASH GIFTS ARE DIRECTLY RECEIVED BY HU F, WHETHER THE HUF IS LIABLE TO PAY TAX ON SAME IN THE AY UNDER CO NSIDERATION? 6. AS FAR AS SOURCE OF CASH GIFTS IS CONCERNED, THE RE IS NO DISPUTE. THE GIFTS ARE MADE BY THE MEMBERS OF HUF I.E., SON, DAUGHTER, WIFE AND MOTHER OF THE KARTA. THE GIFTS ARE ALLEGEDLY GIVEN TO THE KARTA IN HIS INDIVIDUAL CAPACITY ON HI S 60 TH BIRTHDAY. AS I.T.A. NO. 1539/MDS/2013 5 PER THE ASSERTIONS OF THE ASSESSEE, THE CASH GIFTS WERE SUBSEQUENTLY BLENDED WITH PROPERTY OF HUF THROUGH J OURNAL ENTRY. THE AUTHORITIES BELOW HAVE GIVEN A SPECIFIC FINDIN G THAT THE CHEQUES WERE DEPOSITED IN THE ACCOUNT OF HUF. THE LD.COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO CONTROVERT TH IS FINDING OF THE CIT(APPEALS). IF THE GIFT CHEQUES WERE DIRECTLY CR EDITED IN THE ACCOUNT OF HUF, THE CONTENTION OF THE ASSESSEE THAT THE GIFTS WERE RECEIVED BY THE KARTA AND SUBSEQUENTLY MERGED WITH THE PROPERTY OF HUF DOES NOT HOLD GROUND. THUS, THE ANSWER TO F IRST QUESTION IS THE CASH GIFTS WERE DIRECTLY RECEIVED BY THE ASSE SSEE FROM ITS MEMBERS. 7. THE LD.COUNSEL FOR THE ASSESSEE HAS SUBMITTED TH AT EVEN IF THE AMOUNTS ARE DIRECTLY DEPOSITED TO THE AMOUNT OF HUF, THE HUF IS ENTITLED TO RECEIVE GIFTS FROM ANY PERSON WITHOU T BEING TAXED IN VIEW OF CLAUSE (VII) OF EXPLANATION TO SECTION 56(2 )(VI) OF THE ACT. THE RELEVANT EXTRACT OF CLAUSE(VI) TO SUB-SECTION(2 ) OF SECTION 56 IS REPRODUCED HEREIN BELOW: [(VI) WHERE ANY SUM OF MONEY, THE AGGREGATE VALUE OF WHICH EXCEEDS FIFTY THOUSAND RUPEES, IS RECEIVED WITHOUT CONSIDER ATION, BY AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, IN ANY PREV IOUS YEAR FROM ANY PERSON OR PERSONS ON OR AFTER THE 1ST DAY OF AP RIL, 2006 39 [BUT I.T.A. NO. 1539/MDS/2013 6 BEFORE THE 1ST DAY OF OCTOBER, 2009], THE WHOLE OF THE AGGREGATE VALUE OF SUCH SUM: PROVIDED THAT THIS CLAUSE SHALL NOT APPLY TO ANY SUM OF MONE Y RECEIVED (A) FROM ANY RELATIVE; OR (B) ON THE OCCASION OF THE MARRIAGE OF THE INDIV IDUAL; 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 EXP LANATION TO CLAUSE (20) OF SECTION 10; OR (F) FROM ANY FUND OR FOUNDATION OR UNIVERSITY OR OT HER EDUCATIONAL INSTITUTION OR HOSPITAL OR OTHER MEDICAL INSTITUTIO N OR ANY TRUST OR INSTITUTION REFERRED TO IN CLAUSE (23C) OF SECTI ON 10; OR (G) FROM ANY TRUST OR INSTITUTION REGISTE RED UNDER SECTION 12AA. EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, 'RELA TIVE' MEANS (I) SPOUSE OF THE INDIVIDUAL; (II) XXXXX (III) XXXXX (IV) XXXXX (V) XXXXX (VI) XXXXX (VII) XXXXX [(VII) WHERE AN INDIVIDUAL OR A HINDU UNDIVIDED FAM ILY RECEIVES, IN ANY PREVIOUS YEAR, FROM ANY PERSON OR PERSONS ON OR AFTER THE 1ST DAY OF OCTOBER, 2009, I.T.A. NO. 1539/MDS/2013 7 (A) XXXXXXXXX (B) XXXXXXXXX THE TERM RELATIVE HAS BEEN DEFINED IN EXPLANATION TO SECTION 56(2), WHICH INCLUDES HINDU UNDIVIDED FAMILY. HOWE VER, HUF HAS BEEN INCLUDED IN THE LIST OF RELATIVE BY THE FINA NCE ACT, 2009 W.E.F. 01-10-2009. THE CASE IN HAND RELATES TO THE AY.200 8-09, THE ASSESSEE CANNOT TAKE THE BENEFIT OF THE AMENDMENT F ROM RETROSPECTIVE EFFECT. THE SECOND QUESTION IS ANSWE RED IN AFFIRMATIVE AND AGAINST THE ASSESSEE. THE ASSESSEE IS LIABLE TO PAY TAX ON THE CASH GIFT RECEIVED DURING THE AY.200 8-09. 8. IN VIEW OF OUR ABOVE OBSERVATIONS, THE FINDINGS OF THE IMPUGNED ORDER ARE UPHELD AND THE APPEAL OF THE ASS ESSEE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 12 TH MARCH, 2014 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 12 TH MARCH, 2014 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR