ITO 25(2)(3), MUMBAI V. SUMEET MOHANLAL SAVLA (HUF), MUMBAI

ITA 227/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92891 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 08-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Gift
• Section: 56(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 227/M/2014 ASSESSMENT YEAR: 2009 - 10 INCOME TAX OFFICER 25(2)(3), ROOM NO.105, 1 ST FLOOR, BLDG. C - 11, PRATYAKSHA KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 4000 51 VS. SHRI SUMEET MOHANLAL SAVLA (HUF), PLOT NO.97, 2 ND FLOOR, SAI DARSHAN, ROAD NO.8, DAULAT NAGAR, BORIVALI (E), MUMBAI 400 066. PAN: AASHS 8072 - G (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : A.R. REVENUE BY : SHRI NEIL PHILIP, D.R. DATE OF HEARING : 15.06. 201 5 DATE OF PRONOUNCEMENT : 15.06. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEA L HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER DATED 19 . 1 0.201 3 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009 - 10 . 2. THE REVENUE HAS AGITATED THE ACTION OF THE LD. CIT(A) IN DELE TING THE ADDITION OF RS.20 LAKH UNDER SECTION 56(2)(VI) RECEIVED AS A GIFT BY THE ASSESSEE HUF FROM T HE GRANDMOTHER OF THE K ARTA OF THE ASSESSEE HUF. 3. THE BRIEF FACTS ARE THAT MR. SUMEET MOHANLAL SAVLA IS THE KARTA OF THE ASSESSEE HUF. THE GRANDMOTH ER OF MR. SUMEET MOHANLAL SAVLA NAMELY MRS. MOGHIBEN SAVLA MADE A GIFT OF RS.20 LAKH TO THE ASSESSEE HUF. THE ASSESSEE CLAIMED IT AS A GIFT EXEMPT FROM TAX. HOWEVER, THE ASSESSING OFFICER ITA NO.227/M/2014 SHRI SUMEET MOHANLAL SAVLA (HUF) 2 (HEREINAFTER REFERRED TO AS THE AO) REJECTED THE CONTENTION OF THE ASSESSEE OBSERVING THAT THE HUF IS AN ENTITY AND NOT AN INDIVIDUAL AND AS SUCH IT HAS NO RELATIVES. HENCE, THE GIFT RECEIVED FROM THE GRANDMOTHER OF THE KARTA OF THE HUF W OULD NOT FALL WITHIN THE AMBIT OF GIFT RECEIVED FROM RELATIVE AND THEREFORE HE BROU GHT TO TAX THE GIFT AMOUNT AND ADDED THE SAME INTO THE INCOME OF THE ASSESSEE HUF UNDER SECTION 56(2)(VI) OF THE ACT. 4. THE LD. CIT(A), HOWEVER, HELD THAT THE ACT OF GRANDMOTHER OF GIVING GIFT TO HUF OF HER GRANDSON WAS ALLOWABLE GIFT BEING KARTA AND G RANDMOTHER BEING RELATI VE AS MENTIONED IN THE LIST GIVEN UNDER SECTION 56(2)(VI) OF THE ACT. SH E, AFTER INTERPRETING THE PROVISIONS OF THE SECTION 56(2)(VI) HAS HELD THAT THE OPERATIVE PART OF THE SECTION I S IN RESPECT OF INDIVIDUAL AS WELL AS HUF AND THA T THE LEGISLATOR HAS GIVEN A CLEAR INTENTION TO INCLUDE BOTH THE STATUS I.E. OF AN INDIVIDUAL AND AS WELL AS HUF WITHIN ITS SCOPE AS WELL AS WITHIN ITS OPERATION. SH E, THEREFORE, HAS HELD THAT THE HU F CAN RECEIVE GIFT FROM THE RELATIVE. SH E HAS HELD THAT THE GRANDMOTHER OF THE KARTA WOULD FALL IN THE CATEGORY OF RELATIVE AS PRESCRIBED UNDER THE RELEVANT PROVISIONS OF THE ACT AND THEREFORE GIFT RECEIVED FROM HER WAS NOT TAXABLE IN THE HANDS OF ASSESSEE HUF. SH E, THEREFORE, HAS DELETED THE ADDITION MADE BY THE AO. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE HAS COME IN APPEAL BEFORE US . 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND HAVE ALSO GONE THROUGH THE RECORDS. IT IS AN ADMITTED FACT THAT THE GIFT HAS BEEN RECEIVED BY THE ASSESSEE HUF FROM THE GRANDMOTHER OF THE KARTA WHO IS A FIRST LINE RELATIVE OF HIM . AS PER THE PROVISIONS, THE AMOUNT RECEIVED FROM ANY RELATIVE IS NOT LIABLE TO TAX UNDER SECTION 56(2)(VI). FURTHER IN THE LIST PRESCRIBED OF RELATIVES , ANY LINEAL ASCENDANT OR DESCENDANT OF ANY INDIVIDUAL IS ALSO INCLUDED. HOWEVER, IN THE OPERATING PART IT HAS BEEN MENTIONED THAT THE GIFT RECEIVED BY AN INDIVIDUAL OR HINDU UNDIVIDED FAMILY ITA NO.227/M/2014 SHRI SUMEET MOHANLAL SAVLA (HUF) 3 (HUF) IN ANY PREVIOUS YEAR FROM ANY PERSON OR PERSONS AS MENTIONED IN THE LIST INCLUDING RELATIVE S IS EXEMPT. THE LD. CIT(A) , AFTER ANALYZING THE PROVISIONS, IN OUR VIEW, HAS RIGHTLY HELD THAT IN THE LIST OF RELATIVES IN RELATION TO THE HUF , THE GRANDMOTHER OF THE KARTA WILL ALSO FALL WITHIN THE PURVIEW OF THE TERM RELATIVE . OUR ABOVE OBSERVATION IS FORTIFIED BY THE SUBSEQUENT SUB SECTION (VII) TO SECTION 56(2) . IT IS APPLICABLE FOR THE GIFTS RECEIVED ON OR AFTER 1 ST DAY OF OCTOBER, 2009. IN SUB CLAUSE (II) TO CLAUSE (E) TO THE EXPLANATION TO PROVISO TO SECTION 56(2)(VII) WHEREIN , WHILE DEFINING THE TERM RELATIVE , IT HAS BEEN MENTIONED AS UNDER: (E) RELATIVE MEANS : - (I ) I N CASE OF INDIVIDUAL . (II) IN CASE OF HINDU UNDIVIDED FAMILY, ANY MEMBER THEREOF. SO WHATEVER THE DOUBT WAS THERE IN THE RELEVANT PROVISION 56(2)(VI) ABOUT THE SCOPE OF THE TERM RELATIVE IN RELATION TO HUF HAS BEEN CLARIFIED BY THE SUBSEQUENT PROVISION SECTION 56(2)(VII) . IT IS NOT THE CASE OF THE REVENUE THAT THE GRANDMOTHER OF THE KARTA HAS NOT BEEN THE MEMBER OF THE HU F. 6. WE , ACCORDINGLY, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ALLOWING THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS THEREFORE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.06. 201 5 . SD/ - SD/ - ( R.C. SHARMA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 15.06.2015 . * KISHORE , SR. P.S. ITA NO.227/M/2014 SHRI SUMEET MOHANLAL SAVLA (HUF) 4 COPY TO: THE APPELLANT THE RES PONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.