Gift in kind not taxable as money: IMD certificates transferred before anti-gift provisions, later maturity proceeds did not change character.

Gift of India Millennium Deposit certificates completed before the relevant anti-gift provisions came into force was not taxable under section 56(2)(v) or section 56(2)(vi) of the Income-tax Act, 1961. The transfer was treated as an effective gift in kind, with ownership passing on execution of the gift deed and delivery of the certificates. The later maturity proceeds did not change the character or timing of the original receipt, and the phrase "any sum of money" was held to cover money only, not property received in kind. The addition was therefore deleted and the Revenue's challenge failed.

---

---

Issues: Whether the receipt of India Millennium Deposit certificates by way of gift, and the subsequent receipt of their maturity proceeds, could be taxed under section 56(2)(v) or section 56(2)(vi) of the Income-tax Act, 1961.

Analysis: The gift of the IMD certificates was found to have been completed in financial year 2002-03, as the gift deed recorded prior delivery of the certificates and the transfer of ownership had already taken place. Section 56(2)(v) applied only to sums of money received on or after 1 September 2004, and section 56(2)(vi) applied only from 1 April 2006. The maturity proceeds received later could not alter the date or character of the original gift. The expression "any sum of money" was held to cover only money and not receipt in kind. Since what was received without consideration was the IMD certificates and not money, the charging provision could not be extended to cover the transaction.

Conclusion: The receipts were not taxable under section 56(2)(v) or section 56(2)(vi) of the Income-tax Act, 1961, and the deletion of the addition was upheld.

Final Conclusion: The assessee's gift transaction remained outside the scope of the relevant anti-gift charging provisions, so the Revenue's challenge failed.

Ratio Decidendi: A charging provision referring only to "any sum of money" cannot be extended to a gift received in kind, and taxation depends on the character and completion of the original transfer, not on the later receipt of maturity proceeds.

---