Tribunal upholds tax on gift of Rs. 10 lakhs, donor not 'relative' under IT Act. The tribunal upheld the Assessing Officer's decision to tax a gift amount of Rs. 10 lakhs in the hands of the assessee, as the donor's relationship with ...
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Tribunal upholds tax on gift of Rs. 10 lakhs, donor not 'relative' under IT Act.
The tribunal upheld the Assessing Officer's decision to tax a gift amount of Rs. 10 lakhs in the hands of the assessee, as the donor's relationship with the minor sons did not qualify as a 'relative' under section 56(2)(v) of the IT Act. Despite evidence of genuineness, the tribunal ruled that the gifts were assessable under section 56, setting aside the CIT(A)'s order in favor of the Revenue's appeal.
Issues: - Whether the addition of Rs. 10 lakhs, received as a gift by two minor sons, falls under the definition of relatives as per section 56(2)(v) of the IT Act.
Analysis: 1. The Revenue contended that the gifts received by the assessee's minor sons were not from 'relatives' as per section 56(2)(v) of the IT Act, leading to the addition of Rs. 10 lakhs to the assessee's total income.
2. The CIT(A) set aside the addition, noting that the donor, who is the maternal uncle of the appellant, falls under the definition of 'relative' as per Explanation (iv) below clause (v) of sub-section (2) of section 56. The CIT(A) emphasized the genuineness of the gifts based on bank statements, gift declaration, and supporting documents.
3. The Revenue appealed, arguing that the minor sons, as individuals under the Income Tax Act, received the gifts, making the relationship between the donor and the donee crucial. Section 56(2)(v) specifies that gifts from a 'relative' are not automatically taxed, with sub-clause (iv) of the Explanation excluding gifts from the brother or sister of either of the parents of the individual.
4. The tribunal analyzed the relationship between the donor and the donees, the minor sons, concluding that the donor's relationship did not fall within the specified categories to be considered a 'relative' as per the Act. The tribunal emphasized that the gifts were assessable under section 56 of the Act, regardless of their genuineness, and upheld the Assessing Officer's decision to tax the amount in the hands of the assessee.
5. Therefore, the tribunal set aside the CIT(A)'s order and upheld the Assessing Officer's decision to tax the gift amount of Rs. 10 lakhs in the hands of the assessee, as per the provisions of section 56 read with section 64 of the IT Act.
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