2020 (2) TMI 486 - AT - Income Tax

Inheritance exceeding 50,000 CHF exempt from tax even if not from relative

Smt. Cynthia Ramona Chellappa Versus The Income Tax Officer Non-Corporate Ward – 15 (1), Chennai

Smt. Cynthia Ramona Chellappa Versus The Income Tax Officer Non-Corporate Ward – 15 (1), Chennai - TMI Issues: Interpretation of Section 56(2)(vii) of the Income Tax Act, 1961 regarding taxation of amount received through a Will exceeding 50,000 Swiss Francs.Analysis:1. The appeal was filed against the order of the Commissioner of Income Tax for the Assessment Year 2014-15.2. The Assessee, a Swiss individual married to an Indian, received 50,000 Swiss Francs through a Will executed by her God-Mother.3. The Assessing Officer treated the amount as income from other sources under Section 56(2)(vii) as the God-Mother was not considered a relative.4. The Appellant argued that the Fourth Proviso under Section 56(2)(vii) exempts amounts received through a Will or inheritance.5. The Appellate Tribunal noted that the Fourth Proviso does not restrict a Will to be from a relative and does not provide a restrictive meaning to a Will.6. The Tribunal held that the amount received through the Will is exempted under Clause (c) of the Fourth Proviso to Section 56(2)(vii) and cannot be taxed as income from other sources.7. Consequently, the appeal of the Assessee was allowed, and the amount received through the Will was held to be exempt from taxation.This judgment clarifies that under Section 56(2)(vii) of the Income Tax Act, 1961, amounts received through a Will exceeding 50,000 Swiss Francs are exempt from taxation, even if the benefactor is not a relative. The Tribunal emphasized that the Fourth Proviso does not limit a Will to be from a relative and does not define a Will restrictively. Therefore, in this case, the amount received by the Assessee through the Will of her God-Mother was deemed exempt from taxation under the head of income from other sources.