Expenses incurred by non relative person liable for gift tax

[Vikas Aggarwal]

Dear Sir/Madm,

Please help me in the following issues,

A person incurred foreign travel expense of Rs.5,00,000/- in fy 2006-2007on behalf of our girlfreind, the same amount was not reimbursed. whether the expense incurred by person on behalf of our girlfreind to be treated as gift & liable for income tax U/S 56.

What is the position if the above expense was incurred in FY 2009-2010.

Regards

CA Vikas Aggarwal

+91-8800549233

[Surender Gupta]

The true aspect to be seen is that whether that lucky girlfriend is receiving anything or not. In my view, mere incurring an expenditure on foreign tour the girlfriend would not put the transaction within the mischief of section 56 before or after 2009-10

 

[Vikas Aggarwal]

Very very thanxs for clarification .

 

Regards

Ca Vikas Aggarwal

AI Summary

Gift tax: personal payment for another's foreign travel is not a taxable gift absent transfer or receipt of benefit. Characterisation of expenditures as taxable gifts under section 56 hinges on whether the recipient actually receives a transfer or benefit; mere payment of foreign travel expenses for another person, unreimbursed, without evidence of a transfer, does not automatically constitute a taxable gift.