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

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.