2010 (5) TMI 497

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....f sub section (2) of section 56 which includes the relative as brother and sister of the parents of the individual". 2. None appeared on behalf of the assessee. We have heard the learned DR and carefully perused the record. 3. Facts in short are that minor children of the assessee received gifts of Rs. 10 lakhs during the previous year relevant to the assessment year under consideration. A sum of Rs. 5 lakhs each was received by minor sons viz., Master Devesh Pamnani and Master Ayush Pamnani from Shri Rajesh Sawlani who is the blood brother of the assessee's mother Smt. Meena Pamnani. 4. According to the Assessing Officer gifts were not received from 'relatives' within the meaning of section 56(2)(v) of the IT. Act and hence gift a....

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....ed the Order of the Assessing Officer. On a careful perusal of record, we notice that the learned CIT(A) set aside the addition on a wrong premise that the assessee has received the gift, overlooking the fact that the recipients of the gift are his two sons viz., Master Devesh Pamnani and Master Ayush Pamnani. Section 2 (31) defines the expression "person" which includes "individual". Any human being is an individual, whether a male, female, adult or minor. Income earned by a minor can be assessed to tax in the hands of the minor child provided a minor earns income by virtue of manual work done by him or by carrying on any activity involving application of skill, talent or specialized knowledge and experience (See section 64). This proves b....

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....ni     Master Ayush Pamnani     (Donees)     8. In the instant case, minors having received gift, relationship of the donor should be with reference to the minor who is to be treated as "the individual". With reference to the minor the donor is not a brother or sister of either of the parents and he cannot even be considered as a lineal descendant. Learned CIT(A) therefore, erred in law in assuming that income of the minors being assessable to tax in the hands of the father, by applying deeming provision under section 64 of the Act, he should be considered as an 'Individual' for the purpose of connecting the relationship with the donor, overlooking the fact that section speaks of the ....