2014 (5) TMI 41

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....ute was a result of remedial action to an Audit Objection of Revenue Audit. Therefore, even as per CBDT's Instruction No.3/2011, this is a fit case for further appeal. 5. ...." 3. Facts of the case in brief are that the assessee is a Director of M/s. Meda hospitals Pvt. Ltd. For the assessment year 2006-07, the assessee filed her return of income on 16.10.2006 admitting a total income of Rs.4,11,056. Though the assessment was completed initially under S.143(3) of the Act on 30.12.2008, subsequently, the Assessing Officer noticed that an amount of Rs.30,65,000 which was received by the assessee as a gift from M/s. Raghuveera HUF, was not offered to tax. Accordingly, the Assessing Officer re- opened the assessment under S.147 of the Act, so as to bring to tax the said amount of Rs.30,65,000. During the course of re-assessment proceedings, the assessee relying on the decision o Rajkot Bench of the Tribunal in the case of Vineet Kumar Rajharibhai Bhalodia V/s. ITO (46 SOT 97), submitted that as per the relative definition covered under S.56(2)(v) of the Act is very wide and a small set of relatives of this bigger set of relatives covered are the members of HUF. This small group o....

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.... and unmarried daughters. All these persons fall in the definition of 'relative' provided in the explanation to clause (vi) of S.56 of the Act. The CIT(A) also observed that in the case of Darapaneni Chenna Krishnaiah (supra) referred to by the Assessing Officer, the case was in the context of S.54B of the Act and not in the context of S.56(2) of the Act. The CIT(A) accordingly allowed the assessee's appeal, and deleted the addition made by the Assessing Officer, holding that the gift received from the HUF is nothing but a gift received from group of relatives. 5. Aggrieved by the order of the CIT(A), Revenue is in appeal before us. 6. We heard both sides and perused the material available on record in the light of the decisions cited before us. The only question arising for consideration in this appeal is whether a gift received by the assessee from the HUF is eligible for being considered as a gift received from a 'relative' so as to qualify for exemption from tax. We subscribe to the view taken by the CIT(A) that HUF is nothing but a group of relatives. Merely because it is given legal status as a 'HUF' the individuals do not lose their identity as ....

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....to an amount received from any relative. We hereby thus interpret that the proviso prescribes that the charging of the gifted amount shall not apply to any sum of money received as a gift from a "relative" either by an "individual" or by "HUF". Naturally, the proviso annexed to clause(v) of section 56(2) do not restrict to an "individual" but it governs "individual" as well as a "HUF". With this understanding/interpretation of the main provisions, we have to examine the definition of "relative" given in Explanation annexed to this section. The position shall be absolutely clear that even in case of HUF if a sum of money is received from any relative and that relative is as defined in Explanation, then also fall within the exception as prescribed in this section. 7.2. On our study, we have pondered upon the commentary of Sampath Iyengar "Law of Income Tax" 10th Edition - page 4611 and the comments are reproduced below:- "Explanation to clause (v) The Explanation to clause (v), which defines a relative, is wide enough to include spouse, brother or sister, their spouses, brother or sister of either parents of the individual and lineal ascendant or descendant of both the individual an....

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.... CIT(A) that HUF is as good as 'a BOI' and cannot be termed as "relative" is not acceptable. Rather, an HUF is 'a group of relatives'. Now having found that an HUF is 'a group of relatives', the question now arises as to whether would only the gift given by the individual relative from the HUF be exempt from taxation and would, if a gift collectively given by the 'group of relatives' from the HUF not exempt from taxation." Unquote. 7.4. The Respected Co-ordinate Bench has also examined the intention of the legislature and thereupon made an observation that, quote "11.2. Further, from a plain reading of s. 56(2)(vi) along with the Explanation to that section and on understanding the intention of the legislature from the section, we find that a gift received from "relative", irrespective of whether it is from an individual relative or from a group of relatives is exempt from tax under the provisions of s.56(2) (vi) of the Act as a group of relatives also falls within the Explanation to s.56(2)(vi) of the Act. It is not expressly defined in the Explanation that the word "relative" represents a single person. And it is not always necessary that singular....