2017 (3) TMI 1643

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....this appeal are that assessee is individual and engaged in the business of trading and speculative activities in share and securities. The assessee filed return of income for relevant AY on 24.09.2010 declaring total income of Rs. 21,48,080/-. The ITA No.2627/M/201 Shri Hemal D. Shah assessment was completed u/s. 143(3) of the Act on 22.03.2013. The Assessing Officer (AO) while passing the assessment order besides the other addition/disallowance disallowed the claim of bad debt of Rs. 1,00,000/- and treated the gift of Rs. 14,40,000/- received from Pankaj J. Shah HUF and Rs. 44,55,000/- received from Dinesh J. Shah HUF as income under the head "Income from Other Sources" u/s 56(2)(vi) and brought the amount to tax. On appeal before the ld. CIT(A), the disallowance of bad debt and treating the gift as income u/s 56 was sustained. Thus further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us. 3. We have heard the ld. Departmental Representative (DR) for the Revenue and perused the material available on record. Ground No.1 relates to disallowance of loss of Rs. 1,00,000/- related to deposit given for the purpose of business in earlier years.....

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....ued that ground of appeal which relates to gift from Dinesh J Shah HUF is covered in his favour by the decision of Rajkot Tribunal in Vinnet Kumar Raghavhibhai Bhalodia vs ITO (2011) 140 TTJ (Rajkot). Dinesh Shah HUF consist of the father of assessee (Dinesh Shah), mother of assessee(Smt Jyotshna D Shah), Brother of assessee (Gaurav D Shah) and assessee himself. And as per the decision in Vinnet Kumar Raghavhibhai Bhalodia ( supra) the gift received by assessee, a member of HUF, from HUF is gift from relatives and the same is not taxable. The ld AR for assessee further relied on the Hydrabad Tribunal in ITO vs. Dr. M. Shobha Ravhuveera ITA 47/Hyd/13, Harshadbhai Dahyal Vaidya Vs ITO (2013)TTJ (Ahd) 71and Biravelli Basker vs ITO ITA No.398/Hyd/2015. On the other hand the ld DR for the revenue supported the order of the authorities below. 6. We have considered the rival contentions of the parties and have gone through the order of the authorities below. We have noticed that similar issue was considered by the different benches of Tribunal. The Hyderabad Tribunal in ITO vs. Dr. M. Shobha Ravhuveera (supra) while considering the identical ground and relying on the decision of Ahmada....

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....o 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 and his/her spouse and the spouse of any of the persons mentioned herein before. Hence, the definition covers only relatives of the individuals, so that the explanation seems to have overlooked the provision in the main section sparing liability for Hindu Undivided Family (HUF) in respect of gifts from relatives. Even the other exemption as for occasion on the marriage of individuals or inheritance could have not application to the HUF. In the case of HU....

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....bha Ravhuveera, Hyderabad 6 'group of relatives' from the HUF not exempt from taxation." 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 remains singular. Sometimes a singular can mean more than one, as in the case before us. In the case before us the assessee received gift from his HUF. The word "HUF", though sounds singular unit in its form and assessed as such for incometax purposes, finally at the end a "HUF" is made up of "a group of relatives". Unquote. The above observation has buttressed our ....