AI Drafter 
TaxTMI 
TaxTMI 
2022 (3) TMI 1243
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the taxability of gift received by the assessee from his HUF u/s. 56(2)(vii) of the Act. The impugned gift was treated as taxable by the A.O. and the same confirmed by the CIT(A) noting that identical issue had arisen in the case of the assessee for assessment year 2012-13 wherein the addition was confirmed by the Ld. CIT(A). 4. The assessee aggrieved by the said order has raised the following grounds before us: l. That the C.I.T. (Appeals) erred in confirming the taxing of the gift of Rs. 50,00,000 received by the Appellant from the H.U.F. of the Appellant himself u/s 56 r.w.s.68 of the I. T. Act on the ground that the benefit of the second proviso to section 56(2)(vii)(c) of the Act is not available in respect of the gift received by an individual from an H.U.F. . It is submitted that H.U.F. is nothing but a group of individuals and such individuals are the "Relatives' specified under clause (e) of the Explanation to section 56(2)(vii) and, therefore, the said gift cannot be taxed as an income of the Appellant in view of various decisions including that of the Honourable Ahmedabad Tribunal and, therefore, the addition of Rs. 50,00,000 made by the A.O. be direct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ure of a gift but being apportionment of his own share in the property of the asset of the HUF ,given to him. That therefore it could not be termed to be in the nature of a gift "which were purportedly covered under the purview of Section 56(2)(vii) of the Act". That it was pointed out that the said decision also held that the amount was exempt by virtue of Section 10 of sub-section (2) of the Act also. Ld. Counsel for the assessee's contention is that the reasoning on the basis of which the amount received by the assessee had been held to be taxable by the ITAT in assessment year 2012-13 in its own case, has been dealt with clearly in the decision in the case of Pankil Garg(supra) both with respect to applicability of Section 56(2)(vii) of the Act and Section 10(2) of the Act and has also been dealt with in a plethora of decision by the Co-ordinate Benches of the ITAT right from the first decision in the case of VineetKumar Raghavjibhai Bhalodia vs. ITO reported 140 TTJ Rajkot (58). He therefore contended that the aforesaid decisions in favour of the assessee were applicable and the addition made of the amount so received by the assessee from its HUF be deleted. 7. The submissi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... refers to assessee's alternative plea that the CIT(A) has not' adjudicated the later ground that the amount in question is exempt u/s 10(2) of the Act. We find no merit in the instant alternative plea as well since a gift sum which is not allowable under the relevant specific clause cannot be accepted to be an exempt income u/s 10(2) of the Act. We thus treat instant later plea to be mainly technical in nature devoid of merit." It is important to note that the provisions of section 10(2) are the same till today as were interpreted in the above decision and, therefore, the above decision should have been followed, particularly in the absence of any gross mistake being pointed out in this regard. In the case of Shri Pankil Gaig V. PCIT. Karnal bearing ITA XO. T73'CHD/2018 decided on 17-7-2019 by the HonoiraMe Chandigadh Bench , the amount so received by a member/karta from his own H.U.F. has been held to be not exigible to taxation at all for the reason that such a member had a preexisting right in the property of H.U.F. and. therefore, it cannot be said to be a Gift without Consideration by the H.U.F. or by other members. Further, to claim the benefit of sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... received from H.U.F. has to be treated as a gift received from "Relatives' and, therefore, not taxable u/s 56(2) of the Act. DECISION AGAINST THE ASSESSEE : 1 . Gyanchand Mulchand Bardia V. I.T.O. - ITA No. 1 072/AHD/20 1 6 Decided on 2 1 -2-2018 (Asst.Year-2012-13) The perusal of the above decision shows that too much importance has been given to the fact that the term 'H.U.F.' has not been included in the definition of a "Relative' when gift is received by an individual member of H.U.F. and, therefore, the amount so received was held to be exigible to tax ignoring the principles laid down in the aforesaid decisions in favour of the assessee. In the case of Pankil Garg cited Supra, it has been clearly held that looking to the fact that H.U.F. is a collective name of group of individuals who all are 'Specified Relatives' , in the case of a gift received by a member from his own H.U.F., there is no need to include H.U.F. in the definition of "Relative' . However, in case of a gift received by an H.U.F.. the donors may not necessarily be specified 'Relatives' within the definition of "Relative' and. therefore, the Le....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2.Harshadbhai Dahyalal Vaidhya - [2013] 155 TTJ (AHD) 71 3.Hemal D. Shaah V. DCIT - ITA No. 2627/MUM/2015 Decided on 8-3-2017 4. Shri Pankil Garg V. PCIT, Karnal - ITA NO. 773/CHD/2018 Decided on 17-7-2019 ( 5.Mr. Biravelli Bhasker V. ITO - ITA NO. 398/HYD/2015 Decided on 17-6-2015 6. ITO V. Dr. M. Shobha Raghuveera - ITA No. 47/HYD/20 1 3 7. DCIT V. Ateev V. Gala - 20 1 7 Tax Pub (DT) 1 5 1 9(Mum-Trib) 10. It is only in the case of the assessee in Assessment Year 2012-13 that it has been held otherwise. The Ld. D.R. has not pointed out any other decision of the ITAT holding such amounts to be taxable in the hands of the assessee. 11. We have also gone through all the decision as above and we find that interpreting the said section ,it has been noted in the said decisions that the section provides an exception to its applicability ,by way of proviso ,providing therein that sums received from relatives ,as defined in the section, will not qualify for taxability under the section. In all of the above decisions, except in the case of Pankil Garg (supra), the ITAT has consistently held that the gift given by HUF to its members fal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....' in the Act is used in the sense in which a 'Hindu Joint Family' or a 'Hindu Undivided Family' ( 'HUF') is understood in the personal laws of Hindus. A Hindu joint or undivided family is not created for any business purposes, rather, it is a normal condition of Hindu society and prevalent throughout India based on the social necessity. Subject to the subsequent amendments in Hindu Succession Act, as per the Hindu Law and Usage, a 'Hindu Joint Family' consists of male members descended lineally from a common male ancestor, together with their mothers, wives or widows and unmarried daughters bound together by the fundamental principle of 'sapindaship' or family relationship which is the essence and distinguishing feature of the institution. It is purely a creation of law and cannot be created by an act of parties except in the case of adoption or a marriage, only when a stranger can become a 'HUF' member. An undivided family is a normal condition of a Hindu society which is ordinarily joint not only in estate but also in food and worship. The cord that knits of the family together is not property but relationship. There is no presumption that a family is joint be....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by 'Karta' or Manager of the 'HUF' who generally is a senior most male member of the family. The powers of the 'Karta' of management to the properties of the 'HUF' are wide and he is not liable to give day to day accounts of the properties to the members of the 'HUF'. Since the property of the 'HUF' does not belong solely to an individual member and the shares of the members are not determined, hence, the 'HUF' is made a taxable entity in itself. As per the provisions of section 10( 2) of the I. T. Act, any sum received by an individual, as a member of 'HUF', which has been paid out of the income of the family or out of the income of the estate of the family is not exigible to taxation. The said exemption has been given on the pattern of a partnership firm to avoid double taxation of the same amount. In the case of partnership firm, when the partnership firm has been assessed to income tax separately, then, the share of profit received by an individual person is not taxable. If a member does not opt to receive his share out of the profits of the firm and opts that the same be added towards his capital in the firm, even then, when the said partne....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in excess of the share can be treated as a gift by the firm or by other partners to that individual which will be exigible to income tax. However, in the case of an 'HUF', since there is not any determined share of any member in the family property, any amount received by a member of a 'HUF' from property of 'HUF' cannot be said to be more than his share in the property, rather, the same is given to him in the normal course of management of family affairs as is deemed fit or prudent by manager / 'karta' of the 'HUF' and it cannot be said that such an amount received by a member of 'HUF' is the income of the said member. It is received out of the common kitty in which such a member has also a joint interest along with other family members. All the ancestral property belong to the family managed by the head of the family and once income of the family is assessed or subjected to tax as per the provisions of the Income Tax Act, then, the distribution / payment out of the joint family property to any member of the family cannot be said to be income of such a member. The justification of the payment or the quantum of amount paid to any member by....