Thursday 8 November 2012

Gifts from

Income The Income tax Act treat amount received in excess of Rs. 50000 without any consideration as income of the individual or HUF. However the section exempts gifts from a ‘relative’.


In Amit Jain v. DY. CIT (2012) 77DTR (Trib) 235 the father gifted an amount to his son out of amount borrowed from his HUF which the AO took up as in the nature of gift actually from fathers HUF and not one from his father. He thus taxed it as son’s income as HUF is not a relative as per the Explanation to s. 56 (2) (vi). The assessee somehow managed to escape from tax in this case as the bench found genuineness in the gift transaction as it found occasion for gifting plus the son utilised it for purchase of property and above all father met the loan repayment obligation to his HUF. Also the money floated to fathers bank from HUF bank and then got paid to son from father’s account.

The FA 2012 has amended the relative definition only from 1.10.2009 to exempt gifts received by an HUF from its members. This perhaps will be a rescuer in this case in further litigation and can be read as a retrospective amendment even for the period prior to 1.10.2009.

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