The division bench of the ITAT, Mumbai in DCIT v. Ateev V Gala, held that the Gift given by an HUF to its member is not taxable in the hands of the member under the Income Tax Act since “HUF” can be treated as “related person” under the provision of s. 56 of the Act.
In the instant case, the department was aggrieved by the order of the first appellate authority, who deleted the disallowance of Rs. 85 lakhs received by the assessee, an individual as Gift from the HUF. The AO was of the view that the term “group of relatives” defined under section 56(2) of the Income Tax Act would not include an HUF.
The assessee heavily relied upon the decision of the Rajkot Bench of the Tribunal in the case of Veenit Kumar Rahgavjibhai Bhalodia vs ITO, wherein it was held that Gift received from HUF does not attract tax under the IT Act.
Based on the above decision, the division bench of the Tribunal dismissed the departmental appeal and held that the Bench, in the above decision, duly considered section 56 of the Act and on the question of chargeability of tax on a question whether a gift received from relative held that it is exempt from tax under the provision of section 56(2)(vi) of the Income Tax Act on a question whether HUF is a group of relatives, it was held that the gift received from HUF would be exempt from tax under Section 56(20(vi) of the Income Tax Act. “It is noted that in the case before Rajkot Bench of the Tribunal, the amount was received from HUF, where the assessee was also member of HUF. In the light of the aforesaid decision of the Tribunal, we find no infirmity in the conclusion drawn by the Ld. Commissioner of Income Tax (Appeals) as the same decision has been followed therein.”
Read the full text of the order below.
