Step-Siblings Included in 'Relative' Definition, Gift Received Not Taxable u/s 56(2) of Income Tax: ITAT [Read Order]
The ITAT held that a gift received from a step-sister qualifies as exempt under Section 56(2)(vii) of the Income Tax Act, recognizing step-siblings as "relatives" under the law
![Step-Siblings Included in Relative Definition, Gift Received Not Taxable u/s 56(2) of Income Tax: ITAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/Step-Siblings-Siblings-Gift-Received-Not-Taxable-Section-562-of-Income-Tax-Income-Tax-ITAT-Relative-Definition-taxscan.jpg "Step-Siblings Included in Relative Definition, Gift Received Not Taxable u/s 56(2) of Income Tax: ITAT [Read Order]")
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) ruled that a step-sister included in the “relative” definition and gift received from step-siblings is not taxable under Section 56(2) of the Income Tax Act, 1961. Rabin Arup Mukerjea, the assessee, a non-resident Indian, received a residential flat situated at Worli, Mumbai, from Vidhie Mukerjea through a registered gift...
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) ruled that a step-sister included in the “relative” definition and gift received from step-siblings is not taxable under Section 56(2) of the Income Tax Act, 1961.
Rabin Arup Mukerjea, the assessee, a non-resident Indian, received a residential flat situated at Worli, Mumbai, from Vidhie Mukerjea through a registered gift deed dated 21.01.2016. The assessee later applied under Section 197 of the Income Tax Act for a certificate for a lower tax deduction on the proposed property sale. The Assessing Officer (AO) examined the transaction.
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The AO issued a notice under Section 148 to reopen the assessment, stating that the assessee had not filed a return for the assessment year 2016–17 and had not disclosed the property receipt. The AO finalized that the assessee and the donor were not “relatives” as defined in Section 56(2)(vii) because they were step-siblings with no biological or adoptive connection, the gift amounting to Rs. 7.50 crores was taxable as income from other sources.
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The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's decision, stating that the term “relative” should be interpreted strictly and biologically and that step-siblings could not be treated as “brother and sister” unless explicitly specified in the Act.
On appeal before the ITAT, the assessee argued that “step-brother” and “step-sister” are recognized as relatives under various Indian laws, including the Companies Act and RBI regulations, and that the meaning of “brother” and “sister” in Section 56(2)(vii) should be interpreted to include step-siblings by affinity, especially in the absence of a restrictive definition in the Income Tax Act.
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The two-member bench comprising Amit Shukla ( Judicial Member ) and Amarjit Singh (Accountant Member) held that the term “relative” must be interpreted in accordance with ordinary legal and social understanding. Referring to definitions in Black’s Law Dictionary and other legal interpretations, the tribunal observed that relationships by affinity, including step-siblings, could reasonably fall within the scope of “brother and sister.”
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The tribunal ruled that the gift received from a step-sister by the assessee who is her step-brother due to the marriage of their respective parents qualifies for exemption under Section 56(2)(vii) as it falls within the meaning of “relative.” The tribunal deleted the Rs. 7.50 crore addition and the appeal was allowed on merits.
To Read the full text of the Order CLICK HERE
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