2020 (1) TMI 656 - HC - Income Tax

Income from other sources u/s 56 - addition on account of so called gift claimed to have been received from the relative - HELD THAT - Tribunal took into consideration the details of the donor, more particularly, the PAN number, capital gain statement, bank statements and the other relevant documents. Upon perusal of the same, the tribunal concurred with the findings recorded by the CIT (A) as regards the genuineness of the transaction. The tribunal, thereafter, looked into the Section 56. The plain reading of the aforesaid provision would indicate that the assessee would fall within the definition of the term relative as explained under Section 56 of the Act. We are convinced with the reasons assigned by the appellate tribunal. We are of the view that none of the questions of law formulated in the memorandum of the tax appeal could be termed as substantial questions of law.

Summary

Issues:
1. Interpretation of Section 56(2)(vi) of the Income Tax Act, 1961 regarding the definition of "relative."
2. Genuineness of the transaction of a gift received by the assessee from a brother-in-law.
3. Applicability of tax exemption under Section 56 of the Act to the gift received.

Analysis:
1. The tax appeal under Section 260A of the Income Tax Act, 1961 was filed by the revenue against the order of the Income Tax Appellate Tribunal. The dispute arose from a search conducted in connection with the Nopany Group, where the assessee received a gift of ?16,00,00,000 from a brother-in-law. The CIT (Appeals) held that the gift qualified as exempt under Section 56(2)(vi) of the Act, as the donor was considered a "relative." The revenue challenged this decision before the Appellate Tribunal, which dismissed the appeal, emphasizing the lack of evidence to prove the transaction's lack of genuineness. The High Court noted that the tribunal considered all relevant documents and concurred with the CIT (Appeals) regarding the genuineness of the transaction.

2. The key issue revolved around the interpretation of the term "relative" under Section 56(2)(vi) of the Act. The provision defines "relative" broadly to include various familial relationships. The CIT (Appeals) and the tribunal found that the brother-in-law of the assessee fell within the definition of "relative," thereby exempting the gift from taxation under Section 56. The High Court upheld this interpretation, stating that the plain reading of the provision supported the conclusion that the assessee's brother-in-law qualified as a "relative."

3. The appellate tribunal's decision to delete the addition of ?5,00,00,000 for the assessment year 2008-09 was based on the finding that the gift received by the assessee from the brother-in-law was genuine and fell within the exemption provided under Section 56 of the Act. The High Court agreed with the tribunal's reasoning and held that the questions of law proposed by the revenue did not qualify as substantial questions warranting interference. Consequently, the High Court dismissed the appeal, affirming the tribunal's decision and upholding the tax exemption on the gift received by the assessee.