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2022 (8) TMI 388 - HC - Income TaxGift u/s 56(2) (vii) - scope of term relatives u/s 2(41) - Grant of exemption from income tax on gifts received - relatives as defined under Section 2(g) of the Senior Citizens Act - To be treated at par with relative under Section 2(41) and Section 56 of the Income Tax Act, 1961 or not - HELD THAT - Gift of property was brought under the purview of tax with effect from 1st October, 2010 vide the Finance Act, 2010. To avoid misuse of gift of properties, the expression relative was defined in a narrow and restricted manner in the IT Act. In the explanatory notes to the provisions of the Finance Act, 2010 it is stated that the The provisions of Section 56(2) (vii) were introduced as a counter evasion mechanism to prevent laundering of unaccounted income. The provisions were intended to extend the tax net to such transactions in kind. This means that the legislature deliberately left out the gifts received from people other than those specified in the provisions from being exempted from getting taxed. Further, the Senior Citizens Act defines the term relative under the said Act and that too with a stipulation unless the context otherwise requires . This Court is of the opinion that it is clear from the object of both the Acts that the same expression relative is not used in similar context. In fact, the term relative being wholly context-specific, there is no reason to assume that the criteria used in defining it in one context will provide even a useful starting point in another context. The Courts have long rejected any attempt to force them to regard cross-contextual applications of definitions as binding. Consequently, a statutory definition in one context cannot be imported in another Act especially when the two Acts define the same term differently. General approach of the Courts is to ensure that they do not stray into usurping the legislative function - The general approach of the Courts is to ensure that they do not stray into usurping the legislative function. A specific instance of this approach is the rule that a casus omissus is not to be created or supplied, so that a statute may not be extended to meet a case for which provision has clearly and undoubtedly not been made. Real intent is to ensure that gift tax is not levied on Donee. The present petition in no manner promotes the maintenance and welfare of senior citizens. Consequently, the reliance of learned counsel for the petitioner on Sections 3 and 4 of the Senior Citizens Act is untenable in law and the argument that the IT Act makes two classes of Senior Citizens Act is contrary to facts. The order issuing notice in Ms. X vs. The Principal Secretary Health and Family Welfare Department Govt. of NCT of Delhi 2022 (8) TMI 298 - DELHI HIGH COURT also offers no assistance to the petitioner. This Court is of the opinion that Section 23 of the Senior Citizens Act confers additional remedy upon senior citizens in certain circumstances. However, the said Section does not restrict the right of the Donee to challenge the gift/transfer made by a senior citizen in accordance with law. WP dismissed.
Issues involved:
Petition seeking direction to treat a 'relative' under the Maintenance and Welfare of Parents and Senior Citizens Act as par with 'relative' under the Income Tax Act for exemption from income tax on gifts received. Detailed Analysis: Issue 1: Definition of 'relative' under different Acts The petitioner argued that the definition of 'relative' under the Senior Citizens Act includes non-blood related persons as relatives equivalent to children for childless senior citizens, while the Income Tax Act defines 'relative' narrowly as husband, wife, brother, sister, or lineal ascendant or descendant. The petitioner sought exemption for gifts given to relatives under the Senior Citizens Act under the Income Tax Act. Issue 2: Conflict between Acts The petitioner contended that the Senior Citizens Act, being a welfare legislation, should prevail over the Income Tax Act to ensure benefits for childless senior citizens and their defined relatives. The petitioner argued that the exclusion of relatives under the Senior Citizens Act from tax exemption on gifts creates an anomaly and deprives childless senior citizens of benefits. Court's Reasoning and Decision The court noted that the intent and object of the Senior Citizens Act and the Income Tax Act are different. The Income Tax Act's purpose is to prevent misuse of gifts for tax evasion, while the Senior Citizens Act aims at the welfare of parents and senior citizens. The court emphasized that the same term 'relative' is used differently in both Acts, and cross-contextual application of definitions is not binding. The court highlighted the principle that courts should not usurp the legislative function by creating casus omissus or filling gaps in statutes. It cited precedents emphasizing that courts should not read words into a statute unless necessary and that a casus omissus should not be readily inferred. The court concluded that the writ petition's real intent was to avoid gift tax on the donee, not to promote senior citizens' welfare. Relief Granted The court dismissed the writ petition but clarified that the order does not prejudice the donee's right to challenge the gift/transfer made by a senior citizen in accordance with the law. In conclusion, the court upheld the distinction between the definitions of 'relative' in the Senior Citizens Act and the Income Tax Act, emphasizing the legislative intent behind each Act and the limitations on judicial interference in statutory interpretation.
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