DEFINATION OF RELATIVE, Income Tax

[puneet virmani]

Whether Gift from real chacha (Uncle) to his nephew(Brother's son)of Rs.1000000/- covered under defination of relative.

Posts / Replies

[swapna srinivasulu]

meaning of relative for the purpose of 56 (2)(vi)/(vii) - spouse of the indl, brothr or sister of the indl,brother or sister of the spouse of the indl , brothr or sister of either of the parents of the indl, any linear ascendent/decendent of the indl/spouse ,spouse of the above people.  so in the given situation gift from uncle to his nephew is taxable  since not covered under the definition of relative

[GOPALJI AGRAWAL]

With due regards to Swapna, My view is different:

Chacha, Tau, Bua, mama, mausi are well covered under the definition of relative as per explanation para (iv) hence gift would not be taxable. Even by virtue of clause (vii), the following are relative under this clause:

Bhabhi, Jija, Salaij, Sadu (husband of sister of spouse), Jeth, Devar, Nand, Jithani, devrani, nandoi, Tai, Phupha, Mausa, Mami and so on.

Hence under this clause, the wings of relative are far fetching and wide.

 

 

[Surender Gupta]

A agree with the views of Gopal Ji, Chacha being brother of father, is within the excluded category of taxable gifts. Therefore, the gift received from real uncle would not be subject to tax u/s 56. 

Definition of relative for the purpose of section 56(2)(vii) is reproduced as under:

(i) spouse of the individual;

(ii) brother or sister of the individual;

(iii) brother or sister of the spouse of the individual;

 (iv) brother or sister of either of the parents of the individual;

(v) any lineal ascendant or descendant of the individual;

 (vi) any lineal ascendant or descendant of the spouse of the individual;

 (vii) spouse of the person referred to in clauses (ii) to (vi).

Any gift received from the relative shall not be taxable.

[DEV KUMAR KOTHARI]

I agree with views expressed by Shri Gopal ji and Shri Surendra Gupta.

However with a caution to the observation -"Any gift received from the relative shall not be taxable" - the caution is that the donee must be able to satisfy his  AO about the nature and source of money received from relative as gift.

In other words  donor merely being relative is not enough, the donor must also have reasonable sources and justifiable circumstances of giving gifts. Otherwise the credit found can be treated as income of donee u/s 68.

For example A brother having modest means  giving  high amount of gifts to his  very rich sister and not giving or giving small  gift to his poor or not so rich sister can raise doubts about genuineness of gifts received by very rich sister. There can be many more such circumstances to raise doubts in mind of AO