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TMI Blog2016 (11) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... delete the impugned addition. Further, gift in question does not fall within the ambit of Section 56(2)(v) of the Act and same is exempt See case of Nilesh Jhaveri (HUF) [2016 (8) TMI 775 - ITAT MUMBAI ] - Decided in favour of assessee - I.T.A. No.4981/Mum/2014 - - - Dated:- 22-9-2016 - SHRI MAHAVIR SINGH, JM AND SHRI RAJESH KUMAR, AM For The Assessee : Shri Anuj Kishnadwala For The Revenue : Shri B S Bist ORDER PER RAJESH KUMAR, AM This appeal has been filed by assessee against the order of Commissioner of Income-Tax (Appeals)-32, Mumbai, dated 04.07.2014 for A.Y. 2006-07 on following grounds: 1. The learned CIT (A) has erred in law and in facts in confirming the addition of income of ₹ 82,39,653/- being gift of India Millennium Deposit received as unexplained credit under section 68 of the I. T. Act, 1961. 2. It is respectfully submitted that proceeds of India Millennium Deposit cash not be brought to tax in the hands of appellant by invoking provisions of Section 56(2)(v) of the I.T. Act, 1961. 2. The issue raised in this appeal is against the confirming the addition of ₹ 82,39,653/- by ld. CIT(A) by upholding the action o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82,39,653/- to the total income of the assessee as unexplained cash credit u/s 68 of the Act by framing the assessment u/s 143(3) of the Act vide order dated 24.10.2008 by assessing the income at ₹ 82,61,821/-. 4. The ld. AR vehemently argued that the case of the assessee stands covered in its favour by the decision of the Co-ordinate Bench of the Tribunal in the case of Nilesh Jhaveri (HUF) V/s ITO in ITA. No. 4980/Mum/2014(AY:2006-07) dated 04.08.2016 and be allowed accodingly. 5. On the other hands, the ld. DR while strongly opposing the arguments of the ld.AR submitted that the provisions of section 56(2)(v) of the Act were amended retrospectively and therefore any gift received from non relative is taxable under the said section. The ld. DR heavily relied on the orders of authorities below. 6. We have carefully considered the rival contentions and perused the materials placed before us including the orders of authorities below. We find that the assessee has received gifts from the following three persons : S.No. Name of donor IMD Worth in USD Date of transfer of IMD to donor Date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the copies of IMDs certificate clearly reveal that the donor was previous holder of IMDs before passing them to the assessee by way of gift. viii. It was also submitted that the donor Shri Sunil Kumar K Gandhi was having annual income of US$ 15,00,000/- and therefore the gift of US$ 1,00,000/- to a close family friend was not unusual. ix. The creditworthiness of the donor got proved as the donor was holding IMDs for substantial period. Assessee ultimately contended that the genuineness of these gifts of IMD from close family friends need not be doubted. x. To prove the creditworthiness, assessee had submitted net worth certificate of Shri Sunil Kumar Khimchand Gandhi and affidavit confirming the above facts. 2.4 In this background, assessee requested to delete addition made by Assessing Officer. To strengthen its contention, ld. Authorized Representative also relied on the decision of ITAT, Agra Bench (Third Member) in case of Avnish Kumar Singh vs. ITO [2010] 126 ITD 145 (Agra)(TM), wherein third Member observed that in the instant case, following facts were not in dispute: (a) the identity of the donor was not in doubt; (b) gift w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the nature and sources of the credit by way of gift. Therefore, gift could not be said to be credit, the sources of which were not explained satisfactorily. It was a genuine gift and the assessee has proved its sources satisfactory. Therefore, the impugned gift was held genuine and consequently no addition thereof can be made to the income of assessee as income from other sources u/s.68 of the Act held by Third Member. 2.6 In this background, assessee claimed that they had received the gifts totaling to USD1,00,000/- equivalent to approximate ₹ 68,66,378/- from one person, namely, Shri Sunil kumar K Gandhi on 31.08.2004 and the said IMDs were encashed by assessee on 29.12.2005 including interest totaling to ₹ 68,66,378/-. In regard to issue of taxability of gifts the assessee's main stand has been that section 56(2)(v) of the Act mentions the word any sum of money and according to the assessee the gift of IMDs did not fall within the purview any sum of money . Assessee also claimed that in the instant case the gift was received before 01.09.2004, which was much prior to the insertion of section 56(2)(v) of the Act inserted by the Finance Act w.e.f 01.04.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s proved. Entire evidences, which have been referred to above like the declaration of gift, affidavit of donor, direct letter sent to AO, statement on oath both of donor and the donee, proof of source of the draft of ₹ 2,50,000 with further evidence, inter alia, go to prove the claim of the assessee. Therefore, we delete the impugned addition and allow this appeal. 2.8 Nothing contrary was brought to our knowledge. Facts being similar, so, following same reasoning, this issue is decided in favour of assessee. 2.9 Regarding interest, assessee relied on notification u/s.10(15)(i) of the Act which reads as under: Section 10(15)(i) of the Income-tax Act, 1961 Exemptions Income by way of interest, etc., on bonds, securities Specification of bonds, securities, etc. issued by Central government. NOTIFICATION NO. 188/2005 [F.NO. 178/43/2005-IT(A-I)] S.O. 1114(E), DATED 10-8-2005 In exercise of the powers conferred by the sub-clause (i) of clause (15) of section 10 of the Income-tax Act, 1961 (4 of 1961), the central government hereby specifies the India Millennium Deposits, being bank instruments representing foreign currency denominated deposits ..... X X X X Extracts X X X X X X X X Extracts X X X X
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