9911796707
TMI Blog2012 (4) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act was carried out at the residence of the appellant on 10-08-2006. Subsequently, notice u/s. 153A of the Act was issued in response to which the appellant filed return of income declaring income of ₹ 2,57,787/-. The case was selected for scrutiny and order u/s. 143(3) r.w.s. 153A of the Act was passed on 29-12-2008 determining total income of the appellant at ₹ 1,01,14,614/-. 3. Perusal of the records reveal that the assessee had received gift on 25-09- 2005 from Mrs. Hansa Agarwal, a resident of Sharjah,. The gift was in the form of IMD of face value of USD 1,50,000. The assessee prematurely en-cashed the said IMDs on 05-10-2005 and received the maturity amount of USD 2,22,452 equivalent to INR 98,56,827/-. The Assessing Officer (AO) observed that the assessee utilized the unaccounted income of the group to obtain an in-genuine gift. The AO also contended that gift of IMDs was equivalent to gift of money and he invoked the provisions of s. 56(2)(v) of the Act. He made an addition of ₹ 98.56 lakhs to the total income of the assessee. 3.1. The AO made the additions on the ground that the status of IMDs with the facility of premature encashment availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought within the purview of s.56(2) of the Act. The Assessing Officer has equated the IMDs with bank fixed deposits and concluded that the same is money. I have perused the terms and conditions of the IMDs and the various restrictions placed upon the free transferability of the IMDs. It is true that no restrictions apply to the transferability of money, which is currently accepted as a medium of exchange. Thus, IMDs, which have these restrictions, cannot be treated as money. At the best they can be treated a anything convertible into money. For that matter, any property whether movable or immovable can be converted into money but the same is not treated or akin to money. This is precisely the reason that an amendment has been brought by the Finance Act 2009 for bringing within the purview of tax, the gifts in kind. However, the amendment is prospective in nature and applies to transactions on or after 01-10-2009. I am in complete agreement with the decision of Hon'ble Tribunal in the case of Shri Anuj Agarwal (ITA No.4945/Mum/08) wherein gift of IMDs is held as gift in kind and outside the purview of s. 56(2)(v) of the Act. I therefore, direct the Assessing Officer to delete th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily members had never in the past given any gift to any of the family members of the appellant and that giving of the gift at a time when the family of the appellant had earned huge unaccounted money from construction business cannot be purely co-incidental. The appellant on the other hand submitted that he furnished various documentary evidences to establish the genuineness of the aforesaid gift during the course of assessment proceedings. The appellant submitted that statement of the Donor s husband was recorded by the AC during the course of assessment proceedings. The appellant furnished various evidences during the course of assessment proceedings to establish the genuineness of the aforesaid gift such as (a) Details of gift giving name and address of Donor, etc. (b) Copy of Affidavit of both the Donors sworn at the Consulate General of India, Dubai confirming the fact of gift. (c) Letter issued by State Bank of India relating to Investments of the Donors. It was further submitted that the appellant had received gift of IMDs and that the provisions of s. 56(2)(v) of the Act were not applicable to gift received in kind. The learned Departmental Representative, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ift of IMDs can be equated with gift of money and thus brought within the purview of s. 56(2)(v) of the Act. The AC has equated the IMDs with bank fixed deposits and concluded that the same is money. I have perused the terms and conditions of the IMDs and the various restrictions placed upon the free transferability of the IMDs. It is true that no restrictions apply to the transferability of money, which is currently accepted as a medium of exchange. Thus, IMDs, which have these restrictions, cannot be treated as money. At the best they can be treated as anything convertible into money. For that matter, any property whether movable or immovable can be converted into money but the same is not treated or akin to money. This is precisely the reason that an amendment has been brought by the Finance Act 2009 for bringing within the purview of tax, the gifts in kind. However, the amendment is prospective in nature and applies to transactions on or after 1.10.2009. I am in complete agreement with the decision of Hon ble Tribunal in the case of Shri Anuj Agarwal (ITA no. 4945/Mum/08) wherein gift of IMDs is held as gift in kind and outside the purview of s. 56(2)(v) of the Act. I therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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