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TMI Blog2022 (3) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee from his HUF u/s. 56(2)(vii) of the Act. The impugned gift was treated as taxable by the A.O. and the same confirmed by the CIT(A) noting that identical issue had arisen in the case of the assessee for assessment year 2012-13 wherein the addition was confirmed by the Ld. CIT(A). 4. The assessee aggrieved by the said order has raised the following grounds before us: l. That the C.I.T. (Appeals) erred in confirming the taxing of the gift of Rs. 50,00,000 received by the Appellant from the H.U.F. of the Appellant himself u/s 56 r.w.s.68 of the I. T. Act on the ground that the benefit of the second proviso to section 56(2)(vii)(c) of the Act is not available in respect of the gift received by an individual from an H.U.F. . It is submitted that H.U.F. is nothing but a group of individuals and such individuals are the "Relatives' specified under clause (e) of the Explanation to section 56(2)(vii) and, therefore, the said gift cannot be taxed as an income of the Appellant in view of various decisions including that of the Honourable Ahmedabad Tribunal and, therefore, the addition of Rs. 50,00,000 made by the A.O. be directed to be deleted and that the assessment made by the A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the asset of the HUF ,given to him. That therefore it could not be termed to be in the nature of a gift "which were purportedly covered under the purview of Section 56(2)(vii) of the Act". That it was pointed out that the said decision also held that the amount was exempt by virtue of Section 10 of sub-section (2) of the Act also. Ld. Counsel for the assessee's contention is that the reasoning on the basis of which the amount received by the assessee had been held to be taxable by the ITAT in assessment year 2012-13 in its own case, has been dealt with clearly in the decision in the case of Pankil Garg(supra) both with respect to applicability of Section 56(2)(vii) of the Act and Section 10(2) of the Act and has also been dealt with in a plethora of decision by the Co-ordinate Benches of the ITAT right from the first decision in the case of VineetKumar Raghavjibhai Bhalodia vs. ITO reported 140 TTJ Rajkot (58). He therefore contended that the aforesaid decisions in favour of the assessee were applicable and the addition made of the amount so received by the assessee from its HUF be deleted. 7. The submissions made by the Ld. Counsel for the assessee in writing before us, dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find no merit in the instant alternative plea as well since a gift sum which is not allowable under the relevant specific clause cannot be accepted to be an exempt income u/s 10(2) of the Act. We thus treat instant later plea to be mainly technical in nature devoid of merit." It is important to note that the provisions of section 10(2) are the same till today as were interpreted in the above decision and, therefore, the above decision should have been followed, particularly in the absence of any gross mistake being pointed out in this regard. In the case of Shri Pankil Gaig V. PCIT. Karnal bearing ITA XO. T73'CHD/2018 decided on 17-7-2019 by the HonoiraMe Chandigadh Bench , the amount so received by a member/karta from his own H.U.F. has been held to be not exigible to taxation at all for the reason that such a member had a preexisting right in the property of H.U.F. and. therefore, it cannot be said to be a Gift without Consideration by the H.U.F. or by other members. Further, to claim the benefit of section 10(2) of the Act, only two conditions are required to be fulfilled i.e.(i) the Recipient should be a member or co-parcener of H.U.F. and (ii) such sum should have been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided on 2 1 -2-2018 (Asst.Year-2012-13) The perusal of the above decision shows that too much importance has been given to the fact that the term 'H.U.F.' has not been included in the definition of a "Relative' when gift is received by an individual member of H.U.F. and, therefore, the amount so received was held to be exigible to tax ignoring the principles laid down in the aforesaid decisions in favour of the assessee. In the case of Pankil Garg cited Supra, it has been clearly held that looking to the fact that H.U.F. is a collective name of group of individuals who all are 'Specified Relatives' , in the case of a gift received by a member from his own H.U.F., there is no need to include H.U.F. in the definition of "Relative' . However, in case of a gift received by an H.U.F.. the donors may not necessarily be specified 'Relatives' within the definition of "Relative' and. therefore, the Legislature made a retrospective amendment w.e.f. 1-4-2009 by the Finance Act, 2012 whereby in case of gift received by H.U.F., only the members of such H.U.F. were defined as "Specified Relatives'. This amendment was not at all applicable to the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dr. M. Shobha Raghuveera - ITA No. 47/HYD/20 1 3 7. DCIT V. Ateev V. Gala - 20 1 7 Tax Pub (DT) 1 5 1 9(Mum-Trib) 10. It is only in the case of the assessee in Assessment Year 2012-13 that it has been held otherwise. The Ld. D.R. has not pointed out any other decision of the ITAT holding such amounts to be taxable in the hands of the assessee. 11. We have also gone through all the decision as above and we find that interpreting the said section ,it has been noted in the said decisions that the section provides an exception to its applicability ,by way of proviso ,providing therein that sums received from relatives ,as defined in the section, will not qualify for taxability under the section. In all of the above decisions, except in the case of Pankil Garg (supra), the ITAT has consistently held that the gift given by HUF to its members falls within the contours of gift from such specified relatives, and accordingly are excluded from the applicability of the said section. The ITAT has held that the term relative defined in the section is not confined to gift from a single relative but can also include gift from group of relatives, which is the case in the case of HUF's who are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the subsequent amendments in Hindu Succession Act, as per the Hindu Law and Usage, a 'Hindu Joint Family' consists of male members descended lineally from a common male ancestor, together with their mothers, wives or widows and unmarried daughters bound together by the fundamental principle of 'sapindaship' or family relationship which is the essence and distinguishing feature of the institution. It is purely a creation of law and cannot be created by an act of parties except in the case of adoption or a marriage, only when a stranger can become a 'HUF' member. An undivided family is a normal condition of a Hindu society which is ordinarily joint not only in estate but also in food and worship. The cord that knits of the family together is not property but relationship. There is no presumption that a family is joint because it is possessed of joint property. If the persons in the family live together and are joint in food and worship, irrespective of the fact that there is joint property of the family, it constitutes 'HUF'. It is a fluctuating body, its size increases with birth of a member in the family and decreases on death of a member in the family. Females go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l member and the shares of the members are not determined, hence, the 'HUF' is made a taxable entity in itself. As per the provisions of section 10( 2) of the I. T. Act, any sum received by an individual, as a member of 'HUF', which has been paid out of the income of the family or out of the income of the estate of the family is not exigible to taxation. The said exemption has been given on the pattern of a partnership firm to avoid double taxation of the same amount. In the case of partnership firm, when the partnership firm has been assessed to income tax separately, then, the share of profit received by an individual person is not taxable. If a member does not opt to receive his share out of the profits of the firm and opts that the same be added towards his capital in the firm, even then, when the said partner either on dissolution of the firm or otherwise receives back his capital, the said capital is not taxable as an income of the partner, rather, the same is taken as a capital receipt. However, in the case of 'HUF', or to say in the strict sense in case of 'coparcenary', the individual members receive their share on partition. However, during the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e than his share in the property, rather, the same is given to him in the normal course of management of family affairs as is deemed fit or prudent by manager / 'karta' of the 'HUF' and it cannot be said that such an amount received by a member of 'HUF' is the income of the said member. It is received out of the common kitty in which such a member has also a joint interest along with other family members. All the ancestral property belong to the family managed by the head of the family and once income of the family is assessed or subjected to tax as per the provisions of the Income Tax Act, then, the distribution / payment out of the joint family property to any member of the family cannot be said to be income of such a member. The justification of the payment or the quantum of amount paid to any member by the 'Karta' / manager of the 'HUF' is though subject to challenge by other members of the HUF, if found to be not genuine or not for family good, however, a third person cannot question it. Family income flows into a common pool from which resources are drawn to meet needs of all the members which are regulated by the head of the family. In such circumstances, any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members as taxable. 12.1 Considering the consistent decisions of the ITAT in favour of the assessee, more particularly that of the ITAT Chandigarh Bench in the case of Pankil Garg(supra) which has been rendered subsequent to the decision of the ITAT in the case of assessee itself ,having been pronounced on 17/03/2019 while the decision in the case of assessee is dated 21st February 2018, and noting particularly that the ITAT in the said case held the amount given by HUF to its member as not qualifying as gift itself, the decision in the case of assessee in the preceding year, we find, stands clearly distinguished wherein we find that the ITAT has proceeded on the premise that the amount given by the HUF to its members is a gift, which premise has been found to be incorrect in law by the ITAT Chandigarh Bench in the case of Pankil Garg (supra). 13. In view of the above, therefore, we are of the view that the decision of the ITAT Chandigarh Bench in the case of Pankil Garg(supra) would squarely apply to the present case following which we hold that the amount received by the assessee from its HUF of Rs. 50 lakhs is not in the nature of any sum received without consideration/gift an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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