(2012) 77 DTR 235 (Jodhpur) Amit Jain vs. DCIT A.Y.: 2007-08. Dated: 17-09-2012

Facts:

The assessee received a gift of Rs. 5 lakh from his father to enable the assessee to purchase a new flat. The father had received a loan of Rs. 5 lakh in bank account of his proprietary concern from his HUF and on the same day he made gift of Rs. 5 lakh from that bank account. According to the Assessing Officer, the HUF had made payment to the assessee rotating the money through the father. Hence, the Assessing Officer treated the gift of Rs. 5 lakh as gift from HUF of father to the assessee. Since HUF is not covered under the definition of “relative” as given in the Explanation to section 56(2)(vi), the Assessing Officer treated the amount of Rs. 5 lakh received as gift as income from other sources. The learned CIT(A) upheld the stand of the Assessing Officer stating that the so-called loan transaction between HUF to individual has to be ignored and real transaction was in the nature of gift from HUF to the assessee.

Held:

In the given case, the assessee received a gift of Rs. 5 lakh from his father who was assessed to income-tax. The father of the assessee being a donor asserted in the declaration of the gift that he had given an absolute and irrevocable gift out of natural love and affection of Rs. 5 Iakh to his son i.e., the assessee. Also the father was having opening balance in his capital account at Rs. 20.24 lakhs and closing balance of Rs. 20.53 lakhs. Therefore, it is clear that the donor was having the capacity to give the gift which was given to his son under love and affection, there was also an occasion for which gift was received and this contention of the assessee that the gift was received for purchase of a flat at Mumbai, has not been rebutted at any stage. The amount which was paid by way of an account payee cheque by HUF to father had been shown under head “loan and advance” by HUF. Also the gift made by father to son was by way of an account payee cheque.

Therefore, the transaction was a genuine transaction. In the instant case, nothing was brought on record to substantiate that the loan received by the father of the assessee from his HUF was bogus or non-genuine or it was taken with an intention of non-payment. In the present case, the donor was identifiable, his creditworthiness was not doubted and occasion for giving the gift was also there. The donor being the father of the assessee, was a close relative and therefore it was a genuine gift received by the assessee from his father and the same is not chargeable to tax as ‘income from other sources’ u/s. 56(2)(vi).