By Jagdish D. Shah
Jagdish T.Punjabi Chartered Accountants
fiogf49gjkf0d
Section 56(2)(vi) – Payment of alimony amount by the ex-husband to his wife is nothing more than a gift and is exempt under the proviso to section 56(2)(vi).
Facts:
The assessee was a legally wedded wife of Mr. Zaun. The said marriage was performed as per the Hindu customary rights. The said marriage was dissolved on 20.06.1978 as per the provisions of Hindu Marriage Act. During the year under consideration the assessee received Rs. 73,60,787 from her ex-husband Mr. Siguar Erich Zaun, a German citizen. The assessee claimed the said amount to have been received as alimony on divorce with her husband and the same was claimed as exempt. The Assessing Officer (AO) however, held the said amount as taxable under the head `Income from Other Sources’.
Aggrieved, the assessee preferred an appeal to the CIT(A) who observed that the divorce granted by the City Civil Court is recognised by German law. Mr. Zuan had applied to German Court for approval of divorce already granted by City Civil Court. German court granted divorce on 17.07.2001. There was no evidence of any claim before the German court regarding alimony at the time of recognition of her divorce with her husband. The order of the German court did not have any reference of payment of alimony. Alimony was paid after a gap of five years. Since on the date of receiving the amount there was no relationship between assessee and Mr. Zaun, he held that the amount received by the assessee from Mr. Zaun was chargeable to tax u/s. 56(2)(vi) of the Act.
Aggrieved, the assessee preferred an appeal to the Tribunal.
Held:
Under the Hindu Law, a wife has a pre-existing right of maintenance and alimony. The said right exists even after divorce from the husband. So far the granting of divorce under the German Law is concerned, the CIT(A) has discussed at length about the German Law relating to marriage and divorces and thereafter has concluded that even under the German Law, the maintenance can be claimed, if any of the spouse is unable to maintain himself/herself. He has further held that under the German Law spouses are free to arrange for the financial consequences only in case of an eventual divorce possibly by way of prenatal agreement. However, the CIT(A) has not discussed, if there is any bar in paying alimony by the husband to his wife in lieu of her maintenance for the whole life.
In the proviso to section 56(2)(vi) any sum received from a relative is exempt from tax. In the definition of relative, the receipt from whom is exempt under the Act, inter alia not only the spouse but the brother and sister of the spouse have also been included. As we have observed above that the maintenance or alimony is paid by the husband to his wife in recognition of her pre-existing right, whether marriage relationship is still continuing or has been dissolved, does not bar the payment of alimony by the ex-husband, to the divorced wife. Under such type of circumstances, in our view, in the definition of spouse, exspouse is also included except where there is an evidence that the payment is not made as a gift or an alimony but for some other consideration or by virtue of some other transaction. In the absence of any such evidence, the payment of alimony amount by the ex-husband to his wife is nothing more than a gift and is exempt under proviso to section 56(2)(vi) of the Act.
The appeal filed by assessee was allowed.
