S/s 56(2)(v) – Gift of India Millennium Deposit Certificate (IMD) received by an assessee is not taxable u/s. 56(2)(v) since the same is not money.

S/s 56(2)(v) – Gift of India Millennium Deposit Certificate (IMD) received by an assessee is not taxable u/s. 56(2)(v) since the same is not money.

On 25.9.2005, the assessee received, from a nonresident Indian, a gift in the form of IMD of face value of INR94,000. On 5.10.2005, the assessee prematurely encashed these IMDs and received maturity amount of INR139,452 equivalent to Rs. 98,56,827. While assessing the total income of the assessee, the AO stated that the assessee utilised the unaccounted income of the group company to obtain a non-genuine gift. He also held that the IMDs were equivalent to sum of money and attracted provisions of section 56(2) (v). He added the amount received by the assessee u/s.. 56(2)(v) on the ground that the status of IMDs with the facility of premature encashment available was on par with the legal status of a bank fixed deposit. Aggrieved, the assessee filed an appeal to the CIT(A) who held that the gift was a genuine gift and following the ratio of the decision of ITAT in the case of Shri Anuj Agarwal (130 TTJ 49)(Mum) held that the gift of IMDs is gift in kind and outside the purview of section 56(2)(v) of the Act. He deleted the addition made by the AO. Aggrieved, the Revenue preferred an appeal to the Tribunal.

 The Tribunal noted that the facts of the present case before it were identical to the facts before the Tribunal in the case of Haresh N. Mehta (ITA No. 6804/M/2010, AY 2006-07, order dated 31.1.2012). In the case of Haresh N. Mehta, the Tribunal relying on the decision of co-ordinate Bench in the case of ACIT v Anuj Agarwal, 130 TTJ 49(Mum) and also the decision of ITAT Vizag Bench in Sri Sarad Kumar Babulal Jain v ITO (ITA No. 29/Viz/2011) order dated 11.8.2011 dismissed the appeal of the department by confirming the order of CIT(A). Following the decision of the