Clipped from: https://www.taxscan.in/gift-of-immovable-property-to-sister-not-taxable-itat/274028/
The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that a gift of immovable property to sister is neither taxable as capital gain or under section 56(2)(vii)(b) of the Income Tax Act, 1961.
The assessee, Mr. Sanjay Bansal transferred an immovable property in the name of his sister out of natural love and affection. An amount of Rs. 1,72,80,000/- was fixed by the Dy. Registrar, Noida for stamp duty purpose and assessee did not receive any consideration. The assessee paid stamp duty of Rs. 8,64,000/-.
The Assessing Officer held that the assessee had nothing to explain regarding capital gain arising from sale of that property for consideration of Rs. 1,72,80,000/-. By adopting cost of index 582 during the financial year 2008-09 he calculated net capital gain at Rs. 1,43,10,928/- and completed the assessment ex-parte under section 144 read with section 148 of the Act on total income of Rs. 1,43,10,930/- on 04.11.2016.
However, the CIT(A) observed that the said transfer is taxable under section 56(2)(vii)(b).
A bench of Shri G.S. Pannu, President and Ms. Astha Chandra, Judicial Member observed that “Clause (iii) of section 47 of the Act exempts from the operation of section 45 all transfers under a gift or will or an irrevocable trust. Therefore, the transaction of gift under consideration is not to be regarded as transfer for the purposes of section 45.”
Granting relief to the assessee, the Tribunal held that “By no stretch of imagination the impugned gift of immovable property can be brought to tax in the hands of the recipient donee Smt. Manju Garg under section 56(2)(vii)(b). Firstly, the provision of section 56(2)(vii)(b) came into existence w.e.f. 01.10.2009 and therefore will apply for transaction undertaken on or after such date as explained by the CBDT in Circular No. 5 dated 03.06.2010 reported in (2010) 324 ITR (st) 293. Secondly, proviso under section 56(2)(vii) says that this clause shall not apply to any property received from any relative. The expression ‘relatives’ under Explanation (e) to section 56(2)(vii) means ‘brother or sister of the individual’. Since the impugned transaction of gift of property is between brother and sister it falls outside the ambit of the provision of section 56(2)(vii)(b) of the Act. Therefore, the question of taxability of the impugned gift in the hands of the recipient donee Smt. Manju Garg does not arise at all.”To Read the full text of the Order CLICK HERE
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Sanjay Bansal vs ITO
CITATION: 2023 TAXSCAN (ITAT) 887
Counsel for Appellant: Shri Gourav Mittal & Shri Vineet Goel
Counsel for Respondent: Shri Umesh Takyar & Shri Sumit Kumar Verma
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