The AO passed the order accepted the contention of the assessee that gift received from HUF is not taxable . He relied on the decision in Vieneet Kumar Raghavjbhai Bholodia v. ITO (ITA no 583/ Rjk/ 2007dt 17-06 -2015 (SMC) [2011] 11 taxmann.com 384/ 12 ITR(T) 616 / 46 SOT 97 140 TTJ 58 (Rajkot) (Trib) and Mr Biravelli Bhaskar v ITO ( ITA No. 398/Hyd/2015 dt 17 -06-2015 (AY 2008 -09) (2015) 44 CCH 234( Hyd) (Trb) where in the Tribunal held that HUF being a group of relatives hence the gift by the HUF to an individual is exempt u/s 56(2) (vii) of the Act . PCIT revised the order under S 263 of the Act holding that gift received from HUF is assessable as income from other sources .On appeal the Tribunal held that the decisions of the Tribunal is binding on the AO and hence, the decision of the AO cannot be held to be erroneous. Tribunal also held that in case of an ‘HUF’, since there is not any determined share of any member in the family property any amount received by a member of a ‘HUF’ from property of HUF cannot be said to be his share in the property, rather, the same is given to the member by the karta in the normal course of management of family affairs. All the ancestral property belong to the family and once the income of the family is assessed or subjected to tax as per the Act, then, the distribution/ payment our of the joint family property to any member cannot be said to be income of such a member. Thus, the amount received by the assessee from the ‘HUF’, being its member, is a capital receipt in his hands and is not exigible to income tax. (ITA No. 773/ CHD/ 2019 dt. 17-07-2019)
Pankil Garg v. PCIT ( 2019) 181 DTR 305 (Chd.)(Trib.)
S. 263 : Commissioner – Revision of orders prejudicial to revenue – Income from other sources- Order passed by the AO following the decision of Appellate Tribunal cannot be said to be erroneous – Amount received by a member of HUF from HUF is not taxable as income from other sources -Amount received is not a gift without consideration because the member has a pre-existing right in the property hence capital receipt – Revision is not valid. [S. 4, 10(2) 56(2)(vii)]