S. 56 : Income from other sources-Immovable property received without consideration-Family settlement-Gift deed executed pursuant to family arrangement-Property received from member of HUF-Not taxable as deemed income-Revenue’s appeal dismissed. [S. 2(47), 56(2)(vii)(b)]
The assessee, an individual, had originally filed return declaring income of Rs. 3,40,540/-. The assessment was reopened u/s 147 on the ground that she had received an immovable property valued at Rs. 3,03,43,440/- by way of gift from her brother-in-law, who did not fall within the definition of “relative” under section 56(2). In the return filed in response to notice u/s 148, the assessee declared the value of the property as income from other sources; however, during reassessment proceedings she filed a revised computation contending that the property was received pursuant to a family settlement and hence not taxable. The AO rejected the claim and made addition u/s 56(2)(vii)(b). The CIT(A) accepted the assessee’s contention holding that the gift deed merely formalized a genuine family settlement amongst members constituting an HUF and that the AO had not disputed the factual matrix. On Revenue’s appeal, the Tribunal held that the family settlement was not controverted by the AO either on facts or in law. The execution of the registered gift deed was only a mode to effectuate the family arrangement and did not constitute a “transfer” u/s 2(47). Further, in terms of the proviso to section 56(2)(vii)(b) read with Explanation (e), property received from a member of an HUF would not attract the deeming fiction. Accordingly, the provisions of section 56(2)(vii)(b) were held not applicable and the Revenue’s appeal was dismissed. (ITA No. 21/Del/2025 dt. 04-02-2026 (AY .2018-19)
ITO v. Ratna Aggarwal (Delhi)(Trib.) www.itatonlinee.org.
[Coram : Hon’ble Shri Anubhav Sharma, JM & Hon’ble Shri Manish Agarwal, AM]