Property came to me under a family settlement but the instrument was a gift deed. Is that taxable under s.56(2)?
No, on these facts, but the decision is narrower than it reads. The first appellate authority had held that the gift deed merely culminated a family settlement and so was not a transfer within s.2(47), and the Tribunal declined to disturb that. Its own route was different: it held that the exclusion for property received from a relative applies, the definition of relative for a Hindu undivided family being any member of it, and found the settlement to be between members of a family with antecedent rights in the property. That finding was admitted as settled because the Assessing Officer had never disputed it, not because the Tribunal examined it. An addition of Rs. 3,03,43,440 was deleted.
Decided by the ITAT (ITAT Delhi Bench 'A' - Anubhav Sharma (Judicial Member) and Manish Agarwal (Accountant Member); order delivered by Anubhav Sharma, JM; ITA No. 21 (Del.) of 2025; AY 2018-19) on 2026-02-04, reported as [2026] 188 taxmann.com 588 (Delhi)(Trib.); ITA No. 21 (Del.) of 2025; AY 2018-19. It bears on section 56(2)(vii)(b), section 2(47), section 147, section 148 of the Income Tax Act 1961, in Gifts, Shares & Angel Tax and Capital Gains matters.
A family settlement is routinely executed through gift deeds or release deeds because the registry needs an instrument, and the department then reads the instrument rather than the arrangement. This order says the arrangement governs, and it approaches that in two ways: through s.2(47), by affirming the appellate authority, and through the exclusion for property received from a relative, which is the Tribunal's own route. But note what carried it. The settlement had been pleaded before the Assessing Officer with a detailed account of its background, and he did not dispute it on any factual or legal ground, so the Tribunal admitted those facts as settled and held the Revenue to its own silence. It made no finding that the settlement was genuine, and it never engaged with the Revenue's case that the settlement was concocted. Put the arrangement on the assessment record; the decision is worth much less to a taxpayer who did not.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
Read aloud by your device. Press again to stop.
The assessee returned income of Rs. 3,40,540 for AY 2018-19. The case was reopened under s.147 read with s.144 after the department found she had received immovable property - a flat in Kailash Part II, Delhi - under a registered gift deed executed on 12 June 2017, valued at Rs. 3,03,43,440, from a person outside the definition of relative in s.56(2). In the return filed in response to the s.148 notice she offered that value as income from other sources, and during the reassessment she filed a revised computation withdrawing the offer on the ground of family settlement. The donor is Dr Ravi Aggarwal, son of the late A.D. Aggarwal, who was the real brother of the assessee's father-in-law, the late Sahdev Prasad; the order calls him her brother-in-law although on its own facts he is her husband's first cousin, and he is a doctor settled in the United States for 36 years. The case put was that A.D. Aggarwal's dying wish was to gift a share of his property to his brother's family, that his son carried out that wish, and that A.D. Aggarwal had bought the property with a contribution from Sahdev Prasad, which is how joint Hindu family property was pleaded. The Revenue's case was that the family settlement was a story concocted afterwards to lend validity to a registered gift deed caught by s.56(2). The first appellate authority accepted the explanation and admitted the revised claim; the Revenue appealed.
The Revenue's appeal was dismissed and the addition of Rs. 3,03,43,440 deleted; nothing was restored to the Assessing Officer. The Tribunal reached that on two footings. First, it declined to disturb the first appellate authority's conclusion that the gift transaction merely culminated the family settlement and so does not fall within 'transfer' for s.2(47) (para 10). Second, and this is its own route, it held at para 8 that the proviso to sub-clause (b) of clause (vii) of s.56(2) excludes property received from any relative, and that the definition of relative in Explanation (e)(ii) means, in the case of a Hindu undivided family, any member of it, so that property received without consideration from a member is not deemed income; applying that at para 9 it found the settlement to be between members of a family constituting a Hindu undivided family, by reason of the manner of acquisition of the property and their respective antecedent rights in it, and the gift only a formality to transfer title. The decisive step at para 9 is procedural rather than evidentiary: those factual aspects had been pleaded before the Assessing Officer, who did not dispute them on any factual or legal ground, so they had to be admitted as settled and could not be challenged on appeal. The Tribunal made no independent finding that a family settlement existed.
The s.2(47) limb, which the entry previously gave as the whole of the decision, is the first appellate authority's conclusion which the Tribunal declined to disturb (para 10, first sentence): a family arrangement among members holding antecedent rights redistributes what they already own, so the document that records it does not effect a transfer. The Tribunal's own route is at para 8 and runs through the relative definition - the exclusion for property received from a relative, with Explanation (e)(ii) defining relative, in the case of a Hindu undivided family, as any member of it. Applying that at para 9 it found the settlement to be between members of a family constituting such a family, by reason of the manner of acquisition of the property and their respective antecedent rights and interest in it, the execution of the gift being only a formality to transfer valid title. But the finding is procedural: those aspects had been pleaded before the Assessing Officer, who did not dispute them on any factual or legal ground, so the Tribunal held they must be admitted as settled and could not now be challenged. It never engaged with the Revenue's case that the settlement was concocted. On the admission of a claim made otherwise than by a revised return, the first appellate authority had relied on Goetze (India) Ltd. v. CIT, and the Revenue did not question that exercise of discretion in its grounds, so the point was not in issue (para 7).
Thus, at one end the conclusion of ld. CIT(A) that the transaction of gift only culminated the family settlement which does not fall in the definition of 'transfer' for the purpose of Section 2(47) of the Act needs no interference. On the other hand, the provisions of Section 56(2) of the Act, also do not apply as the gift deed was merely execution of a formal document amongst the family members constituting HUF.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppNo, on these facts, but the decision is narrower than it reads. The first appellate authority had held that the gift deed merely culminated a family settlement and so was not a transfer within s.2(47), and the Tribunal declined to disturb that. Its own route was different: it held that the exclusion for property received from a relative applies, the definition of relative for a Hindu undivided family being any member of it, and found the settlement to be between members of a family with antecedent rights in the property. That finding was admitted as settled because the Assessing Officer had never disputed it, not because the Tribunal examined it. An addition of Rs. 3,03,43,440 was deleted. This was decided by the ITAT (ITAT Delhi Bench 'A' - Anubhav Sharma (Judicial Member) and Manish Agarwal (Accountant Member); order delivered by Anubhav Sharma, JM; ITA No. 21 (Del.) of 2025; AY 2018-19) and bears on section 56(2)(vii)(b), section 2(47), section 147, section 148 of the Income Tax Act 1961. It is reported as [2026] 188 taxmann.com 588 (Delhi)(Trib.); ITA No. 21 (Del.) of 2025; AY 2018-19. A family settlement is routinely executed through gift deeds or release deeds because the registry needs an instrument, and the department then reads the instrument rather than the arrangement. This order says the arrangement governs, and it approaches that in two ways: through s.2(47), by affirming the appellate authority, and through the exclusion for property received from a relative, which is the Tribunal's own route. But note what carried it. The settlement had been pleaded before the Assessing Officer with a detailed account of its background, and he did not dispute it on any factual or legal ground, so the Tribunal admitted those facts as settled and held the Revenue to its own silence. It made no finding that the settlement was genuine, and it never engaged with the Revenue's case that the settlement was concocted. Put the arrangement on the assessment record; the decision is worth much less to a taxpayer who did not. If it applies to you, the first step is this: Put the family arrangement itself on the assessment record - the memorandum, the antecedent rights, the dispute it resolved - and not only the deed that gives effect to it. The Assessing Officer's failure to dispute the pleaded background is what decided this case.
The assessee returned income of Rs. 3,40,540 for AY 2018-19. The case was reopened under s.147 read with s.144 after the department found she had received immovable property - a flat in Kailash Part II, Delhi - under a registered gift deed executed on 12 June 2017, valued at Rs. 3,03,43,440, from a person outside the definition of relative in s.56(2). In the return filed in response to the s.148 notice she offered that value as income from other sources, and during the reassessment she filed a revised computation withdrawing the offer on the ground of family settlement. The donor is Dr Ravi Aggarwal, son of the late A.D. Aggarwal, who was the real brother of the assessee's father-in-law, the late Sahdev Prasad; the order calls him her brother-in-law although on its own facts he is her husband's first cousin, and he is a doctor settled in the United States for 36 years. The case put was that A.D. Aggarwal's dying wish was to gift a share of his property to his brother's family, that his son carried out that wish, and that A.D. Aggarwal had bought the property with a contribution from Sahdev Prasad, which is how joint Hindu family property was pleaded. The Revenue's case was that the family settlement was a story concocted afterwards to lend validity to a registered gift deed caught by s.56(2). The first appellate authority accepted the explanation and admitted the revised claim; the Revenue appealed. The matter was decided on 2026-02-04 by the ITAT (ITAT Delhi Bench 'A' - Anubhav Sharma (Judicial Member) and Manish Agarwal (Accountant Member); order delivered by Anubhav Sharma, JM; ITA No. 21 (Del.) of 2025; AY 2018-19). On those facts the ITAT held as follows. The Revenue's appeal was dismissed and the addition of Rs. 3,03,43,440 deleted; nothing was restored to the Assessing Officer. The Tribunal reached that on two footings. First, it declined to disturb the first appellate authority's conclusion that the gift transaction merely culminated the family settlement and so does not fall within 'transfer' for s.2(47) (para 10). Second, and this is its own route, it held at para 8 that the proviso to sub-clause (b) of clause (vii) of s.56(2) excludes property received from any relative, and that the definition of relative in Explanation (e)(ii) means, in the case of a Hindu undivided family, any member of it, so that property received without consideration from a member is not deemed income; applying that at para 9 it found the settlement to be between members of a family constituting a Hindu undivided family, by reason of the manner of acquisition of the property and their respective antecedent rights in it, and the gift only a formality to transfer title. The decisive step at para 9 is procedural rather than evidentiary: those factual aspects had been pleaded before the Assessing Officer, who did not dispute them on any factual or legal ground, so they had to be admitted as settled and could not be challenged on appeal. The Tribunal made no independent finding that a family settlement existed.
The s.2(47) limb, which the entry previously gave as the whole of the decision, is the first appellate authority's conclusion which the Tribunal declined to disturb (para 10, first sentence): a family arrangement among members holding antecedent rights redistributes what they already own, so the document that records it does not effect a transfer. The Tribunal's own route is at para 8 and runs through the relative definition - the exclusion for property received from a relative, with Explanation (e)(ii) defining relative, in the case of a Hindu undivided family, as any member of it. Applying that at para 9 it found the settlement to be between members of a family constituting such a family, by reason of the manner of acquisition of the property and their respective antecedent rights and interest in it, the execution of the gift being only a formality to transfer valid title. But the finding is procedural: those aspects had been pleaded before the Assessing Officer, who did not dispute them on any factual or legal ground, so the Tribunal held they must be admitted as settled and could not now be challenged. It never engaged with the Revenue's case that the settlement was concocted. On the admission of a claim made otherwise than by a revised return, the first appellate authority had relied on Goetze (India) Ltd. v. CIT, and the Revenue did not question that exercise of discretion in its grounds, so the point was not in issue (para 7). In the words reproduced by the source cited on this page: "Thus, at one end the conclusion of ld. CIT(A) that the transaction of gift only culminated the family settlement which does not fall in the definition of 'transfer' for the purpose of Section 2(47) of the Act needs no interference. On the other hand, the provisions of Section 56(2) of the Act, also do not apply as the gift deed was merely execution of a formal document amongst the family members constituting HUF." The decision followed or applied Goetze (India) Ltd. v. CIT [2006] 157 Taxman 1/284 ITR 323 (SC) - referred to at para 7 on the admission of a claim not made by a revised return; it is the only authority named in the order.
It was decided by the ITAT on 2026-02-04 and is reported as [2026] 188 taxmann.com 588 (Delhi)(Trib.); ITA No. 21 (Del.) of 2025; AY 2018-19. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 56(2)(vii)(b), section 2(47), section 147, section 148, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Revenue's appeal was dismissed and the addition of Rs. 3,03,43,440 deleted; nothing was restored to the Assessing Officer. The Tribunal reached that on two footings. First, it declined to disturb the first appellate authority's conclusion that the gift transaction merely culminated the family settlement and so does not fall within 'transfer' for s.2(47) (para 10). Second, and this is its own route, it held at para 8 that the proviso to sub-clause (b) of clause (vii) of s.56(2) excludes property received from any relative, and that the definition of relative in Explanation (e)(ii) means, in the case of a Hindu undivided family, any member of it, so that property received without consideration from a member is not deemed income; applying that at para 9 it found the settlement to be between members of a family constituting a Hindu undivided family, by reason of the manner of acquisition of the property and their respective antecedent rights in it, and the gift only a formality to transfer title. The decisive step at para 9 is procedural rather than evidentiary: those factual aspects had been pleaded before the Assessing Officer, who did not dispute them on any factual or legal ground, so they had to be admitted as settled and could not be challenged on appeal. The Tribunal made no independent finding that a family settlement existed. It arises in Gifts, Shares & Angel Tax and Capital Gains matters, on section 56(2)(vii)(b), section 2(47), section 147, section 148 of the Income Tax Act 1961, and was decided by ITAT Delhi Bench 'A' - Anubhav Sharma (Judicial Member) and Manish Agarwal (Accountant Member); order delivered by Anubhav Sharma, JM; ITA No. 21 (Del.) of 2025; AY 2018-19. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Say plainly in the reply that the deed is a formality recording an existing entitlement, so that the s.2(47) point is taken before the officer and not for the first time in appeal. Where the settlement is among members of a Hindu undivided family, set out how each member's pre-existing right arises, since that is what takes the arrangement out of the language of gift. Be careful with the second route: this order applies the definition of relative for a Hindu undivided family to an individual recipient, which sits uncomfortably with the Delhi Bench's own earlier decision in Subodh Gupta (HUF) v. Pr. CIT holding that the definitions for an individual and for a family are separate and cannot be merged. Lead with s.2(47). Check the clause: for property received on or after 1 April 2017 the operative provision is s.56(2)(x), and this order proceeds on s.56(2)(vii)(b), which by its own terms could not reach a receipt of 12 June 2017. Do not rely on this where a stranger to the family is a party, or where a member had no antecedent interest in the property being allotted.
Searched for later treatment; none was found. That is not the same as a source affirming it. The library record carried no Indian Kanoon id for this entry; the order is doc 109643909 ('Income Tax Officer, Delhi vs Ratna Aggarwal, Delhi on 4 February, 2026', ITAT Delhi). Run against that id the citator returns nothing. A second probe on the assessee's name returned 69 results, of which the only tax matter is this order itself; the rest are Delhi District Court and Delhi High Court proceedings involving other people of the same name. No s.260A appeal against the family-settlement/s.56(2)(vii)(b) holding is disclosed. Nothing overruling, doubting or distinguishing it was found, and no appeal to a High Court against it is disclosed on the record searched. That finding was checked against a published source, which is linked on this page, on 2026-08-24. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order has been read in full. It is reported at [2026] 188 taxmann.com 588 (Delhi)(Trib.) and was decided on 4 February 2026 - the date on the order, not a publication date - in ITA No. 21 (Del.) of 2025 for AY 2018-19, by Delhi Bench 'A', Anubhav Sharma (Judicial Member), who delivered it, and Manish Agarwal (Accountant Member). The clause difficulty the earlier note left unresolved is answered, and the answer is neither of the two explanations it allowed for: the gift deed was executed on 12 June 2017 and so falls in AY 2018-19 after the earlier clause had ceased to reach receipts, the reports named the clause correctly, and it is the Tribunal that applied a superseded clause. The Tribunal's own route is at para 8, through the exclusion for property received from a relative and the definition of relative for a Hindu undivided family, and the entry previously carried only the s.2(47) limb, which is the first appellate authority's conclusion that the Tribunal declined to disturb. The sentence previously quoted was a reporting site's paraphrase describing the appellate authority and has been replaced with para 10. Two cautions. The decision turns on the Revenue's failure to contest the pleaded facts, not on a finding that the settlement was genuine. And para 8 applies the family limb of the relative definition to an individual recipient, which is in tension with the same Tribunal's decision in Subodh Gupta (HUF) v. Pr. CIT, also in this library - neither order cites the other. There are drafting defects on the face of the order worth knowing before quoting it: para 3 opens by naming the donor as Shri Rajiv Agarwal where he is elsewhere Ravi, the surname is printed as both Agarwal and Aggarwal in the same paragraph, and para 2 prints the amount once as Rs. 33,43,440 and once correctly as Rs. 3,03,43,440. The terms of the family settlement and the date on which it was made are not stated anywhere in the order, so the entry cannot say what the arrangement was, only how it was pleaded. The antecedent right is pleaded rather than found: the case as recorded at para 3 is that A.D. Aggarwal purchased the property with a contribution from the assessee's father-in-law, which is how joint Hindu family property was pleaded, and the Assessing Officer did not dispute it. The Tribunal made no independent finding that a settlement existed and never engaged with the Revenue's case that it was concocted. The order proceeds on a clause that had ceased to reach the receipt, and applies the family limb of the relative definition to an individual recipient without addressing the contrary reasoning of the same Tribunal in Subodh Gupta. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Revenue's appeal was dismissed and the addition of Rs. 3,03,43,440 deleted; nothing was restored to the Assessing Officer. The Tribunal reached that on two footings. First, it declined to disturb the first appellate authority's conclusion that the gift transaction merely culminated the family settlement and so does not fall within 'transfer' for s.2(47) (para 10). Second, and this is its own route, it held at para 8 that the proviso to sub-clause (b) of clause (vii) of s.56(2) excludes property received from any relative, and that the definition of relative in Explanation (e)(ii) means, in the case of a Hindu undivided family, any member of it, so that property received without consideration from a member is not deemed income; applying that at para 9 it found the settlement to be between members of a family constituting a Hindu undivided family, by reason of the manner of acquisition of the property and their respective antecedent rights in it, and the gift only a formality to transfer title. The decisive step at para 9 is procedural rather than evidentiary: those factual aspects had been pleaded before the Assessing Officer, who did not dispute them on any factual or legal ground, so they had to be admitted as settled and could not be challenged on appeal. The Tribunal made no independent finding that a family settlement existed.
TaxSphere, “ITO v Ratna Aggarwal”, https://taxnotice.vittsphere.com/caselaw/case/ito-v-ratna-aggarwal-family-settlement-gift-deed/ (validity last checked 2026-08-24)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
My client, a farmer, bought agricultural land well below circle rate with his land-acquisition compensation. The officer has added the difference under section 56(2)(vii)(b). Is agricultural land within the charge at all?
The DRP has refused my client's alternative plea for the section 49(4) cost step-up because it was not made in the return, citing Goetze. Is that the end of it?
I bought flats slightly below the stamp duty value and the Assessing Officer has added the difference in my hands under section 56(2)(vii)(b). There is no tolerance band in that clause. Can I still claim the section 50C margin?
My step-sister gifted me a flat. Can the department tax it because we are not blood relations?
