Section 56(2)(v)

Section 56(2)(v) — the law in short

What the courts have decided on section 56(2)(v), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Harshadbhai Dahyalal Vaidhya (HUF) v ITO — the relative exclusion is available to an HUF donee, tested against the relationships of its member ITATHelps taxpayerValidity unconfirmed
  A gift was made to my client's HUF by the karta's paternal uncle. The Explanation defines 'relative' only for an individual. Can the department tax it in the HUF's hands?
  The Ahmedabad Bench held not. The charging clause operates on an individual and on an HUF alike, so the proviso exempting a sum received from a relative must govern both; the definition in the Explanation is then applied to test the donor's relationship, and a gift to an HUF from the brother of a parent of its member falls within item (iv) of that definition. The appeal was allowed.
• Vinitkumar Raghavjibhai Bhalodia v ITO — a gift by an HUF to its member is a gift from 'relatives', and is in any event exempt under section 10(2) ITATHelps taxpayerValidity unconfirmed
  My client received Rs 60 lakh from his own HUF. The Assessing Officer says an HUF is not a 'relative' in the Explanation, so it is taxable. What is the answer?
  There are two answers and the Rajkot Bench gave both. First, an HUF is not a body of individuals but 'a group of relatives' — every person who composes it falls within the Explanation's list — so a gift from the HUF to a member is a gift from relatives and is outside the charge. Second and independently, a sum received by a member out of the income of the family is exempt under section 10(2), which requires only that he is a member and that the sum came out of the income of the family.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.