Section 56(2)(vii)(b) — the law in short
What the courts have decided on section 56(2)(vii)(b), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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ITO v Ratna Aggarwal
ITATHelps taxpayerValidity unconfirmed
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.
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Rabin Arup Mukerjea v ITO
ITATHelps taxpayerValidity unconfirmed
My step-sister gifted me a flat. Can the department tax it because we are not blood relations?
No. Step-siblings fall within 'relative' for the gift exclusion. Because 'brother and sister of the individual' is not defined in the Act, the common-law meaning applies, and relationships by affinity - including the step-sibling relationship arising from a parent's marriage - come within those words. The registered gift was outside s.56(2)(vii) and the addition of Rs. 7,50,68,525 was deleted. Two limits: the holding is about an individual recipient, and says nothing about the separate definition that applies where the recipient is a Hindu undivided family, and the order relies on no precedent at all.
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.