Income Tax Appellate Tribunal - Mumbai
Rohit V. Chhabria, Mumbai vs Department Of Income Tax on 30 April, 2013
आयकर अपील य अ धकरण "डी " यायपीठ मब
ुं ई म।
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, MUMBAI
ी पी.एम. जगताप, लेखा सद य एवं डॉ. एस.ट .एम. पवलन या यक सद य के सम ।
BEFORE SHRI P.M. JAGTAP, AM AND Dr. S.T.M. PAVALAN, JM
आयकर अपील सं./I.T.A. No. 2477/Mum/2012
( नधारण वष / Assessment Year : 2005-06)
Income Tax Officer - बनाम/
बनाम Mr. Rohit V. Chhabria,
19(3)(2), 1, Shanti Kutir,
Vs.
Room No. 306, Plot No. 454,
3 r d Floor, 24 t h Road,
Piramal Chambers, Bandra (West),
Parel, Lalbaug, Mumbai - 400 050.
Mumbai - 400 012.
थायी ले खा सं . /PAN : AAAPC7859B
(अपीलाथ /Appellant) .. ( यथ / Respondent)
अपीलाथ क ओर से / Appellant by : Shri Rajendra Kumar
यथ क ओर से/ Respondent by : Shri Pankaj Toprani
सन
ु वाई क तार ख / Date of Hearing : 30-04-2013
घोषणा क तार ख /Date of Pronouncement :10-05-2013
आदे श / O R D E R
PER P.M. JAGTAP, A.M. :
This appeal is preferred by the Revenue against the order of the ld. CIT(A) - 30, Mumbai dated 16-01-2012 for A.Y. 2005-06 whereby he allowed the claim of the assessee for exemption u/s 10(2) of the Income Tax Act, 1961 (the Act) in respect of the sum of Rs. 11 lacs received from the HUF of Shri Vasudev Gobindram Chhabria.
2 ITA 2477/Mum/2012
2. The assessee in the present case is an individual who is carrying on the business in the name and style of his proprietary concerns M/s Ecosafe Global and M/s Cebex Security Systems. The return of income for the year under consideration was filed by him on 21-07-2005 declaring total income of Rs. 78,050/-. During the course of assessment proceeding, it was noticed by the A.O. from the capital account of the assessee filed along with the said return of income that the assessee is shown to have received a gift of Rs. 11 lacs from Shri Vasudev Gobindram Chhabria, HUF. He therefore required the assessee to furnish further details in respect of the said gift. In reply, it was submitted by the assessee that the amount of Rs. 11 lacs was received by him for his well being from the HUF wherein his father was karta and he was one of the members and the same was wrongly mentioned as "gift". A confirmation letter of the said HUF was also filed by the assessee along with the bank statement showing the payment of the impugned amount. It was claimed by the assessee that the said amount received by him from the HUF of Shri Vasudev Gobindram Chhabria of which he is one of the members was exempt as per provisions of section 10(2) of the Act. The said claim of the assessee for exemption u/s 10(2) was examined by the A.O. He noted that there were two conditions required to be satisfied by the assessee to claim exemption u/s 10(2) of the Act viz. (i) the sum has to be received by an individual as a member of the HUF and (ii) the amount has been paid out of the income of the HUF. In this regard, it was noted by the A.O. from the bank account of the HUF that equal amount of funds was transferred from the individual bank account of Shri Vasudev Gobindram Chhabria to the account of the HUF just before transferring the said funds from the HUF account to the assessee's account. He held that the amount of Rs. 11 lacs thus was not paid by the HUF out of his income but the same was paid from the funds transferred from the individual account of Shri Vasudev Gobindram Chhabria. He held that one of the conditions stipulated in section 10(2) of the Act thus was not satisfied and the assessee was not entitled to claim exemption under the said 3 ITA 2477/Mum/2012 provision in respect of amount of Rs. 11 lacs received from the HUF. Accordingly the said amount was brought to tax by the A.O. in the hands of the assessee under the head "income from other sources" in the assessment completed u/s 143(3) of the Act vide an order dtd. 26-11-2007.
3. Aggrieved by the order of the A.O., the assessee preferred an appeal before the ld. CIT(A). During the course of appellate proceedings before the ld. CIT(A), a detailed written submission was filed by the assessee to meet the objection raised by the A.O. in the assessment order and to explain how the condition stipulated in section 10(2) of the Act were satisfied by him entitling to him to claim exemption under the said provision in respect of the amount of Rs. 11 lacs received from the HUF. The ld. CIT(A) found merit in the said submission and allowed the claim of the assessee for exemption u/s 10(2) of the Act for the following reasons given in para 5.1 to 5.4 of his impugned order:-
"I have carefully gone through the assessment order and the submissions of the appellant. The A.O. had disallowed the claim of the appellant of having received Rs. 11,00,000/- from the bigger HUF of his father in which he is also one of the member, on the ground that the appellant has not fulfilled the following two conditions as provided u/s 10(2) of the Act:
(1) The amount has to be received by an individual as a member of the HUF; and (2) That the amount has to be paid out of the income of the HUF.
5.1 As regards to the first condition, the learned A.R. of the appellant has submitted that the appellant is a member of the HUF whose karta is his father. The appellant continues to be a member of this HUF despite having his small HUF, as the HUF of the father has not been partitioned. This finding is corroborated from the fact that no order u/s 171 of the Act regarding partition of the father's HUF has been passed by the Income Tax authorities.
5.2 It is a settled principle of Hindu Law that the HUF continues to exist unless partitioned. A person can be a member of more than one HUF. In the present case, the appellant is the member of Vasudeo Gobindram HUF and also the karta of his own HUF.
4 ITA 2477/Mum/2012 5.3 As regards to the second condition, it is submitted by the learned A. R. of the appellant that Vasudeo Gobindram HUF had returned the income of Rs. 15,10,935/83 for assessment year 2005-2006. The said HUF has paid tax amounting to Rs. 4,79,410/- (incl. surcharge) on the said income of Rs. 15,10,935/83. The Return of Income of the said HUF was filed on 21.07.2005. Out of the said income, Vasudeo Gobindram HUF has given a sum of Rs. 11 ,00,00/- to the appellant for his well being. It is also submitted by the learned A.R. of the appellant that Vasudeo Gobindram HUE has not given any money over and above Rs. 11,00,000/- for the well being of any member of the HUF. Thus, it can be seen that Vasudeo Gobindram HUF had sufficient income for the assessment year 2005-2006 from which it could part with Rs. 11,00,000/- to the appellant. Over and above this, the learned A.R. has also submitted that Vasudeo Gobindram HUF from whom the appellant received an amount of Rs. 11,00,000/- had credit balance of Rs. 1,68,60,769.13 in the capital account as on 31.03.2005, built up by way of income From earlier year/s on which the said H.U.F. had already paid the tax. The learned A.O. has not appreciated this fact. In my view, so long as the Income returned by Vasudeo Gobindram HUF is much more than the sum given to the appellant of Rs. 11,00,000/-, it is of no relevance as to Shri Vasudeo Gobindram Chhabria had given back the loan amount to the HUF and then from the HUF's Account, the money was given to the appellant.
5.4 From the above facts, it can be seen that Vasudeo Gobindram HUF has given to the appellant Rs. 11,00,000/- out of the total income of the HUF, which is tax paid".
Aggrieved by the order of the ld. CIT(A), the Revenue has preferred this appeal before the Tribunal.
4. The ld. D.R. supported the order of the A.O. disallowing the claim of the assessee for exemption u/s 10(2) of the Act in respect of the amount of Rs. 11 lacs received by the assessee from the HUF. He contended that the said amount as clearly established by the A.O. from the relevant statement of the HUF that the amount, was not received by the assessee from the income of the said HUF but was paid from the funds transferred from the individual bank account of Shri Vasudev Gobindram Chhabria. He contended that there was a direct nexus between the amount transferred from the individual account of Shri Vasudev Gobindram Chhabria to HUF account and the 5 ITA 2477/Mum/2012 payment made by the said HUF to the assessee and this direct nexus was overlooked by the ld. CIT(A) while allowing the claim of the assessee for exemption u/s 10(2) of the Act.
5. The ld. Counsel for the assessee, on the other hand, submitted that the assessee being the member of the HUF and having received the amount of Rs. 11 lacs from the income of the said HUF, is entitled for exemption u/s 10(2) of the Act as rightly held by the ld. CIT(A) as both the conditions stipulated in the said provision were satisfied. He contended that sufficient income of its own was available with the HUF at the relevant time to give the amount of Rs. 11 lacs to the assessee and the said income was earned by the said HUF in the year under consideration itself as found by the ld. CIT(A) on verification of the relevant record. He contended that even the amount received by the member from the past income of HUF is entitled to exemption u/s 10(2) of the Act as held by the Rajkot Bench of ITAT in the case of Vineetkumar Raghavjibhai Bhalodia vs. ITO reported in (2011) 46 SOT 97. He submitted that even the gift received by the member of HUF from the HUF is not taxable u/s 56(2)(vi) of the Act as held by the Tribunal in the said case.
6. We have considered the rival submissions and also perused the relevant material available on record. In order to claim the exemption u/s 10(2) of the Act, the assessee has to satisfy two conditions. Firstly first he has to be an individual who is the member of that HUF and secondly the said amount has to be paid out of the income of the HUF. In the present case, the assessee is an individual who is the member of the HUF from whom the amount in question was received by him and there is no dispute about the same. The dispute is about the fulfillment of the second condition. The objection of the A.O. in this regard is that equal amount of funds having been transferred from the individual account of Shri Vasudev Gobindram Chhabria to the account of HUF just before the amount in question was paid by the HUF to the assessee, the said amount was not paid by the HUF out of its own 6 ITA 2477/Mum/2012 income. However, as found by the ld. CIT(A), the income returned by the HUF for the year under consideration was Rs. 15,10,935/- out of which the amount of Rs. 11 lacs in question was given by the said HUF to the assessee. As further found by the ld. CIT(A), the HUF had sufficient accumulated credit balance in the bank account before the transfer of funds from the individual account of Shri Vasudev Gobindram Chhabria which by itself was sufficient to give the amount of Rs. 11 lacs in question to the assessee. In the case of Vineetkumar Raghavjibhai Bhalodia (supra) cited by the ld. Counsel for the assessee, it was held by the co-ordinate Bench of the Tribunal that exemption u/s 10(2) of the Act is available not only to the extent of income of the HUF of the relevant year, but the same is available even in respect of amount paid from the past income of the HUF. It was also held by the Tribunal that the gift received by a member of HUF, from the HUF is a gift received from the relatives and it is therefore not taxable even u/s 56(2)(vi) of the Act. Keeping in view the said decision of the co-ordinate Bench and having regard to the facts of the case, we are of the view that the assessee is entitled to exemption u/s 10(2) of the Act in respect of the amount of Rs. 11 lacs received from the HUF and the ld. CIT(A) is fully justified in allowing the claim of the assessee for the said exemption. In that view of the matter, we uphold the impugned order of the ld. CIT(A) and dismiss this appeal filed by the Revenue.
7. In the result, appeal filed by the Revenue is dismissed.
प रणामतः राज व क अपील खा रज क जाती है ।
Order pronounced in the open court on 10-05-2013. .
आदे श क घोषणा खल ु े यायालय म दनांकः 10-05-2013 को क गई ।
Sd/- sd/-
(Dr. S.T.M. PAVALAN) (P.M. JAGTAP)
या यक सद य JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
मुंबई Mumbai; दनांक Dated 10-05-2013
7 ITA 2477/Mum/2012
व. न.स./ RK , Sr. PS
आदे श क त ल प अ े षत/Copy
षत of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु (अपील) / The CIT(A)--30, Mumbai.
4. आयकर आयु / CIT - City - 19, Mumbai
5. वभागीय त न ध, आयकर अपील य अ धकरण, मंब
ु ई / DR, ITAT, Mumbai D Bench
6. गाड फाईल / Guard file.
ु ार/ BY ORDER,
आदे शानस
स या पत त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.
उप/ Registrar)
आयकर अपील य अ धकरण,
धकरण, मुंबई / ITAT, Mumbai