25 February 2010
Assessee gifted u/s 56 Rs.Five lacs to wife during A.Y : 2006-07. Wife invested that money into business by becoming partner and got interest on capital. Assessee( Husband ) is not a partner in that firm. A.O made additions in the hand of assessee u/s 64(iv).
Our view is that One section is allowing gift .i.e ; Sec 56 and Sec.64 is clubbing income from the gift u/s 56. It means Sec.56 is indirectly restrained by Sect.64. It is the ambiguity of law. Hence benefit of ambiguity should be given to the assessee as benefit of doubt given under Criminal Proceeding code as principal of natural justice.
Actually gift tax Act was abolished & merged under the Income tax act & the old provision of section 64(iv) has not been deleted after merging of both the acts. Kindly send the direct or indirect judgments on this issue or arguments in favour of the assessee.
25 February 2010
the A.O. is right. he has clubbed the income not the gifted amount. sec. 56 deals with gift and sec. 64 deals with income arise out of the amt. trf. to spouse without adequate consideration.
CAclubindia
