Sec. 68 additions justified as donors confirmed that they arranged gifts on receipt of commission: Madras HC
- Blog|News|Income Tax|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 14 October, 2022
Latest from Taxmann
Case Details: P.R.Ganapathy v. DCIT - [2022] 143 taxmann.com 122 (Madras)
Judiciary and Counsel Details
-
- S. Vaidyanathan & C. Saravanan, JJ.
- Ms N.V. Lakshmi for the Appellant.
- R. Karthik for the Respondent.
Facts of the Case
Assessee was an individual who filed the return of income during the relevant year. Consequent to the search conducted at his residence under Section 132, the assessee filed the return of income indicating certain undisclosed income. The Assessing Officer (AO) found that the assessee received certain gifts from Non-Resident Individuals. The assessee submitted that these gifts were exempted from payment of tax.
However, the reply submitted by the assessee was not accepted by the AO on the ground that evidence available on record proves otherwise. Accordingly, AO held that the NRI gifts were not genuine and made an addition under section 68.
The assessee challenged the order of AO before lower authorities but didn’t succeed. The matter reached the Madras High Court.
High Court Held
The Madras High Court held that even though the assessee had proved the receipt of gifts through the affidavits but there was no appropriate explanation provided by him about his relationship with donors.
The exchange of gifts must be warmhearted and not out of compulsion or demand. On inquiry with the donors, it was also found that the gifts were arranged for the assessee on receipt of the commission.
“Commission” is the money that one gets for selling something but the gift is something that is voluntarily transferred by the donor without any compensation. Gifts are not exchanged out of compulsion or demand.
Thus, it is very obvious that they were not in the nature of gifts. Accordingly, the order of the Tribunal was perfectly valid and was liable to be upheld.
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied
Sign Up
To subscribe to our weekly newsletter please log in/register on Taxmann.com
Latest Books
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
