General Laws
Kashyap
(Querist) 08 November 2009
This query is : Resolved
1)Is there any law called as general laws ?
2) Is there any definition in the same regarding "relative" ?
3) Can the two wives of the same person can be termed as relatives for the computation of tax purposes ? {Mr. A has two wives, Mrs. X and Mrs. Y.
Mrs.X gifts to Mrs. Y (may be cash or immovable property). Is this
taxable in the hands of Mrs. Y ? }
Raj Kumar Makkad
(Expert) 09 November 2009
1. No. There is no such law.
2. The definition of relative has been given in various Acts/Laws in India. The details of which is summarised in the following link:
http://www.childwelfare.net/activities/legislative2003/relatives_paper_2.html
3. Yes. Two wives can be termed as relatives for the computation of relatives Mrs. Y is definitely liable to pay tax on the gift she received from Mrs. X i.e. the second woman of her husband.
Vineet
(Expert) 09 November 2009
Agreed with Makkad Sir, There is nothing called General Law. However, if a partcular phrase or term is not defined in respective Act or Law, refernce is made to General Clauses Act.
For the purpose of income tax, the term "Relative" has been defined in the respective section wherever this term has been used.
For the purpose of section 56 of Income Tax Act, Two wives of an individual do not fall under the definition of Relative. Hence any transaction between them is beyond the perview of exemption allowed in that section. Any sum or property received by one wife from the other wife of individual shall be trated as income from other source in her hand and taxed accordingly.
Kashyap
(Querist) 09 November 2009
Thank u sirs.
pkpworld..
(Expert) 09 November 2009
1)Is there any law called as general laws
- Agreed with Makkadji
2) Is there any definition in the same regarding "relative"
--Agreed with Makkadji
3) Can the two wives of the same person can be termed as relatives for the computation of tax purposes
--
AS per the section 56 Gifts in excess of Rs.50000/- received without any consideration by any person is taxable in his hand. But exceptions to this section are
1. Gifts received from following persons are not taxable:
a) relatives
b)on the occaion of the marriage of the indiviudla,
c)Under a will ,
d)Loacl authority,
e)Trust registered u/s 21AA
etc.
As per Income Tax Act "relative" means:
a) spouse of the individual,
b)brother or sister of the individual,
c)Brother or sister of the spouse of the individual,
d)Brother or sister of either of the parents of the indiviudal,
e)any lineal ascendant or descendant of the individual,
f)Any loineal ascendant or descendant of the spouse of the individual,
g)spouse of the person referred in clauses (b) to (f) aboove.
From above it is clear that if Mrs.X gifts to Mrs. Y, none of the above conditions fulfill. Gift received in kind was not taxable upto September, 09. But after amendment in October, 09 it is taxable in the hand of donee.
Hence, it is taxable in the hand of Mrs.Y.
