immovable property received without consideration by the assessee, as per family settlement memorandum is taxable under section 56(2)(vii)(b)(i) of the Income Tax Act,1961.
Query.. Does the same Law applicable to WILL & Gift deed in respect to immovable property.
Hello Shaym Lal,
After going through your query concerning the taxation of the immovable property that has been received without any certain considerations, I would like to provide you with an answer that might help you out.
First of all, I would like to let you know that all the immovable properties, received by any individual, without any specific consideration (i.e., as a gift or through family settlement), are termed as “Income from other Sources” and equally taxable as per the fair market value of the property. This has been mentioned in Section 56(2)(vii)(b)(i) of the Income Tax Act.
This situation often differs in the cases involving the properties where it has been received by way of a gift or a will from any relative, the tax is exempted, provided that the receipt of the same must be there, as per the concepts mentioned under Section 56(2)(vii) of the said act.
Here in this case, the definition of “relative” is such a broad concept, inclusive of the parents, siblings, spouses, and all the lineal descendants. This means that if any immovable property is received by way of a gift or will, from a relative, that property is not taxable as per the concept mentioned under Section 56(2)(vii)(b)(i).
Referring to the case of CIT v. S.R. Srinivasa (2017) would be a great idea as this case also tends to tell us about the facts and make things clear that any property received by someone who is not a relative, no matter it has been done by a will or a family settlement, such property may be taxable if it hasn’t been specified as a gift as per the provisions mentioned under the Income Tax Act.
Henceforth, this can be concluded that the taxability of any immovable property depends on the relationship between the transferor and the recipient if it is not be sale deed. The concepts of Section 56(2)(vii) of the said act differently with the cases involving family settlements, wills, and gift deeds.
I hope I was able to make things clear for you and if you need further follow-ups, please feel free to connect with me on LinkedIn. ( www.linkedin.com/in/pankhuri-rastogi-9221b2289 )
Thank You.
