A mother living with her married daughter will be treated as the daughter’s family and the gold belonging to her will not be treated as excess gold for the daughter from the Income Tax point of view, ruled the Visakhapatnam bench of Income Tax Appellate Tribunal (ITAT).
A 1994 instruction of Central Board of Direct Taxes (CBDT) says, in case of a person who is not assessed to wealth tax, gold jewellery and ornaments to the extent of 500 g per married lady, 250 g per unmarried lady and 100 g per male member of the family should not be seized. Anything more than quantity prescribed will be treated as excess and liable for taxation.
The matter involves search and seizure operation by the Income Tax Department at the residence of the husband of the assessee, Vijaywada-based Muppavarapu Kavitha. It was submitted that gold jewellery of 1,628.025 g (over 62 tolas) was found during the search operation. However, keeping in mind CBDT instruction, the Assessing Officer (AO) assessed the income of the assessee including an amount of over ₹7.94 lakh being the value of gold jewellery weighing 284.600 grams (over 28 tolas).
The Authorized Representative (AR) submitted that the gold jewellery belongs to the family members of the assessee. He pleaded that the AO has erred in giving effect to the CBDT instruction to the gold jewellery belonging to the mother of assessee while allowing the gold jewellery belonging to the mother-in-law of the assessee. He further submitted “the mother of the assessee is staying with her daughter, who is the only daughter and hence, the benefit of CBDT Instruction No. 1916 should also be extended to the mother of the assessee.”
Participating in the arguments, representative of the Income Tax Department (DR) supported the order of the AO, but could not controvert the taxing of excess jewellery belonging to the mother of the assessee.
The bench ruled, “AO has erred in disallowing the excess gold of 284.600 grams belonging to the mother of the assessee, who is staying with the assessee being the only daughter, and considered as belonging to the family members of the assessee.” It found merit in the arguments of AR and quashed the order by first appellate authority.