Bullion has been included in the definition of property so as to be taxable as income, if received as a gift from a non-relative under Sec. 56(2)(vii). It has been so included by the Finance Act, 2010, with effect from June 1, 2010. Does it mean that gift of bullion made before June 1, 2010 would be exempt?
Gift of property other than cash was also made liable to tax, if received from non-relatives in Sec. 56(2)(vii) by the Finance (No.2) Act, 2009 with effect from October 1, 2009.
“Immovable property” was included in clause (b) of Sec. 56(2)(vii), while in clause (c), “any property other than immovable property” was included so that there was no need to define “property” under Explanation (d) in this provision to mean immovable property and list some named items as movable property, namely, “shares and securities, jewellery, archaeological collection, drawings, paintings, sculptures, any work of art”. Since “jewellery” was included and not “bullion”, a doubt was raised in response to which “bullion” was specifically included by the Finance Act, 2010, with effect from June 1, 2010, to remove what was considered to be a lacuna in law giving rise to the reader's doubt. Gift of bullion as between October 1, 2009 and June 1, 2010 would be exempt, since the amendment to include bullion is prospective. Before October 1, 2009, gift in kind was not taxable.
The definition of property for the purpose of this clause was unnecessary. More items such as bullion, which do not fall under this definition, are bound to be noticed in future so that it can be expected that these will be added in future amendments from time to time.
It may, however, be pointed out that gifts in cash or kind from relatives will be immune from liability only if they are genuine gifts. If it were not genuine, it could have always been treated as unexplained income or investment under Sec. 68 or 69 of the Income-tax Act. There is no easy route to avoid liability to tax in respect of gifts which are not genuine by availing what is considered to be a lacuna in law.
