Question ID : 44426

Taxability U/s.56(2) of the Income Tax Act

An Assessee had executed a Settlement Deed infavour of his Foster Daughter. The assessee had no issues. No Legal adoption was made for this Daughter. The Settlement was relating to immovable property being an Apartment. The Registering Authority while Registering the Settlement Deed had collected prevailing Stamp Duty as applicable for Regular Sale Deed instead applicable to Gift Deed. The Donee is the Daughter of Donor’s Wife’s Brother (Brother in law’s daughter) The Donar had retained Life estate to possess and enjoy the said property and enjoy all income derived from the property during the term of his Nature Life. As per Section 56(2) the List of Relatives mentioned Wife’s Brother only. No specific relevance to Wife’s Brother’s Daughter. More over the Registering authority had collected the Stamp Duty on the property value. The Donee’s Name had Reflected in Encumbrance Certificate of the Property. Please Clarify: 1) Whether the settlement made was exempt under U/s.56(2) of the Income Tax Act. Since Value exceeded Rs.50,000/- 2) Whether Lineal Ascendant or descendant of the Individual includes Wife’s Brother’s daughter 3) While Registering the Gift Deed the Registering Authority had collected Regular Stamp Duty as Applicable instead as applicable to Gift Deed. A.S. RAMAN

Answer ID : 83923

1) Please read the section to see whether it is exempted from IT or not 2) Meaning of relative is in simple language 3) you should have contested it at that stage. now too late

Answer ID : 83924

1) Please read the section to see whether it is exempted from IT or not 2) Meaning of relative is in simple language 3) you should have contested it at that stage. now too late

Answer ID : 83928

The property will be transferred to the daughter after the death of the doner. This settlement agreement can be considered as will. Hence, any property received by will is not taxable in the hands of the receiver.

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