When PM Modi announced that Rs with the denomination of 500/- and 1000/- would cease to be the legal tender from 9th of Nov, the whole country was stunned. This decision caused sensation in the whole country. What we have today at the end this period is evidence about how the cash hoarding habits of Indian housewives had brought to light. Which every women all over the country who had spent years accumulating cash, that they had saved for themselves from household budgets. The worst sufferers of this move, however, were the middle and lower class family of the country. So here, we would talk about some matters that had been come up during this period.

1. Streedhan:
The word Streedhan is composed of two words: Stree (woman) and Dhan (Property). Therefore on combining these two words, we get ‘property of woman’ her ‘Streedhan’. This is a concept, which came down all the centuries from the Hindu Smritis but has today, engulfed all forms of marriages in all visible castes and regions. Furthermore there is no provision under Income Tax for Streedhan and is just used for the protection of property that is possessed by a woman.
As per The Supreme Court of India:
“A Hindu married woman is the absolute owner of her Streedhan property and can deal with it in any manner she likes and, even if it is placed in the custody of her husband or her in-laws they would be deemed to be trustees and bound to return the same if and when demanded by her”.
Sources of Streedhan:
• From her father, mother, husband, brother, father-in law and mother-in-law out of love and affection.
• By her maternal uncle and relative etc. at the time of marriage in presence of nuptial fire.
• By the cousins and relatives of her parents.
• From the side of bride-groom prior to marriage towards duty.
• Given at the time of her departure from her father’s house.
• By the father-in law or mother-in-law out of love and affection.

FAVORABLE JUDGEMENT- ITO Vs. SMT. PARWATI DEVI dated 06.10.1994 [92 Taxman 280]

“Section 69A of the Income-tax Act, 1961 – Unexplained money, etc. – Assessment year 1978-79 – Assessee made disclosure under Amnesty Scheme under Wealth-tax Act, 1957 but no return was filed under Income-tax Act – Assessing Officer initiated proceedings under section 147 – Assessee filed return of income in response to notice under section 148 – Assessing Officer concluded that entire wealth shown in wealth-tax return had been acquired by assessee during previous year relevant to assessment year 1978-79 – Assessee produced four affidavits regarding acquisition of wealth and explained that gold ornaments and silver utensils were received at time of her marriage and money declared was her ‘Streedhan’ – Commissioner (Appeals) accepted assessee’s plea – Whether assessee had duly discharged onus regarding acquisition of wealth and, therefore, in absence of any material with Assessing Officer to conclude that entire wealth had been acquired during previous year relevant to assessment year 1978-79, assessee’s explanation was rightly accepted by Commissioner (Appeals) – Held, yes”

2. PIN MONEY:
Pin money is a term that dates from the 1500s and originally was used to mean the household money used to buy necessities. At that time, pin money was a substantial sum that was used for important purchases.

FAVORABLE JUDGEMENT: R.B.N.J Naidu vs. CIT dated 09.02.1955 [29 ITR 194]

Pin Money means “A reasonable allowance given to the wife by her husband for her dress and usual household expenses” Pin Money is not taxable. u/s 64(1) (iv) of the Income Tax Act-1961, any income arising from assets transferred to spouse without adequate consideration is taxable in the hands of the transferor and not in the hands of transferee. However, if asset is acquired by the spouse out of pin money (i.e., a reasonable allowance given to the wife by her husband for her dress and usual household expenses) then the income from such assets cannot be clubbed with the income of her husband.

3. NRI SAVINGS:
A person who is not a resident of India and is living outside India since many years and has no occasion to earn any taxable unaccounted income in India. During demonetization the assessee deposits cash out of past savings and agricultural income and addition is made under Income Tax Act.

FAVORABLE JUDGEMENTS:

a) DCIT v Finlay Corp, Ltd [86 ITD 626] (Delhi) dated 22.01.2003
“The income of the non-resident is chargeable only under Section 5(2) and the provisions of Section 68 cannot override the provisions of Section 5(2). Taxability of non-resident can be seen only under Section 5(2) and the provisions of Section 69 could not be pressed into service since such provisions do not override the provisions of Section 5(2). It is settled legal position that burden is on the Revenue to prove that income of an assessee falls within the net of taxation. Section 5(2) being the Charging section, the burden is on the Revenue to prove that the income of the non-resident falls within the ambit of such section.”

b) Saraswati Holding Corporation vs. Deputy Director of Income Tax [111 TTJ Delhi 334] dated 20.07.2007
Wherein the Tribunal upheld the decision of Dy. CIT v. Finlay Corporation Ltd, quoted supra which it was held that:
“The provisions of Section 68 or Section 69 cannot enlarge the scope of Section 5(2). Under Section 5(2), the income accruing or arising outside India is not taxable unless it is received in India.”

c) Vodafone International holding B.V v Union of India [Civil appeal No. 733 of 2012]
“Under Section 5(2) of the Income Tax Act, in case of NRIs the income accrued and received outside India cannot be subject to tax in India. What is not taxable under Section 5(2), cannot be taxed under the provisions of Sections 68 and 69 as undisclosed income”

In such above cases, it is difficult for tax payers to prove the source of income because there is no defined document evidence for the same. As under section 115BBE, which is the draconian provision, such taxpayers are hits hard and the tax rate is increased to 77.25% from 30%. Whereas our Prime Minister has said that the honest taxpayers shouldn’t fear from this tax rate, keeping his promise we hope there should be certain amount of slab which can be considered as Streedhan/Pin money/NRI savings to reduce litigation and unnecessary harassment to the honest taxpayers.

Disclaimer

This article doesn’t constitute professional advice. The author does not represent that the said information is correct and complete in all regards. The views contained in this article are personal views of the author and may change depending upon underlying facts and circumstances. Judicial and legal authorities may not subscribe to the views of author and can take different view. Readers of this article are advised to take professional advice before taking any course of action or decision. The author does not assume any responsibility or liability in respect of the information contained in this article or for any decision/ course of action readers may take based on information contained in this article.

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