A same-sex couple has moved the Bombay High Court challenging the Income Tax Act’s differential treatment regarding the taxation of gifts between spouses. The plea, filed by the couple, seeks to declare the term ‘spouse’ as it appears in the explanation to the fifth proviso to Section 56(2)(x) of the Income Tax Act unconstitutional, as it excludes same-sex couples from the definition of ‘spouse’.
Under Section 56(2)(x) of the Income Tax Act, any money, property, or asset received without adequate consideration, valued at over Rs 50,000, is taxed as ‘income from other sources’. However, the fifth proviso to this section exempts such gifts when received from ‘relatives’, which includes ‘spouses’. Notably, the term ‘spouse’ is not separately defined within the Act, leading to ambiguities that affect the rights of same-sex couples.
A bench consisting of Justice B P Colabawalla and Justice Firdosh Pooniwalla heard the plea on August 14, stating that the challenge addresses the constitutional validity of a provision of law. The court has issued a notice to the Attorney General of India in response to this significant legal matter.
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