Claiming discrimination, same-sex couple approaches court over uneven tax: Report

India Today

3 days ago

A same-sex couple has approached the Bombay High Court challenging a provision in the Income Tax Act that they say discriminates against them by taxing gifts exchanged between partners, reported The Economic Times.The petition was admitted by a bench of Justice BP Colabawalla and Justice Firdoush Pooniwalla, which has also issued a notice to the Attorney General as the case raises a constitutional question.The petitioners, Payio Ashiho, a homemaker, and his partner Vivek Divan, a lawyer who has practised at the High Court and worked at the United Nations headquarters, argue that the current law provides unequal economic treatment to same-sex couples compared to heterosexual couples. They are represented by Advocate Dr Dhruv Janssen-Sanghavi.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 the section exempts such gifts when received from 'relatives', including 'spouses'. The term 'spouse' is not separately defined in the Act.For heterosexual couples, even those not formally married but presumed to be in a marriage, such gifts are not taxed, as they can legally marry. Same-sex couples cannot claim the same exemption as they are not legally recognised as spouses in India.The petitioners have asked the court to declare the reference to 'spouse' unconstitutional to the extent that it excludes same-sex couples, to make the proviso applicable to same-sex couples in long-term stable relationships, and to restrain tax authorities from reassessment or penalties on transactions between them. They clarified that they are not seeking recognition or presumption of marriage.The case is seen as significant for the LGBTQIA+ community as it could affect investments, property ownership, and inheritance rights. While the Supreme Court decriminalised same-sex relationships in 2018, it declined to recognise same-sex marriages under the Special Marriage Act in 2023.Legal experts say the case hinges on whether the court will give an expansive reading to the word 'spouse'. Ashish K Singh, managing partner of Capstone Legal, told The Economic Times that for the petitioners' plea to succeed, the court would need to interpret 'spouse' more broadly.'However, the biggest bottleneck would be the fact that no legal provision in India recognises the rights of same-sex couples,' Singh said.- Ends
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