Same-sex couple moves court against Income Tax Act
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'The love that dare not speak its name' spoke up against an 'uneven' tax code on Thursday morning at Room number 6 of the Bombay High Court, a theatre of many epic legal battles. A same-sex couple, in a relationship for years, has moved the court, challenging the law that discriminates against them by taxing the gifts received by one partner from another.Under the Income Tax Act, no such tax on gifts is levied for a heterosexual couple, even if the partners are not formally married but are presumed to be in a marriage. They are not taxed simply because they have the possibility of getting married.According to the petitioners, such unequal economic treatment to same-sex couples, who may be in a long, stable relationship, would amount to a denial of the equal protection of the law on the basis of sex --- a form of discrimination prohibited by Articles 14 and 15 of the Constitution of India.Admitting the petition, the bench comprising Justice B.P.Colabawalla and Firdoush Pooniwalla said the court would send a notice to the Attorney General as it raises a constitutional question.The petitioners, Payio Ashiho, a homemaker, and his partner Vivek Divan, a lawyer who had practised at the High Court and worked at the UN headquarters, were represented by Advocate Dr Dhruv Janssen-Sanghavi.Introduced to curb tax evasion, Section 56(2)(x) of the IT Act taxes any money, property, or other assets received without adequate consideration if their value exceeds Rs 50,000. Such receipts or gifts are categorised as 'income from other sources'. However, as per the fifth proviso to Section 56(2)(x), such gifts are not treated as 'income from other sources' and therefore not taxed, when received from 'relatives', which also includes 'spouses' (a term that the statute does not separately explain).Unlike the partners in a heterosexual couple, the petitioners are unable to claim tax benefit as they would not legally qualify as 'spouses' as they belong to the same sex.This petition challenges the constitutional validity of the explanation to the fifth proviso to Section 56(2)(x) of the Act, insofar as it discriminates against same-sex couples in taxing gifts received from one partner to another.The petitioners have prayed before the court, (1) to declare the reference to the term 'spouse' as unconstitutional in so far as it excludes same-sex couples in the same circumstances; (2) to declare that the particular proviso is applicable to same-sex couples in a long, stable relationship; (3) restrain tax authorities from carrying out reassessment and imposing penalties relating to transactions between the petitioners. It may be pointed out that the petitioners neither seek recognition nor presumption of marriage.The outcome of the proceedings, according to legal circles, would be closely followed by the LGBTQIA+ community as it could have a bearing on investments, property ownerships, and inheritance.Despite some legal victories, community members, often voicing the discriminations they encounter, believe they still have a long way to go in preserving their dignity and freedom. While in 2018, the apex court had decriminalised same-sex relationship by scrapping a colonial era law, in 2023, a five-member Supreme Court bench declined to recognise LGBTQIA+ persons' right to marry under the Special Marriage Act, 1954.Ashish K Singh, managing partner of law firm Capstone Legal said For such a prayer to be granted, an expansive reading of the word 'spouse' is required to be considered by the Court.'However, the biggest bottleneck would be the fact that no legal provision in India recognises the rights of same sex couples,' said Singh.
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