Income Tax | Bombay High Court Declines Interim Relief To Same Sex Couple Seeking Inclusion Under Term 'Spouse' For Tax Exemption

The Bombay High Court on Thursday refused to grant any interim relief to the same sex couple, which has challenged the constitutional validity of Section 56(2)(x) of the Income Tax (IT) Act, which grants exemption from tax on gifts between heterosexual couples.

A division bench of Justices Burgess Colabawalla and Amit Jamsandekar heard the brief submissions of the petitioner Payio Ashiho and his partner Vivek Divan, who argued that section 56(2)(x), which grants protection to heterosexual couples, is "indirectly discriminatory" against the homosexual partners.

"Your main argument is that if a law is protecting apples, the same law must protect oranges too, right?" Justice Colabawalla sought to know from the counsel appearing for the petitioners.

Interestingly, the couple has urged the bench to include 'same sex couples' in the proviso to section 56(2)(x), which provides exemptions only to heterosexual couples.

Notably, Section 56(2)(x) of the IT Act taxes any money, property, or any other assets received if their value exceeds Rs 50,000. These 'receipts' or 'gifts' under the law are categorised as 'income from other sources.' But the fifth proviso to this provision exempts from taxation, such gifts when received from 'relation', including 'spouses.'

This very part of the proviso, the petitioners allege, is 'discriminatory' against same sex couples as it does not explain if the same would apply to such couples as the law does not recognise same sex partners as 'spouses.'

The counsel submitted that when a class of persons (heterosexuals in the instant case) are protected by the provision in question, similar protection must be extended even to another class of citizens of the country under the Constitution of India. He argued that the petition does not focus on the 'intention' of the provision but on its 'impact' as it discriminates against homosexual couples.

The counsel further pointed out that the bench must take a decision before December 31 as the last date for complying with the provision is December 31, 2025.

However, the bench said it cannot at this stage decide if any protection could be given to the petitioners.

"Not possible for us to pass any judgment before December 31 as we will have to first hear the detailed arguments, then decide the structure of our judgment, apply our mind etc. So we doubt if any order can be passed before the due date," Justice Colabawalla remarked, to which the counsel urged that the judges may consider passing an interim order granting a relief in the nature of "no coercive action."

At this, Justice Colabawalla responded, "We cannot pass interim orders... End of the day each one of us have to pay the tax if you succeed, you will get your money back...but till then we cannot protect you by any order. Also, the alleged discrimination is not by us but by the State."

Meanwhile, Additional Solicitor General (ASG) Anil Singh, representing the IT Department and also for the Central Government, submitted a reply filed by the IT Department; however, he said that the Government is yet to decide if it will accept the IT Department's affidavit or file a separate one.

"The Constitution bench of Supreme Court has held that a union between homosexual couples can be allowed only through an enactment and not by the courts. The courts cannot direct enactment of any such law. So, this court will have to consider the fact that such marriages are not recognised by any law," ASG Singh submitted.

Further, Singh urged the bench to defer the hearing in the case as a detailed and thorough hearing is needed in the instant matter. The judges, therefore, adjourned the hearing till December second week.