HC refuses interim relief to same-sex couple challenging Income Tax gift’s exemption provision

The Bombay High Court denied interim relief to a same-sex couple challenging a tax law that exempts gifts only for heterosexual spouses, citing legal limits.

MUMBAI: The Bombay High Court on Thursday refused to grant interim relief to a same-sex couple who have moved the court to challenge the constitutional validity of section 56(2)(x) of the Income-Tax Act, the provision that exempts gifts exchanged between spouses, but only within heterosexual marriages. The petitioners say the exclusion leaves same-sex partners economically penalised for the very exchange that married couples take for granted: a gift between life partners that, if valued above ₹50,000, is treated as taxable “income from other sources.”

HC refuses interim relief to same-sex couple challenging Income Tax gift’s exemption provision

A division bench of justices Burgess Colabawalla and Amit Jamsandekar heard brief submissions from petitioners Payio Ashiho and Vivek Divan, who argue that the statute’s protection for “spouses” produces an indirect classification that discriminates against another identifiable class of citizens, same-sex couples who are unable, under current Indian law, to qualify as “spouses.” Counsel told the court that the question is not about the legislature’s intent but the law’s practical impact: when one class receives tax immunity, equal protection requires the same treatment for those in materially identical relationships.

Justice Colabawalla crystallised the petitioners’ claim in an earthy metaphor, asking whether a law that protects “apples” must, in fairness, protect “oranges” as well. The bench was candid about the limits of its ability to rush a decision. The petition sought either an interpretation of the fifth proviso to section 56(2)(x)- which exempts gifts from “relatives,” including “spouses”, to read “spouse” as covering same-sex partners, or a declaration extending the exemption to such couples. But with statutory and constitutional questions to be weighed, the court said it could not complete the detailed hearing and frame a judgement before compliance deadlines for the current assessment year.

When counsel sought an interim direction to protect the couple from coercive tax action, the bench refused, observing bluntly that tax obligations cannot be held in suspension, “If you succeed, you will get your money back… but till then we cannot protect you,” the judge said.

The court recorded submissions from the Income Tax Department and the Centre, represented by additional solicitor general Anil Singh, who stressed that formal recognition of same-sex marriage, the ASG argued, is a matter for Parliament and legislation rather than judicial fiat. The bench accepted a request for fuller briefing and listed the matter for the second week of December.