NEW DELHI: A same-sex couple has challenged a part of the Income Tax Act in the Bombay high court, saying it unfairly denies them a tax benefit that married heterosexual couples get on gifts. The Income Tax Department has strongly opposed their plea, telling the court it is “misconceived” and the plea should be dismissed.What was the case about?The petitioners, Payio Ashiho and his partner Vivek Divan challenged Section 56(2)(x) of the Income Tax Act before a bench of Justice B.P. Colabawalla and Justice Firdosh Pooniwalla. Under this section, gifts between spouses are exempt from tax. But since law does not recognise same-sex partners as spouses, the couple cannot claim this exemption. They say this is “indirectly discriminatory” and have asked the court to include same-sex couples under this tax exemption too, as per a report by LiveLaw.The Income Tax Department disagreed and filed an affidavit on October 14, 2025. The department said the couple is trying to use a tax law to get marriage recognition, without their relationship being recognised as a marriage under any Indian law first.“Under the Income Tax Act, no relationship will be recognised as marriage, wife-husband, spouse, if it is not so recognised under any of the marriage act in India,” the Income Tax Department added.It further added that the couple wants the tax law to define spouse differently from how marriage laws already define it, which it says is not allowed.The department also said the petition is not valid on technical grounds, since the couple has not challenged any specific order or action by the tax authorities. Without that, it argued, there is nothing for a writ petition to actually challenge.The bench had already refused to pass any interim orders in the case back in November. Final arguments were set for July 9, 2026. But on July 6, Additional Solicitor General Anil Singh asked for more time, since Solicitor General Tushar Mehta would be arguing the case for the tax department.The court agreed, but made clear this would be the last such adjournment.“We find that the above matter has been adjourned on several occasions at the instance of the Revenue. As a last chance… we place the above Writ Petition on board on 30th July, 2026 at 3.00 p.m…. we have made it clear to the Revenue that no further adjournments will be granted,” the court said.The case will now be heard on July 30, 2026.What does the law actually say?Section 56(2)(x) of the Income Tax Act taxes any money, property or other valuable items a person receives if their value is more than Rs 50,000.Such gifts are treated as “income from other sources” and taxed. However, there is an exception. Gifts received from close relations, including spouses, are exempt from this tax. Since the law does not recognise same-sex relationships as marriages, the petitioners say this exemption unfairly leaves them out. This is the discrimination they are asking the court to correct.
