The Karnataka High Court on Friday heard detailed arguments that the exclusion of same-sex couples from the ‘spouse’ benefit under the Income Tax Act, 1961 amounts to discrimination on the ground of sex and violates Article 15 of the Constitution. The challenge, brought by a same-sex couple, tests whether a statutory tax benefit tied to the word ‘spouse’ can be extended to partners who cannot legally marry, and whether the exclusion itself is constitutionally invalid.

The petition, filed by Anurag Kalia and heard by Justice B.M. Shyam Prasad, asks the court to read the term ‘spouse’ in the Fifth Proviso to Section 56(2)(x) of the Income Tax Act to include same-sex partners. This provision governs the tax treatment of gifts received from specified relatives. The petitioners argue that gifts between same-sex partners would be exempt from tax if the law recognised them as spouses, and that the denial of that benefit discriminates solely on the basis of the sex of the gift recipient.

The case arose from a 22-karat gold bracelet, described as a family heirloom, allegedly gifted by one partner to the other on their relationship anniversary. Had the couple been a married heterosexual pair, the gift would have been outside the scope of taxable income, the petitioners contend. Instead, they argue, the tax department’s interpretation forces them to disclose the gift as income, creating a discriminatory burden.

A challenge rooted in equality, not marriage

Appearing for the petitioners, Dr. Dhruv Janssen-Sanghavi opened his rebuttal by stressing that the case is fundamentally about equality under Article 15, and not about the right of same-sex couples to marry. “We are not asking for special treatment. All we are asking is take the shoes off our legs and treat us as equals,” he submitted.

He argued that the sole distinction between the petitioners and a heterosexual couple is the sex of the gift recipient, which is an impermissible classification under the Constitution. The respondents – represented earlier by Solicitor General Tushar Mehta – had argued that the term ‘spouse’ must be interpreted strictly in tax law, and that same-sex couples cannot claim the benefit without legal recognition of their relationship as a marriage.

Dr. Janssen-Sanghavi countered that a heterosexual couple in exactly the same circumstances as the petitioners would be presumed to be married under the law, without needing to perform any further act. He pointed out that the presumption of marriage, which applies to couples who cohabit and intend to live together indefinitely, should equally apply to same-sex couples. “There should only be evidence that they intend to live together permanently,” he argued, drawing a comparison to the test for domicile.

He also addressed the Supreme Court’s judgment in Supriyo v. Union of India , which held that there is no fundamental right to marry or to legal recognition of same-sex unions. The counsel clarified that the present case does not relitigate that issue. “The instant case does not relitigate the exact case of Supriyo. We only use it to buttress the petitioners’ claims,” he said, adding that the judgment must be read as a whole.

The tax provision and its discriminatory impact

The petitioners’ counsel also dissected the definition of ‘relative’ under Section 56 of the Income Tax Act, arguing that it is far more expansive than the definition under Section 2(41). The respondents had earlier argued that the expression ‘spouse’ in Section 56(2)(x) must be read alongside Section 2(41), which defines ‘relative’ to include husband or wife. But Dr. Janssen-Sanghavi pointed out that the Explanation to Section 56(2)(x) includes not only the spouse but also the brother and sister of the spouse, the brother or sister of either parent, and the lineal ascendants and descendants of the spouse – categories not found in Section 2(41). “Therein lies the logical fallacy,” he argued.

When the court asked how this point helped the petitioners, the counsel explained that the definition was introduced in 2004 when Section 377 of the Indian Penal Code was still in force, and that the term ‘spouse’ as used by Parliament cannot be insulated from judicial review simply because it appears in a taxing statute. “Even Section 377 was subject to judicial review; the idea that strict interpretation excludes a taxing statute from judicial review is wrong at the very threshold,” he said.

He also rejected the respondents’ concern that allowing the petition would lead to tax evasion. “If someone is so hell-bent on abusing the Income Tax Act, they can enter into a marriage, do the tax evasion, and then file a mutual divorce,” he pointed out, adding that the potential for abuse cannot justify the deprivation of a constitutional right.

The counsel further argued that the discrimination occurs at the very point of filing a tax return. A heterosexual couple receiving a gift does not have to report it as income because it falls outside the scope of taxable receipts. “But a tax officer assesses me and says I am taxable… soon as I am required to file my tax return and disclose a gift received from my partner, I am discriminated from where I file the ITR,” he explained.

Next steps

The court has not yet ruled on the contentions. Justice B.M. Shyam Prasad reserved the matter for further hearing, with the respondents expected to respond to the arguments advanced. The case raises a significant constitutional question about whether the absence of legal recognition of same-sex marriage can be used to deny equal tax treatment, and whether the impact of a facially neutral statutory term can amount to discrimination on the ground of sex.

The petitioners have asked the court to read down the provision to avoid the constitutional violation, while the Union of India maintains that the remedy lies with Parliament. The outcome will have far-reaching implications for same-sex couples across the country, particularly in the context of taxation, inheritance, and other spousal benefits tied to the legal definition of marriage.