yashsr (CA) (2285 Points)
10 September 2012Hello,
Yash gifts Rs.10 lac to 'Yash HUF' through payment by cheque. Now, Yash HUF makes a Fixed Deposit and earns Rs.1 lac in the year.
1) Will there be any tax on the gift from Yash to Yash HUF? If yes, who will pay the tax, Yash or Yash HUF?
2) Under whose income, Yash or Yash HUF, will the income of Rs.1 lac(interest on FD) will it be taxed? Will it be lubbed in Yash's income?
CA Vishal Jain
(Chartered Accountant)
(137 Points)
Replied 12 September 2012
Hello Yash
Finance act, 2012 has amended section 56(2)(vii) retrospectively from 01 oct, 2009 to include a member of HUF in definition of relative which is given in explanation to sec. 56(2)(vii). previously there was no definition of relative in explanation in relation to HUF, so HUF was not able to get the benefit of exclusion of relative from taxability of gift and the full amount was taxable in hands of HUF if it is in excess of Rs. 50,000/-
In your case Yash is the karta of Yash HUF, hence ge is a relative of HUF and HUF has received a gift of rs. 10 lakh from its member which is not taxable in hands of HUF
Secondly the income of interest will be taxable in hands of HUF because this is not covered by any provisions of clubbing.
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Pawan Kataria
(Prop)
(44 Points)
Replied 23 September 2012
Dear Vishal & Yash,
Interest on FD will be clubbed in Yash's individual income (section 64 sub clause 2)
Srikanth M S
(finalist)
(88 Points)
Replied 23 September 2012
Dear Vishal Sir,
Thanks for the infomation about the provision which has a retrospective effect too.. But sir i have a doubt kindly clarify the same.
If 10L is not taxable in the hands of HUF due to that provision which has arisen then will dat be considered as application of money and not Diversion at source hence taxable in the hands of Mr.Yash?? or any other condition arises for this complication??
Regards,
Srikanth.M.S
CA Vishal Jain
(Chartered Accountant)
(137 Points)
Replied 24 September 2012
Dear Shrikanth
The above 10 lakh must had been taxable in the hands of mr yash at the time when this money was earned by him. He has gifted the above said 10 lakh to its HUF from its funds, it will decrease the cash balance and correspondingly the capital of mr yash but it will not be taxable in anyone's hand at the time of gift
Srikanth M S
(finalist)
(88 Points)
Replied 24 September 2012
Dear Vishal Sir,
Thanks for the valuable Inputs.....
Regards,
Srikanth.M.S
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