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Taxability of gift

PULKIT BANSAL (Student CA IPC / IPCC) (243 Points)

18 December 2015

If any individual being a Karta of HUF gifts immovable property to its HUF . Will the above transaction be exempt in the hands of individual u/s 47(iii).

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6 Replies

CA Mehul Chudasama (Chartered Accountant) (618 Points)
Replied 18 December 2015

Yes It Will Exempt

PULKIT BANSAL (Student CA IPC / IPCC) (243 Points)
Replied 18 December 2015

Will section 64(2) not be applicanle to it ?

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 19 December 2015

Hello,

Section 64(2) will not be applicable if it is irrevocable transfer.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 19 December 2015

Hello,

Section 64(2) will not be applicable if it is irrevocable transfer.

CA Mehul Chudasama (Chartered Accountant) (618 Points)
Replied 19 December 2015

Section 64(2) apply at the time income generated from the property not at the time of transfer

CA Mehul Chudasama (Chartered Accountant) (618 Points)
Replied 19 December 2015

Section 64(2) of the Income-tax Act, 1961 reads as follows:

“Where, in the case of an individual being a member of a Hindu undivided family, any property having been the separate property of the individual has, at any time after the 31st day of December, 1969, been converted by the individual into property belonging to the family through the act of impressing such separate property with the character of property belonging to the family or throwing it into the common stock of the family or been transferred by the individual, directly or indirectly, to the family otherwise than for adequate consideration (the property so converted or transferred being hereinafter referred to as the converted property), then, notwithstanding anything contained in any other provision of this Act or in any other law for the time being in force, for the purpose of computation of the total income of the individual under this Act for any assessment year commencing on or after the 1st day of April, 1971,—

(a) the individual shall be deemed to have transferred the converted property, through the family, to the members of the family for being held by them jointly ;

(b) the income derived from the converted property or any part thereof shall be deemed to arise to the individual and not to the family ;

[(c) where the converted property has been the subject-matter of a partition (whether partial or total) amongst the members of the family, the income derived from such converted property as is received by the spouse on partition shall be deemed to arise to the spouse from assets transferred indirectly by the individual to the spouse and the provisions of sub-section (1) shall, so far as may be, apply accordingly :

Provided that the income referred to in clause (b) or clause (c) shall, on being included in the total income of the individual, be excluded from the total income of the family or, as the case may be, the spouse of the individual.

Explanation [1].—For the purposes of sub-section (2),—

“property” includes any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment for the time being representing the proceeds of sale thereof and where the property is converted into any other property by any method, such other property.

[Explanation 2.—For the purposes of this section, “income” includes loss.”