Capital contribution in huf
This query is : Resolved
24 January 2012
if an individual contributes 25 lac rs as his capital conrtibution to huf then whether he will be taxed for same or not?
24 January 2012
Capital Contribution means -
As a loan? , or
as a Gift?
.
He should be in a position to the explain the source of such a big amount. If he can not explain the source of the investment he not only will be taxed, but will also be penalised.
.
If he gives loan, there is no issue, except
to see whether the funds are his own or borrowed?
In case of borrowed funds, where he has to pay interest to the lender, against this, he should have to charge interest from the
HUF. If he is contributing from interest free funds or own funds, issue of interest may easily be addressed.
.
If he gifts the amount , income arising from such contribution will be taxed in his hands vide Section 64(2).
.
As a loan? , or
as a Gift?
.
He should be in a position to the explain the source of such a big amount. If he can not explain the source of the investment he not only will be taxed, but will also be penalised.
.
If he gives loan, there is no issue, except
to see whether the funds are his own or borrowed?
In case of borrowed funds, where he has to pay interest to the lender, against this, he should have to charge interest from the
HUF. If he is contributing from interest free funds or own funds, issue of interest may easily be addressed.
.
If he gifts the amount , income arising from such contribution will be taxed in his hands vide Section 64(2).
.
24 January 2012
Thanks sir
he is in a position to show rs 25 lacs as he has amount in his balance sheet.
if he chooses to make gift under irrevocable trust mode than it will not be tax in his hand u/s 64(2) pls clarify i am right or not?
he is in a position to show rs 25 lacs as he has amount in his balance sheet.
if he chooses to make gift under irrevocable trust mode than it will not be tax in his hand u/s 64(2) pls clarify i am right or not?
25 January 2012
Being a member of the said HUF, it can not be said that he does not derive direct or indirect benefit from income arising out of such funds.
The income arising to irrevocable trust is includible in the hands of the transferor.
.
Further, in relation to HUF & its member, direct or indirect conversion both are covered U/s 64(2).
The income arising to irrevocable trust is includible in the hands of the transferor.
.
Further, in relation to HUF & its member, direct or indirect conversion both are covered U/s 64(2).
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