Clubbing of income
This query is : Open
23 February 2012
I am earning salary from M/s XYZ Ltd on which XYZ deducts TDS.
I am also karta of my huf.
I am receiving commission on sales from XYZ but in huf capacity and not in individual capacity.
Will this income of huf be clubbed with my individual income ??
If yes please specify which sections talk about it ??
I am also karta of my huf.
I am receiving commission on sales from XYZ but in huf capacity and not in individual capacity.
Will this income of huf be clubbed with my individual income ??
If yes please specify which sections talk about it ??
CA PARAS BAFNA
(Expert)
23 February 2012
Does your HUF has a establishment under a trade or business firm name ?
.
If no, then it can be treated as your income. As you are working in the company, and execution of sales require personal indulgence. In no way, the tag of HUF is helpful to you achieving the sales as well as commission thereon. Due to your personal competence only, such commission is deemed to be awarded you. It becomes a case of diversion of income for reducing the tax burden upon the employee.
As far as particular section is concerned, the most attracted section will be the accounts section of your company. However, from Income tax point of view, it will come under the perview of Section 17(1)(iv).
.
.
If no, then it can be treated as your income. As you are working in the company, and execution of sales require personal indulgence. In no way, the tag of HUF is helpful to you achieving the sales as well as commission thereon. Due to your personal competence only, such commission is deemed to be awarded you. It becomes a case of diversion of income for reducing the tax burden upon the employee.
As far as particular section is concerned, the most attracted section will be the accounts section of your company. However, from Income tax point of view, it will come under the perview of Section 17(1)(iv).
.
Yogesh Agarwal
(Expert)
23 February 2012
No the commission received on behalf of HUF is not your income.. and same would not be clubbed with your one..
Hope you have separate identification of these two incomes.
Hope you have separate identification of these two incomes.
23 February 2012
Yes, it is basically for diverting tax liability.
Is there any other way to reduce tax liability in such case ??
Is there any other way to reduce tax liability in such case ??
23 February 2012
Mr Yogesh,
What is meaning of separate identification of these two incomes ??
What is meaning of separate identification of these two incomes ??
Guest
Guest
(Expert)
23 February 2012
Commission received will not be clubbed in your income.
CA PARAS BAFNA
(Expert)
23 February 2012
Yes , I agree with all the experts,
but differently.
It will not be clubbed-------True.
.
But why ??
.
Because it will be treated as his personal income as any direct or indirect benefit received from the employer can be treated as Salary in the hands of the employee.
.
In spite of clubbing, it can be treated as the Salary Income of the employee as without personal involvement of the employee in question, the sales commission
would not have reached to the hands of the
HUF.
....
We may examine this query from 2 angles
.
Would the commission receivable could be forgone by the employee-
..
1. Had there been no HUF in the picture ?
.
or
.
2.had the employee been a female or any a member other than karta ?
.
The reply will emerge out.
.
but differently.
It will not be clubbed-------True.
.
But why ??
.
Because it will be treated as his personal income as any direct or indirect benefit received from the employer can be treated as Salary in the hands of the employee.
.
In spite of clubbing, it can be treated as the Salary Income of the employee as without personal involvement of the employee in question, the sales commission
would not have reached to the hands of the
HUF.
....
We may examine this query from 2 angles
.
Would the commission receivable could be forgone by the employee-
..
1. Had there been no HUF in the picture ?
.
or
.
2.had the employee been a female or any a member other than karta ?
.
The reply will emerge out.
.
23 February 2012
Paras sir,
if the point of question is dat involvement of person as an individual, then in any case income earned by huf (not in profession) will be clubbed with individual as no work can b done by karta without involving himself or any member of family personally. huf is seperate entity which cant do any work. work is done by member of huf
if the point of question is dat involvement of person as an individual, then in any case income earned by huf (not in profession) will be clubbed with individual as no work can b done by karta without involving himself or any member of family personally. huf is seperate entity which cant do any work. work is done by member of huf
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