Clubbing of Income & Capital gain

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RAMAKRISHNAN MB (Querist)
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23 February 2011
There is an HUF which consists of Mr.A & Mrs.A AND their Sons B & C and their wives.
HUF constructs flats and A, B & C share the flats in equal numbers

Later B transfers the flat to C’s wife as gift & similarly C to B’s wife

Whether clubbing provision applicable?

May also clarify the taxability of transactions??

prasad

prasad (Expert)
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24 February 2011 YES.

In the query its not clear that, whether the HUF has tansferred the ownership to the individual coparceners.

Asuming the ownership of the flats lies with the HUF and not with the individual co-parceners, ABC cannot gift the flats to their sisters in law. Hence, the income from the flats (rent or capital gains ) will have to be taxed under HUF.

RAMAKRISHNAN MB

RAMAKRISHNAN MB (Querist)
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24 February 2011 Sir,
Assuming there happened a transfer of property due to partition of HUF, in that case the entire transaction would go untaxable, right?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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24 February 2011 1. The HUF will not be there after the complete partition.

2. What is the logic in cross gifting the properties? Please explain.

3. You are correct in asserting that there will be no tax implications in these transactions in case complete partition takes place.

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