Gift from huf to members

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CA Priyanka Goyal (Querist)
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05 January 2015 Whether HUF can make a tax free gift (in the form of money out of HUF income) to its members, further any income earned out of such gift in money like interest income will be clubbed in HUF income or not.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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05 January 2015 it is exempted under explanation u/s 56(2).

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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05 January 2015 There will no clubbing provisions applicable in the hands of HUF in this type of transaction and HUF can make gift to its members.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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06 January 2015 The experts are correct but they have examined this issue from one angle. The other angle is once HUF is giving gift to its member it is not the case of individual and therefore, consent of all the members are required. Now the question arises can you gift to yourself. The answer is no because the gift includes a share of the member to whom HUF is gifting the money. Another problem is once you are gifting HUF properties you are violating the provisions of section 171 (now it is not there) this means you are doing partial partition which is not permitted and the ITO can continue to treat the gifted property as belonging to HUF and any income arising on the gifted property can be taxed in the hands of HUF. To give effect to the HUF properties you have to do full partition by paying proper stamp duty.

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CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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06 January 2015 Thank you for enlightening us the other issues Agarwal saheb.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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06 January 2015 thanks sir for correcting us...........

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