Gift from huf to members
This query is : Resolved
CA Priyanka Goyal
(Querist)
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.
05 January 2015
it is exempted under explanation u/s 56(2).
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.
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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06 January 2015
Thank you for enlightening us the other issues Agarwal saheb.
06 January 2015
thanks sir for correcting us...........
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