Gift provided as profit from business - reg

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P MURUGAN (Querist)
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01 January 2019 Sir

I have a doubt regarding can a father who earns a profit in his business have to be transfer ( profit) to his son as gift without the physical transfer of fund or cash i.e through the proper letter obtained between them such as from the balance outstanding/receivable in their business respectively and adjusted in the books of accounts?

I explained clearly that, the father who have manufacturing unit which deals bakery items ( preparation of cakes, biscuits and snacks) and sold these items to his son who have a trading shop, for which a son makes a payment regularly through bank for supply of goods by his father and at the end of the year ( 31st march) some balance ( nearly a profit amount of father's business) to be outstanding for a trading shop. A son thought that at one point, he is not able to make that payment fully, because of he have not enough fund as he (son) used the fund from his business towards constructed a new building (another shop) and it may be need more funds for construction.So what will be do in that situation.?

Please give your valuable reply.

P MURUGAN

P MURUGAN (Querist)
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05 January 2019 Sir I have a doubt regarding can a father who earns a profit in his business have to be transfer ( profit) to his son as gift without the physical transfer of fund or cash i.e through the proper letter obtained between them such as from the balance outstanding/receivable in their business respectively and adjusted in the books of accounts? I explained clearly that, the father who have manufacturing unit which deals bakery items ( preparation of cakes, biscuits and snacks) and sold these items to his son who have a trading shop, for which a son makes a payment regularly through bank for supply of goods by his father and at the end of the year ( 31st march) some balance ( nearly a profit amount of father's business) to be outstanding for a trading shop. A son thought that at one point, he is not able to make that payment fully, because of he have not enough fund as he (son) used the fund from his business towards constructed a new building (another shop) and it may be need more funds for construction.So what will be do in that situation.? Please give your valuable reply.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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27 September 2021 No. He can transfer any such assets, only after payment of legitimate tax liability paid.
He cannot just transfer by book entry, and adjust profit from the business.

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