Gifts to HUF A/C

This query is : Resolved

Sujal Patel (Querist)
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02 November 2010 My HUF consists of myself and my wife. Is the gift money received from my or my wife's blood relatives to my HUF A/C taxable? What effect does it have on account books if i as an individual gift to my HUF account or vice-versa (HUF A/C gives gift to me)? Thanks in advance

CA Sanat Pyne

CA Sanat Pyne (Expert)
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02 November 2010 Any sum of money exceeding Rs. 50,000/- given by any member or karta of HUF to such HUF is taxable in the hands of such karta/ member of HUF because these r not covered in proviso to Sec.56(2)(vii).

The section is framed in such a way as first Sec.Sec.56(2)(vii) declares the amount recieved by individual or HUF from anybody is taxable. But proviso then comes in to exclude certain catagory of persons.

For individual, relative is excluded. But for HUF, since it can't have any relative, this exception can't be applied to it. Nor can we deem relative of karta to exempt the amount given by him to HUF basing our assumption that relative of karta is also relative of HUF. It would be foul assumption.

Hence any amoutn recieved by HUF from relative of karta is taxable bcoz it doesn't come in the proviso to Sec.56(2)(vii)

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