Huf taxation

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PRITESH SHAH (Querist)
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15 July 2012 What is the exmption limit for any relatives or any person giving gift to the HUF?

As per the recent amendment in the budget a member can give gift to the HUF without any limit. So any income generated by the HUF by using the member gift will attract any Clubbing provision (Income to be added in the member instead of treated as income of the HUF)

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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15 July 2012 The traditional view:
By virtue of Section 64(2) income of converted property is liable to attract the clubbing provisions.
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However, Analysis of certain terms may lead
to a different view -
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Section 56(2)(vii) and Section 64(2) are different sections of the same act. In both the sections "Property" has been defined in different manner. Definition of Section 56
defines property in exclusive terms , whereas S. 64(2) defines in inclusive terms.
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Section 56 does not cover "money" or " a "sum of money" into property. It clearly have demarcation as regards to the "money" and "property".
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Whereas the definition given under Section 64(2), being inclusive, may include money also. However, various decisions can be found which talks about the contexts in which any term in the law has to be inferred. Even in case of an inclusive definition, the context in which the term is being defined has to be borne in mind.
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Section 64(2) deals mainly with converted property or property or consideration receivable on transfer of such property.
In my view it does not deal with "money" or " a sum of money" being transferred by a member to the common stock of the family.
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To my view, when a member gifts "money" or " a sum of money" in terms of Section 56(2)(vii)(a) it can not be said in the same statute that the amount gifted is also covered U/s 56(2)(vii)(c) which deal with gift of property.
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When the taxing provision of Section 56 treat "money" separately from any "property", how section 64(2) of the same statute can treat it as property ?
Specifically when the definition of property under the clubbing section purely deals with property in the form of a substance and not in the form of money.
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Concluding Remarks':
1. Money Transfer by a member to HUF : Clubbing of Income is not required.
2. Property Transfer : Clubbing U/s 64(2) is applicable.
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Hope, you will agree with the above view.
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