Formation of huf

What you are doing is not related to income tax. Because the surplus is already taxed in the hands of Individual. He cannot TRANSFER MONEY to save on incoem tax. However he can route his expenses via HUF to inflate them or can divert his earnings to ACCRUE in HUF(Raise bills inthe name & PAN of HUF)
The TARNASFER OF SURPLUS FUNDS WOULD LEAD TO CLUBBING IN WELATH TAX.
I dont see any tax planning benifit arising out of the aarangement

Sorry u do not understand the question. My client has surplus cash because his son sending money from outside india to him and such someof moey  is deposited by him in bank fd and pay tax on such income.

I just want to reduce their individual tax liablity by creating HUF and transferinterest free loan to HUf to reduce their individual tax liab.

My question is can he do so or not and if not then what is the reason.

If he transfers funds to HUF the income will be clubbed. Even wealth tax clubbing will be applicable. however if gift tax is paid same can be avoided.