Can a member of HUF give the initial capital to HUF when the bank account is opened for the first time on the name of HUF ? or only my grandfather can give that initial capital to HUF ?
In our case my Father(Karta) gave a cheque of 1lac from his bank accnt to HUF bank account. Now can we show that 1 lac as a gift from my Father to HUF for creation of HUF or shold we show it as a Loan(asset) in father's balance sheet and Loan(liability) in HUF balance sheet ?
Yes, HUF can take gift from members, exempt or tax-free. better to treat it as loan.
Why treating it as a loan is better? Please tell.
1. HUF can swallow gifts, but cannot give gift/s except for some special occassions. Capital locked.
2. Clubbing provision, shall not relieve member donor from any tax liability. etc.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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