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SIDDHARTH KOTHARI (N.A)     27 February 2012

Problem in creating huf!!

HOW TO CREATE THE HUF IN FOLLOWING SITUATION ???

THE FATHER AND MOTHER OF THE ASSESSEE IS NOT ALIVE AND THE ASSESSEE IS MARRIED AND HE WANTS TO CREATE HUF THEN HOW HE CAN CREATE THE HUF ??

ON CREATION HUF HE WANTS TO DO HIS TRANSPOTATION BUSINESS IN THE NAME OF HUF THEN WHETHER THE INCOME GENERATED BY THE HUF BE CLUBBED IN HIS INDIVIDUAL CATEGORY OR CONSIDERED AS THE INCOME OF HUF???

 

PLEASE HELP ME TO COME OUT OF THE SAME!!!!!!



 4 Replies

SathikondaA

SathikondaA (Tax Consultant)     27 February 2012

Mr.Siddharth Kothari

When a Hindu Indivudal gets married then his HUF comes into exitence.

That HUF should have income from ancestral property.

Please see

PREM KUMAR vs. COMMISSIONER OF INCOME TAX, HIGH COURT OF ALLAHABAD

  (1980) 121 ITR 347 (ALL)

Best Wishes

Sathikonda

 

SIDDHARTH KOTHARI

SIDDHARTH KOTHARI (N.A)     27 February 2012

sir,

You mean to say that the HUF can not do the business!!!

 

Vignesh Killur

Vignesh Killur (Articled Assistant)     27 February 2012

Hi Siddharath,

An HUF cannot be created by mere paperwork, and one cannot become a member of any HUF by choice. He is born into it. If you want to create an HUF, simply get married. You and your wife can constitute a HUF. (Hindu Union).

Once an HUF is created, it will remain inert like a baloon without air. Capital needs to be infused into the HUF. Without capital an HUF is like a Motor Car without tyres. Once you have fit the tyres, the car can begin moving i.e an HUF can truly come into operation.

How do you bring capital into an HUF?

To prevent Tax evasion, the government has introduced various clubbing of Income provisions. If you, the Karta or any member of HUF makes a gift of any money (without consideration), then any income arising from such money will be clubbed in the Individuals hands.

How to Overcome this obstacle?

1.) If you have a friends or relatives, tell them to make a gift directly to your HUF. Then, use this fund to start the HUF business.

2.) if you have a bigger HUF, that is the HUF of your father, you can ask him to make a gift directly to your HUF.

3.) There is no bar in investing exempt money into the HUF. If you have any investment which earns exempt income, redirect that to the HUF.

There is no bar on an HUF carrying on business. It can carry out business activities.

Please apply for a PAN card in the the Following name: Name of the Karta (HUF).

You can submit documents like Passport copy of Karta & Ration Card (showing details of family members)

Regards

 

 

2 Like
vishal

vishal (article ass)     17 October 2012

 

Help regarding following matter in creation of HUF:
My father died 10 years ago and he was holding some shares which i transferred to my demate a/c after my father's death. my mother died 3 years ago. we are 3 brothers and 3 sisters of which i am elder and only married, others are unmarried. now i want to know that can i create my HUF and transfer shares received from my father as i have filed my return these shares valuing RS.18 lac are not shown in my IT return

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