Today i.e.28th October 2014, TOI published a write up “ HUFs are taxed as separate entities” explaining various aspects relating to HUF and taxability of its income.(Page 9) This is a useful write up but would like to add something for the sake of clarification and benefit of the readers:- • The ld. author has proceeded on the basis that an HUF can be formed. In my view the joint and undivided family is the normal condition of Hindu society. The presumption, therefore, is that the members of a Hindu family are living in a state of union, unless the contrary is established (Maynes Hindu Law and Usage, eleventh edition, page 323 ; Mullas Hindu Law, fourteenth edition, page 284). P782. Therefore, HUF cannot be created by act of parties. So creation of HUF is natural. • It must be kept in mind that self earned money by members of HUF cannot be considered as fund of HUF. The corpus of fund of a new HUF will consist of money received from non family members by way of gift with clear stipulation that gift is being made for the benefit of HUF. • The author has stated that gift can be received from the members of HUF. Though, legally there is no such bar but such gift shall be hit by the provisions of section 64(2) of the Income Tax Act 1961 and consequently the income arising to the HUF from the investment of such amount shall be treated the income of the donor itself. • The author has also stated that gift can be received from strangers up to a certain limit. Though there is no limit as per Hindu law yet the income tax law provides the limit of Rs.50,000/-(Section 56). It must be kept in mind that if the amount of total gift from the strangers exceeds the about limit than the entire amount of gift shall be taxable as income of the HUF. • The author has stated that Karta can be a male member of HUF. It is submitted that after amendment in 2005, the daughters are also considered as coparcener of an HUF. Hence, now, daughter can also be a karta of an HUF . The readers can also go through my article on HUF with reference to amendment made in 2005 on my website incometaxviews
Posted on: Tue, 28 Oct 2014 12:35:50 +0000
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