Fixed Deposit in HUF

This query is : Resolved

Amit Singal (Querist)
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01 March 2010 If someone creates a HUF and transfer money to HUF and invest in FD to earn Interest, can there be some issue from Income tax point of view.

There is no other business/Investment of HUF.

Is there any possibility of clubbing of Income with Karta?

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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01 March 2010 Yes, because it is diversion of income.

But future earning out of interest will be taxed in the hands of HUF.

Amit Singal

Amit Singal (Querist)
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01 March 2010 Thanks Surendra..

But I want to add that this is tax paid income of Karta in the same year which he had earned from Salary, still can clubbed?

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M Prabhakar Menon

M Prabhakar Menon (Expert)
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03 March 2010 A karta can add his personal assets into the HUF pot.The HUF will be seperate entity and the individual will continue with his separate identity.The provisions of S 56(2) wrt gifts may apply in the year of receipt.