23 July 2010
Dear All, Whether gift of money received by the H.U.F. from the mother of the its karta is taxable us 56(2) or exempt as having been received from a relative of the karta? For reference the proviso to section 56(2)(vi)(vii)includes only the relative of an individual. Thanks
24 July 2010
I agree with adityaji, Just see the case law, A HUF is a normally presumed condition of a Hindu society (CIT v Ghansham Dass Mukim — 1979; 118 ITR 930;P & H). Relying on Surjit Lal Chhabdha v CIT (1975; 101 ITR 776;SC), the question of creation of a HUF as such does not arise. What can be done is to create a corpus, which can yield income so as to make it an assessable entity. It is possible for a HUF to receive a gift.
Insofar as creating the initial corpus is concerned, the same can be done only by receiving a gift from an outsider to the HUF.
This would be because what a coparcener can do is only to blend his individual property with that of the HUF. No blending will be possible without an initial corpus.
It may, however, be remembered that only a Hindu coparcener can blend his individual property with that of the joint family.
Thus, a female member or any other member who is not a coparcener cannot blend the individual property with that of the joint property (Pushpa Devi v CIT; 1977; 109 ITR 730; SC).
The gift can be from any one including a stranger to the joint family provided there is a clear declaration of intention by the donor/testator that the gift/will is for the benefit of the HUF. This view has found favour in Pushpa Devi v CIT; CIT v M. Balasubramaniam (1990; 182 ITR 117; Mad, FB).
In your case, for creating the initial corpus, a gift can be taken from your father who will be an outsider to the HUF consisting of you, your wife and your children.
Subsequent blending of course may be done by you. You may, however, note that a gift received by a HUF will be chargeable to tax under Section 56 as `income from other sources' if the sum exceeds Rs 50000/-.
CAclubindia
