huf
This query is : Resolved
27 April 2009
A PERSON GOT MARRIED AROUND 50YRS AGO. HE NEVER FILED RETURN AS HUF. HE APPLIED FOR PAN AND RECEIVED IT IN FEBUARY 2009. CAN THIS HUF SHOW HIS BASIC CAPITAL FOR LAST 50 YRSOR NOT. IF YES HOW PLZ EXPLAIN IN DETAIL
27 April 2009
Huf comes in existance from the date it is created. The initial contribution in the HUF wiil be contributed by the Karta of HUF.
28 April 2009
HUF Comes in existance from the date pf it is created . What is Date of Creation of HUF in your PAN Data, you can show capital from the date of Creation of HUF to till date & if there is any taxable income in hand of HUF from that capital you have to file I T Return for the same,
You have to also keep track record of Capital Generated by HUF
You have to also keep track record of Capital Generated by HUF
28 April 2009
HUFs are automatically born, which are euphemistically referred to as creation of ‘HUF’.
An HUF consist of at least two members (of which at least one should be male), and is automatically born with the ancestral property being received from or belonging to three generations above (example: if Mr X, a married man, receives ancestral property belonging to his great grandfather, the same will automatically be considered as property of Mr X’s HUF).
Alternatively, the HUF could also get formed with the asset gifted or given, preferably by a lineal ascendant, with a specific direction for the use of HUF.
Technically speaking, an HUF always exists in a Hindu family and never gets ‘created’. However, from a tax perspective, an HUF is created when it gets vested with assets, property or any income generating activity. 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.
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 a case, for creating the initial corpus, a gift can be taken from your father who will be an outsider to the HUF consisting of male donee as Karta of HUF, his wife and the children.
An HUF consist of at least two members (of which at least one should be male), and is automatically born with the ancestral property being received from or belonging to three generations above (example: if Mr X, a married man, receives ancestral property belonging to his great grandfather, the same will automatically be considered as property of Mr X’s HUF).
Alternatively, the HUF could also get formed with the asset gifted or given, preferably by a lineal ascendant, with a specific direction for the use of HUF.
Technically speaking, an HUF always exists in a Hindu family and never gets ‘created’. However, from a tax perspective, an HUF is created when it gets vested with assets, property or any income generating activity. 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.
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 a case, for creating the initial corpus, a gift can be taken from your father who will be an outsider to the HUF consisting of male donee as Karta of HUF, his wife and the children.
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29 April 2009
HI. BASICALLY I WANT TO KNOW THAT WHETHER CAN WE SHOW INTIAL CAPITAL FROM LAST 50 YRS THOUGH HUF HAVE NOT RECEIVED ANY GIFT NOR APPLIED FOR PAN.
28 July 2024
In the context of an HUF (Hindu Undivided Family) and its taxation, there are specific rules regarding the declaration of capital and historical financial details. Let's break down the situation:
### **1. **Initial Capital and Historical Financial Details**
- **Initial Capital Declaration:**
- **Initial Capital:** An HUF can declare its initial capital when it is formally constituted and registered. However, the capital declared should be reasonable and justifiable based on available evidence or documentation.
- **Documentation:** If you are claiming initial capital from historical sources (e.g., assets accumulated over the years before the PAN was obtained), it’s essential to provide a reasonable basis for this claim. The HUF should document the source of the capital, such as property records, family assets, or any other verifiable evidence.
### **2. **PAN Application and Historical Capital**
- **PAN Application Date:** The PAN was obtained in February 2009. The HUF’s financial history before this date might not be directly recorded or verified with the Income Tax Department.
- **Capital Declaration:** For tax purposes, initial capital can be declared when the HUF starts its tax filings. The HUF can declare the initial capital as of the date of PAN issuance or as of the start of the financial year in which it first files its return.
### **3. **Practical Considerations for Historical Capital**
- **Establishing Capital:**
- **Historical Evidence:** To show initial capital accumulated over the past 50 years, the HUF needs to establish a reasonable basis for this capital. This might include showing the accumulation of assets over time, family inheritance, or other verifiable sources.
- **Tax Records:** Since there were no returns filed before PAN issuance, historical capital might be challenging to prove. It’s crucial to have documentation supporting the source of this capital to avoid disputes or questions from tax authorities.
- **Tax Compliance:**
- **Current Returns:** The HUF should start by declaring the capital in its tax returns from the year PAN was issued. While historical capital might not be directly verifiable, future filings should be accurate and reflect the declared capital and income.
- **Reasonable Estimates:** If historical capital cannot be precisely quantified, it may be necessary to make reasonable estimates based on available information and provide explanations in the tax filings.
### **4. **Filing Returns and Capital Disclosure**
- **Declaration in Returns:**
- **Initial Returns:** When starting to file returns, declare the capital based on available evidence and reasonable estimates. Clearly state the source and nature of this capital in the tax return filings.
- **Subsequent Filings:** Ensure all income and capital sources are accurately declared in subsequent returns to comply with tax regulations.
### **Summary**
- **Declare Initial Capital:** You can declare the initial capital of the HUF when it starts filing tax returns, but it should be based on reasonable and justifiable evidence.
- **Document Sources:** Provide documentation or evidence for the source of the capital. This can include family records, asset valuations, or other supporting documents.
- **Tax Compliance:** Ensure accurate and transparent reporting in tax returns and maintain proper records for future compliance.
**Consult a Tax Professional:** Given the complexity of historical capital and tax compliance, consulting with a tax advisor or financial expert is recommended to navigate the specifics of your situation and ensure proper handling of the initial capital declaration.
### **1. **Initial Capital and Historical Financial Details**
- **Initial Capital Declaration:**
- **Initial Capital:** An HUF can declare its initial capital when it is formally constituted and registered. However, the capital declared should be reasonable and justifiable based on available evidence or documentation.
- **Documentation:** If you are claiming initial capital from historical sources (e.g., assets accumulated over the years before the PAN was obtained), it’s essential to provide a reasonable basis for this claim. The HUF should document the source of the capital, such as property records, family assets, or any other verifiable evidence.
### **2. **PAN Application and Historical Capital**
- **PAN Application Date:** The PAN was obtained in February 2009. The HUF’s financial history before this date might not be directly recorded or verified with the Income Tax Department.
- **Capital Declaration:** For tax purposes, initial capital can be declared when the HUF starts its tax filings. The HUF can declare the initial capital as of the date of PAN issuance or as of the start of the financial year in which it first files its return.
### **3. **Practical Considerations for Historical Capital**
- **Establishing Capital:**
- **Historical Evidence:** To show initial capital accumulated over the past 50 years, the HUF needs to establish a reasonable basis for this capital. This might include showing the accumulation of assets over time, family inheritance, or other verifiable sources.
- **Tax Records:** Since there were no returns filed before PAN issuance, historical capital might be challenging to prove. It’s crucial to have documentation supporting the source of this capital to avoid disputes or questions from tax authorities.
- **Tax Compliance:**
- **Current Returns:** The HUF should start by declaring the capital in its tax returns from the year PAN was issued. While historical capital might not be directly verifiable, future filings should be accurate and reflect the declared capital and income.
- **Reasonable Estimates:** If historical capital cannot be precisely quantified, it may be necessary to make reasonable estimates based on available information and provide explanations in the tax filings.
### **4. **Filing Returns and Capital Disclosure**
- **Declaration in Returns:**
- **Initial Returns:** When starting to file returns, declare the capital based on available evidence and reasonable estimates. Clearly state the source and nature of this capital in the tax return filings.
- **Subsequent Filings:** Ensure all income and capital sources are accurately declared in subsequent returns to comply with tax regulations.
### **Summary**
- **Declare Initial Capital:** You can declare the initial capital of the HUF when it starts filing tax returns, but it should be based on reasonable and justifiable evidence.
- **Document Sources:** Provide documentation or evidence for the source of the capital. This can include family records, asset valuations, or other supporting documents.
- **Tax Compliance:** Ensure accurate and transparent reporting in tax returns and maintain proper records for future compliance.
**Consult a Tax Professional:** Given the complexity of historical capital and tax compliance, consulting with a tax advisor or financial expert is recommended to navigate the specifics of your situation and ensure proper handling of the initial capital declaration.
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