Income tax

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Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2015 Commission paid to HUF whether allowed or Disallowed as per Income Tax Act.....

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 February 2015 if tds deducted , if any applicable and it is in relation to business then allowed

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2015 thanx for your precious comment......is there any supporting also..???

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CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 February 2015 refer sec 40a and also sec 37(1)..........

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2015 thank you so much............

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 February 2015 you are welcome friend............

Guest

Guest (Expert)

18 February 2015 Commission earned by HUF will be disallowed for the HUF, even if TDS is deducted. HUF is an artificial body. It is not possible to justify commission income in the hands of HUF, unless there is a business undertaken by it. It would be visibly deviation of income into the hands of HUF.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 February 2015 Huf is no doubt artificial body but if the said commision is paid in relation to business and tds deducted then for which reason it will not be allowed?

please provide section/ rule or any case law as ur supporting

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CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 February 2015 Moreover the query is amount paid to huf as commision and not for huf whether deduction is allowed or not?

Guest

Guest (Expert)

18 February 2015 I have already mentioned that if there is a business being conducted in the HUF, it wouldn't be disallowed.

Earning of commission requires rendering of services by a person on behalf of another person, which an HUF does not perform under normal circumstances. It would be added to the income of Karta since he would be considered to have provided the service in personal capacity and not as Karta of HUF.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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18 February 2015 If business is conducted by karta on behalf of huf then how it can be disallowed?

where it is written then huf cannot indulge in business through karta/

Guest

Guest (Expert)

18 February 2015 HUF can indulge in business through Karta. That is when funds owned by the HUF are used for the purpose of conducting such business.

Commission earned through agency held by the HUF in its own name would construe income in the hands of the HUF or if earned in the course of business.

However, commission for tasks where skill is important, an HUF is not adept at provision such skill. If it does so through the Karta, the Karta himself would be performing such service in personal capacity and therefore it would be added to his income and not that of the HUF.

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Guest

Guest (Expert)

18 February 2015 Also, I mentioned the above because sometimes commission is paid to the HUF expecting overall tax benefit (expense allowed where 30% tax slab exists, and chargeable as income in the hands of HUF, where tax slab < 10%)

Another case where income would charged be in the hands of Karta and not the HUF is where the Karta becomes partner in a firm in representative capacity and draws remuneration. Such remuneration cannot be taxed in the hands of HUF unless it is return for investment made by HUF (in form).
Case is Raj Kumar vs. CIT [(1970) 78 ITR 33 (SC)