Ppf contribution from huf to son becoming major?

This query is : Resolved

Rakesh Jain (Querist)
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10 April 2013 I have my HUF since 1992 when I got married,comprising of me / spouse /only one son, it is derived from my father's HUF. My son was born in July 1996, and from July 1998 I have been contributing the maximum limits under PPF in his PPF account from my above mentioned HUF. I have extended the above PPF for a block of 5 years from today 05-4-2013. Next year in July 2014 my son will become a Major, can I take the PPF outstanding in his name as his capital for his Income Tax Returns. He is already enrolled for PAN number. Further how do i remit further PPF after he attains the age of majority. I would be grateful to the responders.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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30 May 2013 The investment is that of HUF although made in the name of one of the members of your HUF. Since there is no partition of your HUF you cannot take the money in the name of your son. If you do so partial partition is not permitted as was permitted previously u/s 171. The AO may still treat this amount as belonging to HUF and the income shall be that of HUF.

You can withdraw the money from your PPF a/c and give loan to your son and accordingly your son can invest or earn income which will be taxable in his hands. Charge nominal rate of interest eqivalant to that of PPF a/c.