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Can HUF Receive a Gift more than 25000?

Assessee (advocate) (108 Points)

04 January 2008

Sir, I want to know can a Karta on behalf of his HUF receives a Gift more than Rs. 25000? Because, definition of relative does not apply in case of HUF, then how HUF can receive a gift or towhom HUF can receive a gift more than rs.25000 which is not liable to tax.Defenition of relative be same for HUF as in case of individual or not ?

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3 Replies

CA. O.P. Agarwalla (C.A.) (2916 Points)
Replied 05 January 2008

In my opinion:- HUF is artificial person, it can not be termed as human. No body can say that he is relative of a HUF.

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Rashmi Agrawal (Accountant) (275 Points)
Replied 05 January 2008

Under the Income Tax Act, a HUF is treated as a separate entity for the purpose of asessment. The term "HUF" has not been defined under the I-T Act. the expression is, however, defined under the HINDU Law where a person who acquire interest in joint family by birth is called a COPARCENAR. A Coparcenar cannot be termed as a Relative of the Karta of the HUF. Hence the definition of Relatives for an INDIVIDUAL cannot be used for the HUF. So, if the Karta receives a gift from a relative, who is not a Coparcenar of the HUF, the gift so received will be termed as "Gift from relatives". Any gift received from such realtive upto Rs. 25,000 will be exempted from tax. A gift recived in Excess of Rs. 25,000 will be taxable since the relative from whom the gift is received is not a close relative of the karta. This is solely my interpretation of the query. Others opinions on the same are solicited. Thanks.

(Guest)

Hi friend. On plain reading of Proviso to SEc.56(2)(v) , any sum recieved from the relative to an 'individual' shall not taxable under that section. Hence For the purposes of SEc.56(2)(v), in relation to individual, all the clauses provided in the proviso hold true but for the purposes of HUF, the clauses (c) to (g) shall only hve effect coz' a HUF can't hve a relative and hence can't hve any marraige too (since its not human).