what is your view Mr.bajaj 

Is HUF entity carring speculation business?

(trading in shares & securities)

Trading in shares and securities is not a commission income.

Its a trading business involving investments. Thus, if the HUF is investing from its own account and earning, then it is business income of HUF.

However, if it is doing intra-day (without investments), then it could be difficult to prove the involvement of HUF in decision making. At such instances, it is better to show it as individual income.

in my opinion it can earn commission income  

Read more at: /forum/commission-income-of-huf-175252.asp#.VNh9aeaUeuF

HUF CANNOT SHOW COMMSSION INCOME FROM OTHER SOURCES, BUT HUF CAN SHOW COMMISSION INCOME FROM BUSINESS & PROFESSION.

are you sure HUF can legally earn commission as various people have various views  and if your client is showing it for last 7years, was his case selected for scrutiny?

Based on my personal observation and experience we have to apply simple logic.

For Trading and Manufacturing purpose we can Register HUF as proprietor with Vat and Excise Department.

If so then just becuase HUF is earning Commission from Trading of Goods, it should be allowed by Income Tax Department as the involvement is almost same. Just because in first instance HUF becomes owner of goods and in second case it doesnot that does not mean there is a case of clubbing. Further we all know what kind of involvement is there when HUF deals in Stock Market ? Still Income is assessed in the Hands of HUF.

if HUF has  legal entity ( not mere having pan card and bank account) and  can establish that the commission is earned by HUF entity,  

as to claim the capital gain and speculation income in hands of HUF, the HUF has to open a trading / demat and bank  account and route the gains / speculation profits through that chanel only, 

similar way if the HUF has a trade licence, profession tax other commercial establishment records which can establish offering services to gain commission, then there is no bar, however if karta is  routing the income through HUF just to divide the tax, then tax network is smart enough nowadays to trace the things,  as  AIR reports are filed for every such transactinos.  

[1968] 68 ITR 221 (SC) - In the case of S. RM. CT. PL. Palaniappa Chettiar v CIT the Hon'ble apex court held that HUF can earn income that arrive from joint family asset of the family.

Therefore in my view Simply earning commission from skills is individual income and not income of HUF. 

Hello Sir,

I wanted to know if HUF can show Insurance Commission as its still being a family business selling Insurance as a services to various contacts within Family & Friends.

Example: Person X, Y & Z are part of HUF. X being Karta taken Insurance License Examiation. All members of HUF are procuring Insurance proposals & leads to Commission Income Generation. In this case is it fair to use HUF PAN for Taxation?.

Thanks,

Nirmal

(nkradha @ gmail.com)

Originally posted by : Nirmal
	Hello Sir, I wanted to know if HUF can show Insurance Commission as its still being a family business selling Insurance as a services to various contacts within Family & Friends. Example: Person X, Y & Z are part of HUF. X being Karta taken Insurance License Examiation. All members of HUF are procuring Insurance proposals & leads to Commission Income Generation. In this case is it fair to use HUF PAN for Taxation?. Thanks, Nirmal (nkradha @ gmail.com)

Well, HUF is a separate taxable entity having its separate PAN. In case the HUF collectively as an HUF provides any service for which  they receive commission in the capacity of HUF, only then one can claim the commission income in the name of HUF.

Otherwise, such commission income shall be taxable in the hands of the respective individuals if there is no explicit agreement or contract in the name of HUF. 

But, there is no doubt in the general principal that the HUF is a separate legal entity and can earn income of any nature in its own name and status only if entered into the contract or earned in its own HUF name.

Since HUF is a separate legal entity and having separate PAN, HUF is not restricted to earn commission income. In the above example whether or not all the members involved in procuring insurance proposals, the commission income shall be taxable in the hands of HUF and not in the hands of members individually but the income should be credited to the bank account of HUF.

Thanks

Nishchal Rastogi

rastoginishchal @ gmail.com

Isn't a HUF business difficult to manage from a tax perspective? is the treatment different?

Isn't a HUF business difficult to manage from a tax perspective? is the treatment different?

When coparceners earn commission income it is because of their individual skills...and not because they are members of HUF.