CA Rajiv Poddar (k) (65 Points)
23 November 20091. Can a Karta give loan to HUF? Does he need to charge interest? If yes, at what rate?
2. Can co-parceners give gift to a HUF? If it is below 50k is it chargeable to tax in the hands of HUF?
3. Can the HUF trade in equity shares out of the money received from either 1 or 2?
Neha
(Ca)
(29 Points)
Replied 23 November 2009
1. Can a Karta give loan to HUF? Does he need to charge interest? If yes, at what rate?
Ans: Yes Karta can give a loan to HUF but he will taxable for Intt. on Loan plus income earned by HUF by way of Clubbing it would be taxable in the hands of Karta.
Can co-parceners give gift to a HUF? If it is below 50k is it chargeable to tax in the hands of HUF?
Ans: Yes co-parceners can give gift to a HUF if it is below or above 50k. the income earned by Huf would be taxble in the hands of co - parceners by way of clubbing.
HOPE U HAD GOT ANS for UR QUE 3
Juzer Sadikot
(CA - innovative solutions for Imports and Exports)
(1309 Points)
Replied 23 November 2009
Dear Mr. Rajiv,
CA Neha Ma'am is absolutely correct, however please note the following;
1) Gift of money or property exceeding Rs. 50000 on or after 01/10/09 by Karta/Co-parcener may be taxable in the hand of HUF wrt section 56 (2) (vii).
2) The limit of gift is Rs. 50,000/- whether recieved single or collectively from any person/persons other wise than provided under 2nd provisio to section 56 (2) (vii).
3) You may need check on eligibility of HUF for opening Share trading/demat Account and subsequent transactions.
4) Now I have doubt on clubbing of income arising outof investment of such money/property.
Thanks and Regards
Juzer
CA Anshu Agarwal
(B€ @LW@¥$ ]-[@Pp¥)
(1832 Points)
Replied 23 November 2009
HI NEHA
can u clear my doubt about the clubbing of income of HUF in the hand of Karta of coparceners?
i think, in the given case there will not be clubbing of income.
But the provisions of 40A(2) shall be applicable.
CA Rajiv Poddar
(k)
(65 Points)
Replied 24 November 2009
@ neha - I don't think the clubbing provisions would apply. Sec. 64(2) applies only if the member of HUF transfers his property without adequate consideration. So, in case of loan, the transfer of property does not arise. Hence, it cannot be said tht clubbing would apply.
@ anshu - I didn't quite understand where sec. 40A(2) will fit in. 40A(2) says that if any expenditure by the assessee and the payment is to be made to some "interested person" then AO may deny such amount as he may deem unreasonable. So, in my question i don't think 40A(2) will apply.
rajiv
CA Anshu Agarwal
(B€ @LW@¥$ ]-[@Pp¥)
(1832 Points)
Replied 24 November 2009
section 40A(2) shall apply in this case as memebers of HUF are referred in the section 40A(2)(b)(ii).
CA. Atindra A. Prabhu Bhatikar
(practising CA)
(68 Points)
Replied 25 November 2009
1. Clubbing provisions are not applicable in this case.
2. Sec 40(A)(2) would be applicable. However, as long as the rate of int paid on loan borrowed is reasonable, say bank FD rate, then question of disallowance as such would not arise. Reporting is must in Form 3CD.
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