A HUF has funds Rs.50 lacs. The family members want to distribute Rs.40 Lacs amongst them. Can they do so in view of section 171 of IT act. Otherwise what remedy one has.
Regards.
CA Sanjay Baheti
1 Replies
Amir
(Learner)
(4016 Points)
Replied 10 February 2010
Dear Sanjay,
As far as I know,
1) HUF cannot give gifts to it's members except in certain circumstances...
2) Now since Gifts cannot be made therefore there has to be partition only..
Now Partition can either be Total or Partial..
Sec 171, doesnot recocgize Partial Partition as partition at all....That is the income shall continue to be taxed as earlier in case of Partial partition.
However in case of Total Partition, the income upto the date of partition shall be assessed in the hands of HUF & after that in the hands of Members individually (the provisions of Sec 64 shuld be kept in mind )
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