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Income from capital gainns

ANIL KUMAR KHETAN (PROPRIETOR) (542 Points)

03 December 2022

Huf received loan of ten lakhs from his karta and investment in share . Income from at the time of sales of shares or divided income is Huf income or personal income of karta , please advise me

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4 Replies

Arjun Gupta (Advocate Bombay High Court) (26 Points)
Replied 03 December 2022

The karta gave a loan to the HUF from his personal funds. The money then belongs to the HUF only and it is upto the HUF after selling shares to pay the capital gains tax. The loan has to be repaid but since the transaction is done by the HUF as property of the HUF it becomes taxable only in its hands and not the karta.

The above is subject to a full scrutiny of the facts of your case.

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (183191 Points)
Replied 03 December 2022

Refer: Clubbing of Income & HUF [Section 64(2)] of IT act...

Arjun Gupta (Advocate Bombay High Court) (26 Points)
Replied 03 December 2022

I don’t think section 64(2) is applicable here. Loan is not property converted by karta into joint family property, it is a liability and has to be repaid. Assuming the karta has taken consent of other members/coparceners, in my view, the amount is taxable in HUFS hands only since the loan was utilised towards investment resulting in capital gains. If the other coparceners allege that the karta wrongly exercised power by investing etc they may file a civil suit but tax liability is upon the HUF only.