Raykumar Panyam (Operations Head AP) (65 Points)
15 September 2015One of our HUF client has purchased shares worth Rs. 1 lakh and the shares are lying in his DP account. He want to transfer these shares to another individual DP account (Individual is one of the member of HUF).
After 13 months, the individual will transfer back these shares to the HUF account. Is the HUF entity is eligible for LTCG (Long Term Capital Gain)??. HUF entity want to take the benefit of LTCG ! Please share your opinion
Miss Rinkal
(Student)
(1309 Points)
Replied 16 September 2015
What is the purpose of transfer is still not established?
Although such benefit can be availed if both transfer are effected by a gift deed
Z
( )
(2965 Points)
Replied 17 September 2015
As per explanation to S.56(2) , members of HUF are considered as relatives.
Hence any gift to and from HUF to and from members shall be exempt.
Further, by virtue of S.47 read with 49 Gift will not be treated as transfer and hence there shall be no tax effect. In such a scenario I do not understand what kind of tax planing is purported.
While giving the effect to above transaction , I suggest careful analsis is also done of clubbing provisions. If the objective is to transfer the income to HUF for some period then this tax planing will not work (eg dividend income from shares of foregin CO.). A transfer via gift deed is still a transfer for inadequate consideration and hence though exempt u/s 56(2)(vii), the income therefrom (transferred asset) can be clubbed.
S.64(2) Where, in the case of an individual being a member of a Hindu undivided family, any property having been the separate property of the individual has, at any time after the 31st day of December, 1969, been converted by the individual into property belonging to the family through the act of impressing such separate property with the character of property belonging to the family or throwing it into the common stock of the family or been transferred by the individual, directly or indirectly, to the family otherwise than for adequate consideration (the property so converted or transferred being hereinafter referred to as the converted property), then, notwithstanding anything contained in any other provision of this Act or in any other law for the time being in force, for the purpose of computation of the total income of the individual under this Act for any assessment year commencing on or after the 1st day of April, 1971,—
(a) the individual shall be deemed to have transferred the converted property, through the family, to the members of the family for being held by them jointly ;
(b) the income derived from the converted property or any part thereof shall be deemed to arise to the individual and not to the family ;
(c) where the converted property has been the subject-matter of a partition (whether partial or total) amongst the members of the family, the income derived from such converted property as is received by the spouse on partition shall be deemed to arise to the spouse from assets transferred indirectly by the individual to the spouse and the provisions of sub-section (1) shall, so far as may be, apply accordingly :
Provided that the income referred to in clause (b) or clause (c) shall, on being included in the total income of the individual, be excluded from the total income of the family or, as the case may be, the spouse of the individual.
Explanation 1.—For the purposes of sub-section (2),—
"property" includes any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment for the time being representing the proceeds of sale thereof and where the property is converted into any other property by any method, such other property.
Explanation 2.—For the purposes of this section, "income" includes loss.
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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