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Transfer of property to son's HUF

22 June 2019

Respected colleagues, Kindly confirm the tax implications of transfer of immovable property into son's HUF.
Rgds
Amit Khatri

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9 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (171404 Points)
Replied 22 June 2019

What is the kind of transfer, with consideration or without?

Any think less than FMV, is taxable in the hands of recipient.

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Amit Khatri (29 Points)
Replied 22 June 2019

Transfer is without consideration, it is a Gift through execution of gift deed.

Suresh Thiyagarajan (Student) (3986 Points)
Replied 22 June 2019

The above transaction will have implication in the hands of the transferor and as well as the transferee.
In the hands of the Transferee :
1. According to sec 56(2)(x), where any Immovable property received for no consideration or for inadequate consideration, where the difference between stamp duty value of such property and consideration received exceeds Rs. 50,000 on the date of transfer the same will be taxable u/s 56(2)(x), subject to certain conditions.
2. In your case, I am assuming that you have transferred your Immovable property to son's HUF for inadequate or no consideration. For the purpose of a relative, Son's HUF will not be considered as relative and hence it will be treated as a separate concern and it amounts to transfer of Immovable property to concern in which your son has a substantial interest. Hence in the hands of HUF (transferee), the difference in value will be taxed u/s 56(2)(x).
In the hands of Transferor :
1. However, there is no stringent provision in the hands of the transferor. According to sec 61 where the transfer is in the nature of revocable transfer any income arising out of the asset will remains to be taxed in the hands of the transferor.
2. In your case make sure it is an irrevocable transfer so that sec 61 does not get attracted.
Please correct me if the above interpretation has an alternative view.

Amit Khatri (29 Points)
Replied 22 June 2019

What will be the tax implications in case property is first transferred to the son (a relative, so no tax implications) and he further transfers it to his HUF.

Suresh Thiyagarajan (Student) (3986 Points)
Replied 22 June 2019

1. If the property is first transferred to a son, he will be covered under the definition of relative hence there won't be any tax in the hands of the transferee.