Opinion Of Eminent Legal Luminaries On Controversial Issues

Clubbing of income – HUF -Sum of money attracts section 64(2)

QUERY: Whether clubbing provisions of section 64(2) can be said to be applicable to the HUF in respect of sum of money received without consideration as the wordings in the section relate to only property? Can it be said that the sum of money received is separate from the property envisaged in section 64(2)?
ANSWER: Yes, Normally property has been understood in widest possible terms. The Explanation 1 to section 64(2) clarifies that the word “property” has been defined very widely. 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. Therefore “any sum of money” is property.
As per section 64(2) when an individual being a member of the HUF, then clubbing provisions will apply as follows:
(a) Before partition of the HUF, entire income from such property will be clubbed with the income of the transferor.
(b) After partition of the HUF, such property is distributed among the members of the family, in such case income derived by spouse from such property will be clubbed with the income of individual and will be charged to tax in his hands.
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Posted in Income-tax

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