Opinion Of Eminent Legal Luminaries On Controversial Issues

Income from other sources- Gift by HUF

QUERY: A’s HUF consists of karta A and Members Mrs. A, S-1 and D-1. The HUF derives income of ₹ 3 lakhs as interest on FD with bank and agri. income of ₹ 10 lakhs.
Now HUF can make a reasonable gift to its members. Also income received by a member out of the HUF income is also exempt u/s. 10 (2).
What are the tax implications of receiving gift in the hands of member taking into account provisions of Sec. 10 (2) and Section 56 (2) (x) ?
It appears that there would be no liability in the hands of member concerned u/s. 56(2)(x) since the income itself is exempt u/s. 10(2). Is it correct?
ANSWER: S. 56(2)(vii) was applicable up to March 31, 2017, which is yet on statute.
From April 1, 2017, clause (x) of S. 56(2) is applicable, wherein the expression “relative” shall have the same meaning as assigned to it in the Explanation to clause (vii), which provides that any gift received by a member from HUF is not liable to tax. Otherwise also income in the hands of member is not liable to be included in the total income u/s. 10(2) of the Act.

Posted in Income-tax

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