Gifts received by HUF from Aliens / Strangers

 

Further, HUF can also receive gifts from any alien stranger. However, In this regard, it is pertinent to note that till the enactment of Section 56(2) gifts were exempt from any tax in hands of the donor as well as the donee. However, Section 56(2) (v) was introduced in the statute books w.e.f 1.4.2005 and reads as under:

 

Section 56(2) - In particular and without prejudice to the generality of the provisions of sub-section (1), the following income shall be chargeable to income-tax under the head “Income from other sources” namely:

 

(v)        where any sum of money exceeding twenty-five thousand rupees is received without consideration by an individual or a Hindu undivided family from any person on or after the 1st day of September, 2004, but before the 1st day of April, 2006 the whole of such sum:


Provided that this clause shall not apply to any sum of money received—


(a)       from any relative; or
(b)       on the occasion of the marriage of the individual; or
(c)        under a will or by way of inheritance; or

(d)       in contemplation of death of the payer.

Explanation.—For the purposes of this clause, “relative” means—


(i)         spouse of the individual;
(ii)        brother or sister of the individual;
(iii)       brother or sister of the spouse of the individual;
(iv)       brother or sister of either of the parents of the individual;
(v)        any lineal ascendant or descendant of the individual;
(vi)       any lineal ascendant or descendant of the spouse of the individual;
(vii)      spouse of the person referred to in clauses (ii) to (vi).]

 

The above provisions of Section 56(2)(v) were operative only upto 31s1 March,2006 and from 1st April,2006 a new sub-clause (vi) was added in Section 56(2) which reads as follows:

 

Section 56(2) (vi) - Where any sum of money, the aggregate value of which exceeds fifty thousand rupees, is received without consideration, by an individual or a Hindu undivided family, in any previous year from any person or persons on or after the 1st day of April, 2006 [but before the 1st day of October, 2009], the whole of the aggregate value of such sum:


Provided that this clause shall not apply to any sum of money received —


(a)       from any relative; or
(b)       on the occasion of the marriage of the individual; or
(c)        under a will or by way of inheritance; or
(d)       in contemplation of death of the payer; or
(e)       from any local authority as defined iii the Explanation to clause (20) of section 10; or
(f)        from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or

(g)       from any trust or institution registered under section 12AA.


Explanation—For the purposes of this clause, ‘relative” means—


(i)         spouse of the individual;
(ii)        brother or sister of the individual;
(iii)       brother or sister of the spouse of the individual;
(iv)       brother or sister of either of the parents of the individual;
(v)        any lineal ascendant or descendant of the individual;
(vi)       any lineal ascendant or descendant of the spouse of the individual;
(vii)      spouse of the person referred to in clauses (ii) to (vi)


Thus, in view of the above it is important to keep in mind that the gifts which are received by HUF must be exempt u/s 56(2) (vi) of the Income- tax Act, 1961, otherwise tax liability may arise.


In order to so plan this, the following things must be kept in mind:-


The proviso to Section 56(2) (vi) exempts the following types of gifts from being treated as income:

 

1.   Gift from any relative is exempt. Further, explanation to this proviso defines the word relative by referring to individuals. Therefore ordinarily speaking, the HUF seems to have been excluded from this clause as there cannot be any relative of a HUF. However, the extended meaning of this clause can be taken to mean that the relatives of members of HUF are covered by this clause and therefore any gift from any relative of a member to HUF is exempt in the hands of the HUF. However, this is a very liberal and extended meaning which must not be taken in view of the fact that huge tax liability may entail upon the HUF. It is only a matter of time before the Courts of law settle this controversy.in this regard, it is pertinent to refer to the decision in the case of Goli Eswariah vs CGT (1970) 2 SCC 390 [=(170) 76 ITR 675 wherein the Apex court held that when a coparcener throws is separate property into the common stock, he makes no gift under Chapter VII of the Transfer of Property Act. In such a case there is no donor or donee.

 

2.   Secondly, gifts on the occasion of the marriage of the individual is exempt in the hands of individual without any limit. This being not applicable to HUF is not discussed here.

 

3.   Thirdly, gifts under a will or by inheritance are exempt under this clause and therefore, if a HUF receives any gift by a will of any person, the same is exempt without any limit. HUF may not ordinarily receive any gift by inheritance as such and therefore, the clause is not applicable in the case of HUF.

 

4.         Fourthly, gifts in contemplation of death can be received by HUF in case a person makes such a gift.

MORE TOPICS ....

HUF -  Capital Gain Account
HUF -  Deduction from HUF Business Income
Income Derived From Funds Of HUF -Whether Individual Income Or Family Income
Gift by HUF to its Member
Gift To Minor Daughters Out Of HUF Property Prior To Marriage
Gift of HUF Property to Stranger or to any Person who is a Alien to HUF
Clubbing Provisions In Case Of Gifts Received By HUF
Applicability of Clubbing Provisions in case Karta of a HUF is a Partner in a Firm
Gifts received by HUF from Aliens / Strangers
HUF - Investment Options
Concept of Multiple HUF’s
Whether a Single Member can Constitute a HUF ?
Whether any Limit is placed on Number of Members of a HUF ?
Whether HUF- Can Be Constituted with only Female Members ?
Drawings / Expenses of HUF
Whether HUF can be a Shareholder / Subscriber to the MOA ( Memorandum Of Association)  of a Company
Whether HUF can be a Member of a Cooperative Society ?
Whether HUF can be a Partner ?
Can KARTA of a HUF enter into Partnership with another Member of HUF ?
Can There Be A Partnership Between Two HUFs?
Effect Of Death Of Karta In Case Of Partnership Firm
Whether HUF Can Be A Proprietor ?
Whether HUF Can Be A Trustee / Settler ?
HUF - Aliyasantana Law
HUF - Marumakkattayam Law
Power of KARTA in relation to HUF
Managing Members in relation to HUF
Whether a Female can become a Karta ?
Tax Planning TIPS for HUF
HUF - Meaning Of Important Term- “Ancestral”
HUF - Meaning Of Important Term- “Stridhan”
HUF - Meaning Of Important Term- “Mitakshara”
HUF - Meaning Of Important Term- “ Dayabhaga”
Meaning of the term ‘Coparcener’ of HUF
Power of ‘Coparcener’ of HUF
Difference between a ‘Coparcener’ and a ‘Member’
Whether Husband / Wife Can Constitute A HUF ?
HUF - RECOVERY PROVISIONS
‘Maintenance of Accounts’ by HUF
‘Audit of Accounts’ by HUF
Applicability Of The ‘Accounting Standards’ On HUF
Whether Merger Of Two HUF is Possible ?
Residential Status of the HUF under I.T. Act.1956
‘Coparcener Property’ under HUF
 

BUDGET 2017

:: How These 8 Hot Tips can lead to Cool Tax Saving in Budget 2017
 
:: How to Pay Less Income Tax Post Budget 2017 and Beyond ....
 
:: Salient Features of Direct Tax Proposals in Union Budget 2017
 
:: New Tax Rates For FY 2017-18 & AY 2018-19 (Budget 2017)
 
:: TAX Benefit for Taxable Income in Budget 2017-2018
 
:: Point wise Summarise of Budget 2017
 
:: Key Features / Highlights of Budget 2017-2018
 
:: Important Points on Union Budget 2017
 
How is a Search Operation Conducted by Income Tax Department ?
The provisions relating to search and seizure are contained in section 132 of the Income Tax Act, 1961.
 
Sec. 143(3) : Scrutiny Assessments by Income Tax Department
Scrutiny assessment refers to the examination of a return of income by giving an opportunity to the assessee to substantiate the income declared and the expenses, deductions, losses, exemptions, etc. claimed in the return with the help of evidence..
 
“Penalties” Under Income Tax Act. 1956
Penalties by way of monetary payments are charged under the Income Tax Act for various defaults relating to payment of taxes, maintenance of accounts, for noncompliance and non co-operation during proceedings, for evasion of tax, etc..
 
Income of Individuals And HUFs – As a Tax Payers Under Income Tax Act, 1961.
The individual tax payers and also the HUFs while proceeding to calculate the net taxable income in the first phase are required to arrive at the gross total income under different heads of income...
 
Types Of Income Subject To TDS [Deduction Of Tax At Source]
The following types of incomes are mainly subject to deduction of tax at source: (a) Salaries Section 192. (b) Interest on securities Section 193..
 
Pre-Requisite For Claiming Income Tax Refund
For claiming income tax refund the first prerequisite is that there should have been excess tax paid or deducted at source on the basis of return of income.
 
Section-139(1) : Provision for Voluntary Income Tax Return
Every person,— (a) being a company or a firm; (whether having income or loss) or (b) being a person other than a company or a firm if his total income or the total ncome of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall file a return of his income in the prescribed form.
 
Benefits of Filing Income Tax Returnsn
We have heard many a times that every individual whose total income exceeds the maximum exemption limit is obligated to furnish his/her Income Tax Return or ITR.
 
Section-139(9): Defective Tax Return
Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of 15 days from the date of intimation.
 
Section 139(5) : Revised Income Tax Return
If any person, having furnished a return u/s 139(1), or in pursuance of a notice issued under section 142(1), discovers any omission or any wrong statement therein, he may furnish a revised return at any time.
 
Section-139(4A) : Income Tax Return of Charitable and Religious Trusts
Every person in receipt of income derived from property held under trust or other legal obligation wholly or partly for charitable or religious purposes or of income being voluntary contributions referred to in section 2(24)(iia) shall.
 
Section-139(4) : Belated Income Tax Return
If an assessee has not furnished a return of his income within the time allowed to him under section 139(1) or within the time allowed under a notice issued under section 142(1).
 
Get Updated ...
 
 
LIBRARY @ Tax Management
TAX & INVESTMENT GUIDE FOR "NRI"- Non-Resident Indians !
GUIDE & FAQ @ TAX
GRAPHICAL PRESENTATION @ TAX
TIPS & TRICKS @ TAX
MANAGERIAL & FINANCIAL DECISIONS @ TAX
5 GOLDEN RULES OF TAX PLANNING
FAMILY TAX PLANNING
DEDUCTIONS FROM YOUR INCOME
EXEMPTED INCOMES
HUF - FORMATION, MANAGEMENT & TAX PLANNING
COMPUTATION OF GROSS TOAL INCOME
INCOME TAX @ GLANCE
MULTIPLE KNOWLEDGEBASE ON TAX
51 TIPS ON TAX PLANNING
APPEALS UNDER INCOME TAX
ASSESSMENTS
PENALTIES UNDER IT DEPATMENTS
TAX SAVING SCHEMES
TAX READY RECKONER
TAX RATES
PROSECUTIONS UNDER INCOME TAX DEPARTMENT
TAXATION SYSTEM IN INDIA
CHARITABLE & RELIGIOUS TRUST - TAXATION

KNOWLEDGE BASE !

New Topics @ Tax KnowledgeBase...
 
 

Most Popular Topics :

Corporate Tax ( Taxation in Companies)
FAQ on TDS on Salaries
FAQ on Taxable Income
FAQ on Filing of Income Tax Return
Graphical Chat Presentation of Provision of Motor Car / Other Vehicles [Rule 3(2)(A)&(B)]
Tax Amendment at a Glance for Year 2015
'Appeals' Under Income Tax Act. 1961.
'Assessments' Under Income Tax Act. 1961.
List of Exempted Incomes (Tax-Free) Under Section-10
Income Under the Head ' Business and Professions' [Section 28 to 44]
Income Under the Head ' Capital Gain'
Income Under the Head ' House Property '[Section- 22 - 25 ]
Income Under the Head "Salary"
[Section 15-17]
Income Tax on 'Partnership Firms'
PENALTIES Under Income Tax Act. 1961.
Tax Saving Schemes for Individual for AY 2015-2016-Instant Guide
Income Tax Rates / Tax Slabs (AY-2014-2015 & 2015-2016)
"Exempted Incomes" under Income Tax Act.
Charitable & Religious Trust :Formation, Registration, & Taxation
Hindu Undivided Family [HUF] - Formation, Management and Taxation

Most Popular Links :

Clubing of Income Deduction U/s 80C
Allowances Us-17(3) Exemption-Salary
Tax Amendment-2015 Taxable Income
Clubing of Income Tax Deductions
HUF Deduction HUF Investment
Gift by HUF HUF Tax Planning Tips
Tax Saving Schemes Tax Planning Tips
Refund of Tax Fringe Benefit Tax-FBT
Return Filing Assessment / Scrutiny
Notice from I.T. Dept. Incomes Types @ TDS
Exemptions-Tax Returns “Summon” U/s 131
'Black Money' @ I.Tax Big Gifts To Be Taxed
'Appeals' under I.Tax Assessment @ I.Tax
Exempted Incomes Capital Gain
Business & Professions House Property
Salaries @ I.Tax Partnership Firm
'Penalty' under I.Tax Act. Tax Ready Reckoner
Charitable Trust Useful Links @ I.Tax
 
 
Guide & FAQ on Tax Knowledgebase @ Taxation Income Tax @ Glance HUF - Formation, Planning & Taxation
TRUSTs (Formation, Management & Taxation) NRI (Tax Planning,Saving,Investemnt) Budget 2017-2018  
________________________________________________________________________________________

Disclaimer:
All efforts are made to keep the content of this site correct and up-to-date. But, this site does not make any claim regarding the information provided on its pages as correct and up-to-date. The contents of this site cannot be treated or interpreted as a statement of law. In case, any loss or damage is caused to any person due to his/her treating or interpreting the contents of this site or any part thereof as correct, complete and up-to-date statement of law out of ignorance or otherwise, this site will not be liable in any manner whatsoever for such loss or damage.

The visitors may click here to visit the web site of Income Tax Department for resolving their doubts or for clarifications

 
Contact Us :

SWAYAM EDUCATION
Mandal Bagicha, Hemkapada,
Sunhat, Balasore-756002 ( Odisha)
eMail ID : incometaxmanagement@gmail.com

www.IncomeTaxManagement.Com