HUF as has been seen earlier is an entity be’onging to a family. The family in the instant case consists of members constituting the HUF. In such a case drawings or expenses needed to maintain the family can be met out of the current income of the HUF or the corpus funds. of the HUF and there is no bar/limit on this. The expenses which can be met out of the Corpus of HUF can be either recurring/casual and, one time expenses. In such cases, the essence is that the expenses should be on account of or for the benefit of the family as a whole or any member of the family. Expenses on education, maintenance and marriage of the members of the family is the obligation of the family, even if the individual member may have his/her own income from learning or earning.
The following nature of expenses can be generally classified under the heading of drawings:
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Expenses on rent
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Expenses on fooding of the family
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Expenses on education including higher education of the family members
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Expenses on Electricity bill
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Expenses on Motorcar
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Expenses on family get-together / entertainment
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Expenses on Travelling/holidays
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Expenses on capital assets like buying a Car, TV, and Refrigerator etc.
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Expenses on medical treatment of family members
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Expenses on marriages and other festival and ceremonies.
The above list is not exhaustive and can include other items of expenses also. The essence in such cases is that the Corpus is spent for the purpose of enjoyment of the whole family.
In cases where the expenses are incurred not for the family members but for other persons, then there is nothing untoward in such cases except that the same may be treated as gift in the hands of the person for whose benefit the expense are incurred by the Assessing Officer u/s 56(2) (vi)/(vii)/(viia)of the Income-tax Act, 1961 as has been specified elsewhere. Further, it has been held by CBDT that expenses incurred on marriage on a female member of a HUF out of the HUF funds are not to he treated as gift. The detailed circular in this regard is reported in Chapter dealing with Circulars issued in relation to HUFs. The rationale for not treating expenditure on marriage as gift is that it is duty and not a voluntary act. Section 56(2)(vii) of the Income-tax Act,1961 specifically excludes marriage gifts from its ambit. |
