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Messages - amrit singh

Dear Sujit/JB - you'll both seem experts. Could you also comment on

HUF funding - can mother loan money to son's huf? http://www.itatonline.org/forum/index.php?topic=956.0
If mother gives loan to son's huf, even at low 1% interest, does huf's income get clubbed with mother's income? Who pays tax on huf income - the huf? or mother?

Section 60 suggests mother pays tax, because income was transferred without transferring underlying asset i.e. it was a loan, and not an irrevocable gift

Funding an HUF is tough because if Karta/member puts personal money in huf - the income generated is clubbed with transferer's income i.e. they pay tax, and not HUF. Section 64(2) (pasted below)

Please guide


Other useful threads:


All income arising to any person by virtue of a transfer whether revocable or not and whether effected before or after the commencement of this Act shall, where there is no transfer of the assets from which the income arises, be chargeable to income-tax as the income of the transferor and shall be included in his total income.

Section 64(2) Where, in the case of an individual being a member of a Hindu undivided family, any property having been the separate property of the individual has, at any time after the 31st day of December, 1969 been converted by the individual into property belonging to the family through the act of impressing such separate property with the character of property belonging to the family or throwing it into the common stock of the family or been transferred by the individual, directly or indirectly, to the family otherwise than for adequate consideration (the property so converted or transferred being hereinafter referred to as the converted property) then, notwithstanding anything contained in any other provision of this Act or in any other law for the time being in force, for the purpose of computation of the total income of the individual under this Act for any assessment year commencing on or after the 1st day of April, 1971, -

(a) The individual shall be deemed to have transferred the converted property, through the family, to the members of the family for being held by them jointly;

(b) The income derived from the converted property or any part thereof shall be deemed to arise to the individual and not to the family;

(c) Where the converted property has been the subject-matter of a partition (whether partial or total) amongst the members of the family, the income derived from such converted property as is received by the spouse on partition shall be deemed to arise to the spouse or minor child from assets transferred indirectly by the individual to the spouse and the provisions of sub-section (1) shall, so far as may be, apply accordingly:

Provided that the income referred to in clause (b) or clause (c) shall, on being included in the total income of the individual, be excluded from the total income of the family or, as the case may be, the spouse of the individual.