Doctor as karta of HUF

[MANOJ JAIN]

I would like to discuss the issue of income of HUF. Can the Karta of HUF give professional services on behalf of HUF and hence earn income for HUF. For example, a doctor provides his services at some place in his capacity as a Doctor and proprietor of his firm. Can he provide the same services in the capacity of Karta of his HUF at any other place. Here my contention is, that,if an individual can provide his services as Karta, to run the business owned by HUF, then the same position may be applied to a proferssional and he should not be barred from providing the medical services in the capacity of Karta. Can anyone throw some light with his expert views. I would be obliged. Thanks and regards Manoj Jain

[Markesh Antony]

Some services are personalized services.Some services may not be personalized service. Threfore, income from personalized service can not be attributed to HUF income. Sevices of doctor are in the nature of personalized services. I think you can not apportion you income to HUF income. However, a clinic may be run by HUF. From the income of the clinic you may draw some amount towards your personalized service. The income of clinic own by HUF would continue to be taxed in the hands of HUF.

[MANOJ JAIN]

Thanks for your reply. But i would further like to know whether it is available somewhere in any law that a personalised service can not be attributed to HUF income. Kindly advise. Thanks and regards manoj jain

[Rajeev Menon]

The profession of doctor is attributable as special skill and hence will be treated as personal income. Diversion of income to HUF will be questioned by IT and will be disallowed.

[MANOJ JAIN]

I would further like to ask a question. An HUF can run a business through its karta. There is no bar on the volume of business. I feel every business requires a personal skill to run it successfully. A business may be profitable for one and loss making for another. So, it requires personal skill to run it successfully. Then, why a doctor or CA or an advocate is not allowed to give its professional services on behalf of HUF. Why has it become a negative point for a person who has developed personal skills by studying hard. Kindly advice.

[Surender Gupta]

I think there is conceptual difference. Business of HUF is not dependent on the personal skill of any karta or member of huf. A business of HUF is run by the Karta in capacity of caretaker. If you try to mix it with personal skill that can not be attributable to HUF, you would lead to a wrong conclusion.

How can the HUF entity earn money without each one's personal skills?

AI Summary

Personalized professional services cannot be attributed to the family entity; HUF may own a clinic but personal fees remain individual.
Personalized professional services provided by a member (such as a doctor) are treated as that member's personal income and generally cannot be attributed to the HUF. The HUF may, however, operate a business or clinic whose income belongs to the HUF, and the Karta may receive compensation from that HUF business; diversion of income that essentially represents an individual's specialized professional skill to the HUF is subject to challenge by tax authorities.