Distribution of HUF Funds - Section 171

[satbir singhwahi]

huf has funds Rs.50 lacs. The family members want to distribute Rs.40 Lacs amongst them. Can they do so in view of section 171 of IT Act. Otherwise what remedy one has.

[Rama Krishana]

Partial partition is not allowed under section 171. If the members wants to use the funds of the HUF either partition the HUF completely in terms of section 171 or distribute loan after complying with the conditions of sections 269SS and 269T of the Income Tax Act, 1961.

AI Summary

Hindu Undivided Family must fully partition to distribute funds; partial partition not allowed under Section 171 IT Act. A discussion on distributing Rs. 40 lakhs from a Hindu Undivided Family (HUF) fund of Rs. 50 lakhs raised a query about the applicability of Section 171 of the Income Tax Act. A response clarified that partial partition of HUF is not permissible under Section 171. To utilize the funds, the HUF must either undergo a complete partition as per Section 171 or distribute the amount as a loan, adhering to the conditions outlined in Sections 269SS and 269T of the Income Tax Act, 1961.