Member contribution to HUF

[CA Rachit Agarwal]

Please clarify whether the contributions made by members to its HUF, is taxable in the hands of HUF. Contibutions of the members is considered under the Capital Account of HUF.

As HUF being the separate legal entity and being assessed separately, and HUF not being the individual.

[B L Bhojwani]

1. In the hands of the HUF, such contributions are covered under clause (v)/(vi)/(vii) of sub-section (2) of section 56.

2. In the hands of the individual, i.e., the member of the HUF making the contribution, clubbing provisions under sub-section (2) of section 64 will be attracted.

[Rama Krishana]

I wish to endorse the view of my learned brother.

AI Summary

Contributions to Hindu Undivided Family (HUF) are taxable under section 56(2); clubbing rules apply per section 64(2). A query was raised regarding the tax implications of contributions made by members to a Hindu Undivided Family (HUF). It was clarified that such contributions are taxable for the HUF under specific clauses of section 56(2) of the Income Tax Act. Additionally, for the individual member making the contribution, the clubbing provisions under section 64(2) may apply. Both responses agreed on this interpretation, confirming that HUF is assessed separately as a distinct legal entity.