reciept of gift as corpus from other than family.

[Guest]

Sir,

                     My huf has recived gift from my father's friend HUF which became corpus of our huf. now AO is denying the validity of huf  on the basis that huf can be formed by a gift recived from ancestral immovable property. Kindly suggest and from where i can find case laws in support. AO has passed his order and income of huf has been clubbed with that of my father.

[Deepak Nagori]

Dear Shailesh,

The IT Act does not define HUF nor does it state how HUF can be formed. In your case, since the HUF received gift from non relatives (who are not family members), it shall be liable to tax in the hands of HUF. The Rajkot ITAT has held HUF to be a group of relatives in Vineet kumar Raghavjibhai Bhalodia vs. ITO (ITAT Rajkot)

Regards

CA Deepak Nagori

AI Summary

Hindu Undivided Family's Tax Liability Questioned; Income Tax Act Silent on HUF Formation; Gifts from Non-Relatives Taxable. An individual raised a query about their Hindu Undivided Family (HUF) receiving a gift from a friend's HUF, which was added to their corpus. The Assessing Officer (AO) challenged the validity of the HUF, claiming it should be formed through ancestral property. The AO included the HUF's income with the individual's father. A respondent clarified that the Income Tax Act does not define HUF formation and stated that gifts from non-relatives are taxable. They referenced a Rajkot ITAT decision which defines HUF as a group of relatives, suggesting the tax liability remains with the HUF.