Rama aged 65 years is Karta of his HUF, which consists of himself, his wife and two sons viz., C of 28 years and Minor D aged 16 years. The HUF is assessed to income tax and has business income from the year 2010-11 onwa

Cash gift of ₹ 1 lakh by Rama's major son, to the HUF of Rama would not be taxable in the hands of the HUF, since gifts from a relative of the HUF does not fall within the scope of income taxable under section 56(2)(x) of the Income-tax Act, 1961. Since C being Rama's son, is a member of Rama's HUF, he is a relative of the HUF. Hence, the total income of HUF would be ₹ 5 lakh, being the business income computed. However as per Sec 64(1), any income arising to HUF on the gifted money will be clubbed in the Income of C. Note: Salary income of Rama, the Karta of the HUF, who is employed in a private company would be taxed in his individual hands, since the remuneration earned by the Karta on account of the personal qualifications and expertise and not on account of the investment of the family funds, cannot be treated as income of the HUF.