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

CS Professional · Direct Tax Law & Practice · PYQS · December 2021
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 onwards. The business income of HUF for the year ended 31st March, 2021 is ₹ 5,00,000. Rama is employed in a private company and his salary income for the same period is ₹ 6,10,000 (computed). You are required to answer the following treating each of them as independent situations: (iii) A car owned personally by Rama was blended with HUF during the year. It was leased out for a monthly rent of ₹ 10,000 from 1st October, 2020. How would this income be taxed?

Answer & Explanation:

As per section 64(2) of the Income-tax Act, 1961, where a member of the HUF blends his self-acquired property for inadequate consideration with the HUF, income derived therefrom is deemed to arise to the transferor/member and not to the HUF. In this case, Rama has blended his personal property (i.e. car) with the HUF. Since there is no consideration in case of blending, the lease rental of the car of ₹ 60,000 (₹ 10,000 x 6 months) less allowable deductions) would be deemed as the income of Rama.

Topics: Clubbing of Income

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