Did you fail to file your HUF income ITR? Ask Wallet Wise today outlines why a member has no options after the time for filing a revised ITR has passed.
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During the fiscal year 2024–2025, I experienced a major health problem that cost me a lot of money. I therefore moved a portion of the shares from my HUF account to my personal account. My personal ITR revealed the dividend income from these shares, and I paid the appropriate amount of tax. It was not possible to file the HUF ITR, and it is still pending. Please advise how the Income Tax Department will interpret this.
Expert Advice: If specific legal and tax requirements are met, the transfer of shares from your HUF to your individual account may be regarded as a gift from the HUF to you. According to the Income-tax Act, transferring a portion of the HUF’s assets to its members constitutes a partial partition of the organization. The income tax laws do not recognize a partial HUF division. Therefore, even when the transferee has received the revenue in his account, it must stay in the HUF’s possession.
There is nothing you can do because the deadline for filing an amended ITR has past. However, as you have not submitted a HUF ITR, you can submit an updated ITR after March 31, 2026, which will reflect the dividends you earned for these shares. Please take note that the clubbing provisions will remain in effect until the HUF assets are fully divided, including dividends and capital gains realized from the selling of these shares. Following and adhering to this procedure year after year is quite difficult.
As an alternative, you may consider the transfer of shares from your HUF account to your own account to be a loan of the shares. If you have not sold the shares yet, you can reverse the same by moving them to the HUF’s demat account along with the dividends you have earned. This will save you the trouble of using the clubbing provisions year after year.
Regardless of the approach you take, it is preferable to record this in a memorandum of understanding between your HUF and yourself.
