Can I view my rental income on a Huf account?
I am the karta of a hindu undivided family (HUF) company. My co-partners are my wife and my son. I am retired and only have rental income from a house inherited from my mother by her probated will.
Can I view my rental income in my HUF bank account? And, as I sell this house, can I show the sale proceeds on the HUF account? For this, do I have to transfer the house to HUF? If so, then what is the procedure? Isn’t the property automatically treated as a HUF property because I’m also the HUF karta?
What process should be followed in case the property is to be bequeathed after the death of the testator as per the will registered in Delhi after the transfer has been made in the municipal records. It needs to be further clarified whether the probate process also needs to be followed in Delhi or if an estate certification is sufficient and who would issue the same?
— Name masked on request
We assume that you are the sole legatee/heir to the house under your mother’s will. Since the house is bequeathed to you individually, and not to your HUF, ownership of the house will belong to you, not to HUF.
Therefore, the proceeds from the rental of the house cannot be shown as HUF rental income.
Because ownership of the home is yours, the proceeds from the sale of the home cannot be shown as HUF-owned proceeds due to the sale of the home by you.
The transfer of the house to HUF and its subsequent sale by HUF will allow you to reserve the proceeds of the sale to HUF.
Until the transfer to HUF occurs, it will continue to be treated as your personal property. Although you are the HUF karta, the house will not automatically be considered HUF property.
Regarding the process of transferring the house to HUF, since it is immovable property, the same can be done by a deed of gift duly stamped and registered in favor of HUF.
The donation received by HUF will not be treated as income of HUF.
However, any income from home/property transferred by a member to HUF is subject to the clubbing provisions.
As a result, income from such real estate will be treated as your income.
In Delhi, it is not compulsory to obtain probate for a will, whether registered or not. Therefore, in your case, assuming that the property to be bequeathed under the will is in Delhi, there will be no requirement for the executor to apply to the Delhi High Court for the grant of a probate, after the death of the testator.
Rishabh Shroff is partner, Cyril Amarchand Mangaldas.