Q.Mr. Sen, a member of a Hindu Undivided Family (HUF), received a sum of money during the year out of the income of the HUF. Is this receipt taxable in his individual hands? Discuss with reference to the relevant provision of the Income Tax Act.

Income that has already suffered tax once, in the hands of a different assessee, is generally spared from being taxed a second time.

Under Section 10(2) of the Income Tax Act, 1961, any sum received by an individual, in his or her capacity as a member of a Hindu Undivided Family, out of the income of that family (or, for an impartible estate, out of the estate's income), is not included in the individual's Total Income. The Hindu Undivided Family is itself a distinct 'Person' under Section 2(31) and is separately assessed to tax on its own total income. Once the HUF has paid tax on that income, distributing part of it to Mr. Sen as a member does not create a fresh taxable ev …

Students sometimes assume ANY money received from family is automatically exempt — the exemption specifically applies to a receipt OUT OF THE HUF'S OWN (already-taxed) INCOME, in the member's …