A trust is a distinct legal entity. - Income Tax - 1021/CBDT

INSTRUCTION NO. 1021/CBDT Dated : November 9, 1976 A case has been brought to the notice of the Board in which the Karta of an H.U.F. transferred certain properties of the H.U.F. to a trust constituted for the benefit of the Karta's wife and children. The G.T. Officer held that as the trust was set up for the benefit of the members of the H.U.F., there was no transfer of property and hence the gift-tax liability was not attracted. 2. The Board are of the view that, unless the context requires otherwise, a trust is a distinct legal entity. A transfer made by the Karta of an H.U.F. to a trust which is set up for the benefit of members of the H.U.F. is a bilateral transaction involving two distinct entities, namely, the H.U.F. and the trust. If such transfers are for no consideration or for less than adequate consideration, the provisions of G.T. Act, 1958 would be attracted. 3. The Board, therefore, desire that the legal position as mentioned above be brought to the notice of the officers working in your charge.