Can CA in Practice do Business Through HUF?
Students and Professionals generally both have curiosity to know whether HUF route is open for doing business for CA in practice. People feel restricted when they realise technically they cannot do business along with practice.
So here is GIST of the matter – CA in practice can be member of HUF, where business is being carried. But he cannot be karta of HUF or Representative of HUF for business. If he is karta / representative, then specific permission will be required and their he will have to prove that he is not actively engaged in business , but then he will be considered to be in part time practice.
Further if business comes to him as share of HUF because of his relation then also above thing will be applicable.
If it would have been allowed, it would have been big loop hole which all CAs would have happily implemented. Practically everything is fine till we or anyone inform ca institute, there is no mechanism to detect it.
Requirement under Regulation 190A
Permission to be granted specifically:
Members of the Institute in practice may engage in the following categories of business or occupations, after obtaining the specific and prior approval of the Council in each case:-
- Interest in family business concern or concern in which interest has been acquired as a result of relationship and in the management of which no active part is taken.
- Above Specific Resolution would be equally applicable to member carrying out the activities referred to therein in his capacity as Karta/representative of HUF provided he is not actively engaged in carrying on such activities.
Past Cases
1. Where a Chartered Accountant acted as karta of a Hindu Undivided Family (HUF) without taking prior permission of the Council. Held that he was inter alia guilty of professional
misconduct under the clause.
(B.L. Asawa, Chief Manager, Punjab National Bank, Delhi vs. P.K.Garg – Page 728 of Vol. IX – 2A – 21(4) of Disciplinary Cases – Council’s decision dated 16th to 18th Sept. 2003)
2. Where a Chartered Accountant was Karta of the HUF and was engaged in the business of a firm without permission of the Council. Held that he was guilty of professional misconduct under the Clause.
(V. Krishnamoorthy vs. T.T. Krishnaswami – Page 192 of Vol.VII(2) of Disciplinary Cases – Council’s decision dated 27th to 29th September, 1992)
3. A member as a Karta of his Hindu Undivided Family entered into partnership business for a short period with non-Chartered Accountants for engaging in business other than the profession of Chartered Accountants, without prior permission of the Council. Therefore, he was found guilty in terms of clauses (4) and (11).
(R.D. Bhatt vs. K.B. Parikh – Page 191 of Vol. VI(2) of Disciplinary Cases – Decided on 15th, 16th and 17th December, 1988)
4. While applying for membership and Certificate of Practice, a Chartered Accountant did not report that he was a partner in his family business. Held that he was guilty of professional misconduct within the meaning of the Clause.
(Baijnath Agarwalla vs. Gopinath Aggarwalla – Pages 426 of Volume VIII (2) of Disciplinary Cases – Council’s decision dated 26th to 28th August, 2001)