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Index

Table of Cases
Introduction
Composition of Hindu Joint Family
Ouster Of a member from the Joint family
Coparcenary
Incidents of Hindu Joint Family
Incidents of coparcenership
Rights of members of joint Hindu family
Ancestral Property
Bibliography

Table of Cases

Chotelal v. Jhandelal, 1972 All. 424


Gur Narain Das v. Gur Tahal Das, AIR 1952 SC 225; Vellaiyappa Chetty v. Natarajan,

AIR 1931 PC 294.


Isree Prasad v. Nasib Kooer, (1884) 10 Cal 1017
Kanta v. Rajah (1863) 9 M.I.A 539; Venugopala v. UOI, 1969 SC 1094
Katama Natchiar v. The Rajah of Shivagunga, 1863 MIA 539.
Krishnaswami v. Rajagopala, (1895) 18 Mad 73, 83.
Kumar Rasheswari Naudan v. R.B. Bhagwati Saran, 1960 S.C.J 648.
Lal Bahadur v. Kanhaiyalal, (1907) 34 IA 65:29 All 244 (PC).
Rajagopala v. Venkataraman,1947 P.C 122; Chandra v. Kanak, 1975 Del. 175
Ram Kumar v. Commissioner of Income Tax, 1953 All. 150
Soam v. Kunzang, 1982 Sikkim 26.
Srinivasan v. Commissioner of Income Tax, AIR 1962 Mad 146.
State Bank of India v. Chamandi Ram, 1969 S.C, 1330.
Surjit Lal v. Commissioner of Income Tax, (1978) 101 ITR 776.
Tundra v. Tiwari, 1972 M.P.L.J 400

Introduction
The Hindu joint family is a normal condition of the Hindu society. Its origin can be traced to
the ancient patriarchal system where the patriarch or the head of the family was the
unquestioned ruler, laying down norms for the members of his family to follow, obeyed by

everyone in his family, and having an unparallel control over their lives and properties. At the
root was the general family welfare or promotion of family as a unit for which personal
interests of the family members could be sacrificed. The ancient system generally treated the
property acquired by the members of the family as family property or the joint property of the
family with family members having one or the other right over it. With gradual
transformation of the society and recognition of the members of the family as independent in
their own right, concept of separate property and rules for its inheritance were developed.
This dual property system, though considerably diluted, has survived the lashes of time, the
judicial and legislative onslaught and the Hindu society still recognises the joint family
property as unique entities having no similar concept alive anywhere else in the world.1

Composition of Hindu Joint Family:


A Hindu Joint Family consists of all male members descended lineally from a common male
ancestor together with their mothers, wives or widows and unmarried daughters. 2 An
1 Dr.Poonam Pradhan Saxena, Family Law Lectures, 3rd Edition(2013), Lexis Nexis, 53.

2 Surjit Lal v. Commissioner of Income Tax, (1978) 101 ITR 776.3 Gur Narain Das v. Gur Tahal Das, AIR 1952 SC 225;
Vellaiyappa Chetty v. Natarajan, AIR 1931 PC 294.

unmarried daughter on marriage ceases to be a part of her fathers joint family and joins her
husbands joint family as his wife. If a daughter becomes a widow or is deserted by her
husband and returns to her fathers house permanently, she again becomes member of her
fathers joint family. Her children however dont become members of her fathers joint family
and continues being member of their fathers joint family. Even an illegitimate son of a male
descendant would be a member of his fathers joint family.3 a child in womb till it is born is
not a member of the joint family for taxation purposes but is treated as in existence for certain
purposes under Hindu law.4
To bring into existence a joint family for the first time the presence of the seniormost male
member is an essential condition. However, once the joint family comes into existence it
continues despite the death of this male member.
The members of a joint family are bound together by the fundamental principle of sapindaship or family relationship, which is the essential feature of this institution. The cord that
knits the members of the family is not property but the relationship with one another.4 A
Hindu joint family is not a corporation. 5 A Hindu joint family has no legal entity distinct and
separate from that of the members who constitute it. It is not a juristic person either. Hindu
joint family is a unit and in all affairs it is represented by its Karta. Within its fold no outsider,
except by adoption, can be admitted by agreement or otherwise. It confers a status on its
members which can be acquired only by birth in the family or by marriage to a male member.

Ouster Of a member from the Joint family:

Srinivasan v. Commissioner of Income Tax, AIR 1962 Mad 146.

5 supra 1, 54

3
4
5

An unmarried daughter ceases to be a part of her fathers joint family on her marriage and
may regain her status if she becomes a widow or if on being deserted by the husband comes
back to her fathers house permanently. A child male or female born in the family can cease
to be member of this family if he or she is given in adoption to another family by a person
competent to do so under the law. The marriage of a lineal male member under the Special
marriage Act,1954 to a non-Hindu will result in his automatic severance from the joint family
and he cannot become a member of this family even by agreement. Presently marriages
between a Hindu and a Christian can be validly solemnised under the Special Marriage Act,
1954 and under the Indian Christian Marriage Act, 1872. If they marry under the former Act,
a Hindu man will cease to be a member of a joint family, there is no reason why the same
consequences should not apply if they marry under the latter Act. Thus, the concept of a
Hindu joint family would mean a Hindu father, having a Hindu wife and Hindu children. It is
a Hindu joint family and cannot comprise non-Hindu members let alone a family having only
a Hindu father, a non-Hindu wife and children whose religion cannot be determined at birth
but is dependent upon the contingency of them being brought up as Hindus6.
Coparcenary:
He Hindu joint family must be distinguished from Hindu coparcenary. The latter is a much
narrower body than the joint family. The coparcenary includes only those persons who by
birth acquire an interest in the joint or coparcenary property. They are the sons, sons sons
and sons sons sons of the holder of the joint family property for the present.
The essence of a coparcenary under the Mitakshara Law is unity of ownership and unity of
possession. The ownership of the coparcenary property vests in the whole body of
coparceners. As long as the family is joint, no individual member can predicate of the joint
undivided property, that is, he has certain and definite share therein. The rights of each
coparcener consists in a common possession and common enjoyment of the whole
coparcenary7.
To understand the conception of coparcenary it is necessary to note the distinction between
ancestral and separate property. The property inherited by a Hindu from his fathers father
and fathers fathers father is ancestral property. Property inherited by other relations is his
6 Supra 1,55
7 MP Tandon Family Law in india 4th Edition (1990),Allahabad Law Agency, 36

separate property. The essential feature of ancestral property is that if the person inheriting it
has sons, grandsons or great grandsons, they become joint owners with him. They become
entitled to it by reason of their birth. Father, son, sons son and sons sons son together
constitute coparcenary, because they have common ownership in the ancestral property. No
coparcenary can commence without a common male ancestor, though after his death it may
consist of collaterals, such as brothers, uncles and nephews, cousins, etc. A member of a joint
family may be removed more than four degrees from the common ancestors and yet he may
be a coparcener. If he can demand partition he is a member of coparcenary. Only those
members of joint family can demand partition who are within four degrees from the last
holder of the property8
Incidents of Hindu Joint Family:
(a) A common male ancestor is necessary to bring the Hindu joint family in existence but
is not necessary for its continuation. After the death of such common male ancestor
the rest of the family continues to be a joint Hindu family. It is said that upper links
are removed and lower links are added.
(b) A Hindu joint family is purely a creature of law. This means, it cannot be created by
the act of the members or an agreement between the parties. Therefore, a stranger
cannot be made a member of a Hindu joint family even by agreement. The only
exception is marriage and adoption9
(c) A Hindu joint family has no legal entity distinct or separate from its members. It is a
unit and is represented by the manager of the joint family who is called Karta. It
cannot be sued in its own name. It is neither a juristic person nor a corporation and
therefore cannot convey the property in its joint character.
(d) The status of a joint family member can be lost by conversion to another faith, by
marriage to a non-Hindu, on being given in adoption by the competent parents, and
for a daughter, on getting married.
(e) All members in a joint family do not have equal rights in the family property.
Coparceners have an interest in the coparcenary property while females and males
other than coparceners or disqualified coparceners have a right of maintenance and a
right of residence in the joint family house.

8 ID 37
9 Supra 1,56

(f) The continuation of a joint family is not dependent upon the presence of a male
member in the family.
(g) Plurality of members is necessary for constitution of or continuation of joint family
but plurality of male members is not necessary for its continuation. The joint family
does not end even with the death of a male member as long as it is possible in the
nature of things to add a male member in the family.
(h) A Hindu joint family may continue in perpetuity until it ends. Even where a partition
is effected this joint family may break but does not end as in its place two or more
joint families come into existence10.
Incidents of coparcenership: A coparcener has an interest by birth in the joint family
property, though until partition takes place, this is an unpredictable and fluctuating
interest which may be enlarged by deaths and diminished by births in the family;
every coparcener has the right to be in joint possession and enjoyment of joint family
property both these are community of interest and unity of possession 11. Every
coparcener has a right to be maintained including a right of marriage expenses being
defrayed out of joint family funds,12 every coparcener is bound by the alienation made
by the Karta for legal necessity or benefit of the estate and by the legitimate acts of
management of the Karta; every coparcener has a right to object and challenge
alienations made without his consent or made without legal necessity; and every
coparcener has a right of partition and survivorship. 13 he can establish his right of
survivorship by suit14

10 Supra1,57
11 Kanta v Rajah (1863) 9 MLA 539; Venugopala v Uoi 1969 SC 1094
12 Rajagopala v Venkatraman1947 P.C 122 Chandra v Kanak 1975 Del 175
13 Sbi v Chamandiram 1969 SC 1330
14 Sonam v Kunzang 1982 Sikiim 26

In N. Jaya Lakshmi v. R. Gopala,15 where two brothers jointly acquired property and later
on one of the brothers was not heard to be alive for seven years, the other brother would take
the property by survivorship.
(a) Four Generation Rule: The lineal male descendants of a person, up to fourth
generation, acquire on birth, an interest in the coparcenary property held by him.
(b) Creation of Law: Like a joint family, coparcenary is also a creation of law and
cannot be formed by an agreement between the parties.
(c) No stranger can be introduced in the coparcenary. Only a male child, born in the
family or validly adopted, can become a coparcener. In Mitakshra coparcenary, no
female except a daughter can be its member, though they are members of the joint
family. It means that no female except the daughter has any interest by birth in the
joint family property. She has no right of survivorship or partition, though if a
partition takes place, certain females are entitled to a share.
(d) Acquisition of interest by birth: A coparcener in a joint family is born with an
interest in the coparcenery property which means that the moment he is born in the
family he gets a right by birth in the ownership of the coparcenery property. Thus, if
the family comprises the father and his two sons, all three of them have an interest in
the coparcenery property.
(e) Unity of Possession and Community of Interest: one of the basic features of
coparcenery is unity of possession and community of interest.16 All the coparceners
jointly own the coparcenery property and till a partition takes place and their shares
are specifically demarcated no one can claim ownership over any specific item of the
coparcenery property. This means that all coparceners have a right of common
enjoyment or common use of the property.
(f) Unpredictable and fluctuating interest: The most remarkable feature feature of
interest by birth is that the interest which a coparcener acquires by birth is not a
specified or fixed interest. At no time before partition can it be predicted that he is
entitled to so much share in the joint family property. Nor can he say that such items
of property belong to him, even if the properties are in his possession or use. The
interest fluctuates with the births and deaths in the family17
15 1995 S.C 995
16 Katama Natchair v The raja of shivagunga 1863 MIA 539
17 Tundra v Tiwari 1972 M.P.l.J 400

(g) Right of Maintenance: Every coparcener and every other member of the joint family
has a right of maintenance out of the joint family property. The right of maintenance
subsists through the life of the member so long as family remains joint. Female
members and other male members who do not get a share on partition, either because
they have no right, such as an unmarried daughter or because they are disqualified
from getting a share, such as an idiot or lunatic coparcener, are entitled to
maintenance even after partition. Unmarried daughters have a right to be married out
of the joint family funds. Other members marriage expenses are also to be defrayed
out of joint family funds.
(h) Coparceners right to restrain and challenge alienation: When the father, the
Karta, the coparcener and the sole surviving coparcener overstep their power, the
alienation can be challenged. It can be challenged the moment the person entitled to
challenge comes to know of it and till it is not barred by limitation. Whenever an
alienation is challenged, the burden of proof is on the alienee to show that it was for a
valid purpose. Even when sons challenge an alienation made by the father for
discharging his personal debts, it is for the alienee to show that the debt was taken by
the father, though if sons assert that the debt was tainted, the burden of proof that the
debt was tainted is on the sons. Sometimes a stranger can also challenge an alienation,
such as purchaser of a coparceners interest may challenge an improper alienation
(i) Coparceners right of partition: After the Amendment Act of 2005 a daughter since
would be a coparcener shall have a right to ask for partition. As a general rule, both
under the Mitakshara and the Dayabhaga schools, every coparcener has a right to
partition and every coparcener is entitled to a share on partition. Apart from the
coparceners, no one else has a right to partition. No female except the daughter has a
right to partition, but, if partition takes place, there are certain females who are
entitled to a share. These females are fathers wife, mother and grandmother etc.
under the Hindu Right to Property Act, 1937, a Mitakshara coparceners widow took
the same interest which her husband had at the time of his death. She was given the
right to partition.
(j) Illegitimate son as a coparcener: Hindu law has never considered an illegitimate
child as a filius nullius. An illegitimate son, particularly dasiputra has always regarded
as a member of his putative fathers joint family and as such has a right to be
maintained out of the joint family funds during his entire life. However, he is not
considered as an coparcener. Among the sudras, his position is slightly better. During

the life time of his father, he is not a coparcener with his father, and therefore has no
right to ask for partition. But if partition takes place , the father is free to allot a share
to him, even a share equal to a legitimate son. He is entitled to take only half a share
of what he would have taken had he been a legitimate son.
(k) Coparcenary between a sane and insane person: There can be a coparcenary
between a sane and an insane person. A coparcener gets his right in the coparcenary
property by birth and there is nothing in Hindu law which shows that such a right is
irrevocably extinguished on a supervening insanity. If partition takes place he has no
share in property, but this does not make him cease to be a coparcener. When he is
cured of insanity, both his rights revive. In any case his son is not excluded from
taking a share in the partition.18
(l) Coparcenary within coparcenary: It is possible that separate coparcenaries may
exist within a coparcenary.

Rights of members of joint Hindu family:


In a Hindu joint family, all its members do not have equal rights. The interest in the
coparcenary property is with the coparceners, including a right to demand its partition, and a
right to challenge its unauthorised alienation made by Karta. All other female members
including the widows of deceased coparceners, and illegitimate sons of lineal male
descendants, have a right of maintenance out of the joint family funds and a right of residence
in the joint family home.19

Ancestral Property:
All property inherited by a male Hindu from his father, fathers father, and fathers fathers
father, is ancestral property as regards his son, grandson and great grandson. Property
inherited from any other relation is not ancestral property but it is the separate property of the
person inheriting it. The essential feature of the ancestral property according to Mitakshara
law is that the sons, grandsons and great grandsons of the person who inherits it acquire an
interest in it by birth. Their rights attach to it by their birth. But according to Dayabhaga the
male issue of the inheritor do not acquire any interest by birth in such property as they do
according to Mitakshara law.

18 Kumar Rajeshwari Nandan v R.B Bhagwati Saran 1960 S.C.J 648


19 Supra 6, 292

A Hindu father or the managing member has power to make a gift within reasonable limits of
ancestral immovable property for pious purposes.
The properties of the following description are ancestral properties:
(a) Accretions.- Accumulations of income of ancestral property, property purchased or
acquired out of income of or with the assistance of ancestral property, the sale
proceeds of ancestral property, and property purchased out of such proceeds or
obtained in lieu of such property are all ancestral property and constitute joint family
property.20
(b) Residue.- Where a member of a joint family has assigned his undivided interest to a
creditor to satisfy claims to satisfy claims which do not exhaust the entire value of
interest, any residue continues to be ancestral property.21
(c) Savings.- Judicial Committee pointed out all savings made out of ancestral property
and all purchases or profits made from the income or sale of ancestral property would
form part of ancestral or coparcenery property, whether such savings or acquisitions
were made before or after the birth of a son.22
Inherited Property.- Property inherited by two brothers from their father is ancestral
property. If one of them alone has a son, that son by his birth acquires not only an interest in
the share of his father but a right of survivorship even in respect of the rest of the property
Unobstructed Heritage: ( Apratibandha Daya)
Ancestral property is unobstructed heritage. The essential feature of unobstructed heritage,
according to Mitakshara Law is that the sons, grandsons and great grandsons acquire an
interest in the property inherited by birth. Their rights attach to it by their birth. The property
is called unobstructed because the accrual of the right to it is not obstructed by existence of
the owner. Thus, if A inherits its property from his father or grandfather or great grandfather it
is ancestral property or unobstructed heritage in the hands of A is an obstruction to his son
acquiring an interest but as regards other relations he holds it as his absolute property. If A
has no male issue, other relations have no interest in the property during the life time of A.
20 Isree Prasad v Nasir Kooer (1884) 10 Cal 1017
21 Krishnaswami v Rajagopala (1895) 18 Mad 73,83
22 Lal bahudhur v Kanhiyalal (1907) 34 IA 65:29 ALL 244 (PC)

Obstructed Heritage: ( Sapratibandha Daya)


Property inherited by a Hindu from a person other than his father, grand father, and great gran
father is obstructed heritage. It is called obstructed because the accrual of the rights to it is
obstructed by the existence of the owner. The owner holds it as his separate and absolute
property. The relations of the owner do not take a vested interest in it by birth. They are
entitled to it only on the death of the owner. Thus, the property which devolves on parents,
brothers, uncles, nephews, etc., on the death of the last owner is obstructed heritage. For
example A inherits certain property from his brother. A has a son B. the property is obstructed
in the life-time of A. B does not take any interest in it during the life-time of A. After As
death B will take it as As heir by succession. The existence of A is an obstruction to the
accrual of any right in the property to B.23
HINDU UNDIVIDED FAMILY
Hindu Undivided Family (HUF) or a Joint Hindu Family Consists of all males lineally
descended from common ancestor their wives and daughter. Any married Hindu, Sikh, Jain
or Buddhist man can form HUF. HUF is automatically constituted on marriage. Few simple
formalities to complete for HUF to function as legal entity Formed from blending of
individual property with HUF character, Gifts, Joint Labour, Will, Partition or Reunion. There
are two schools of Hindu Law i.e. Dayabhaga School of Hindu Law and Mitakshara School
of Hindu Law.
CO-PARCENERS:1. Some of the members of HUF are designated as coparceners.
2. All coparceners are members of HUF, all members are NOT coparceners.
3. Husband & Wife form HUF; wife can only be member, NOT coparcener.
4. Coparcener is different from the other members of HUF, coparceners are those members who
acquires by birth an interest in the joint property of the family.
5. Coparcenary is restricted to four levels of living order.
6. Daughters also coparcener w.e.f. 9.9.2005 in the Hindu Succession (Amendment) Act, 2005.
23 Supra 10,40

7. After Hindu Succession Act amendments equal rights to daughters even after marriage.
Married

women have rights in two HUFs-their father's as coparcener and their

husband's as member. There's no need to fill an application form or submit KYC documents
for joining an HUF.
8. Members if the family who are not coparceners- No right to claim partition.
9. 1st Step Form a corpus for HUF can be any CAPITAL ASSET (like property, gold, jewellery,
securities, deposits) or CASH.
10. Daughter of a coparcener shall by birth become coparcener in her own right in the same
manner as son.
11. Daughter has the same rights in the coparcener property as she would have had if she had
been a son.
12. Daughter is allotted the same share as to the son.
Who can be a KARTA of HUF?
The FATHER of the family in absence, senior male member of the family. Unmarried
daughter, in the unfortunate event of her father passing away, will become Karta IF All male
members are minors & natural guardian is mother then she is the Karta. Where a couple has
only one daughter and the husband pass away, the mother-daughter duo can continue the
HUF (although a problem may arise after she gets married and becomes a member of her
husband's HUF).
The Karta Have Various Duties that are Managing the affairs of HUF, Maintaining the
books of accounts, filing tax returns for HUF, To enter in to contracts, form partnership
firm, or representation on behalf of HUF.
The various ways of Tax Saving through HUF
General Benefits:-There are Separate exemption limit under Income-tax Act of Rs.
2,00,000, Separate deduction u/s 80G, Separate deduction u/s 80C(Insurance
Premium can be paid on life on any member up to Rs. 1 lacks), Separate deduction u/s
80D(Medi-Claim) (Rs.15000), Section 80DD deduction for maintenance including
medical treatment of a dependant who is a HUF member, Salary to Karta /Member,
Separate Income-tax Deduction on Interest on loan for self occupied House Property
in the name of HUF(Sec 24(b)) and There are Separate exemption of Wealth-tax for

HUFs up to Rs. 30 lakhs Wealth and One House- Wealth Tax Free and Productive
assets of HUF fully exempt from Wealth-tax.
HUF can also take benefits of exemption of capital gain Cost Inflation Index benefit
available to Calculate Cost of the Asset, Tax benefit of 20% Tax on Long-term Capital
Gains.(Except for non listed shares-Without STT), Saving Tax on Long-term Capital
Gain possible by investing in Capital Gains Bonds of NHAI / REC, Long-term Capital
Gains Saving by investing in Residential Property, No capital gains to HUF on
Distribution of assets on partition.
Stock Market, Mutual Funds & HUF:-HUF can have a separate Demat Account and
can Make money by investing in Primary Market and Secondary Market , Enjoy Tax
Free Income for Long-term Capital Gains by holding shares for more than one
year(STT Paid), HUF has 2 benefits in investing in IPOs i.e. the 2 lakhs limit for the
investment to be categorized as retail is not breached and there is a greater
probability of more shares being allotted, Enjoy lower tax rate of 15% on Short-term
Capital Gains(STT Paid), HUF can also invest in mutual fund.
HUF can be a Proprietor of one or more than one Business concerns, Separate name can
be kept of HUF business entity. There are No requirement of tax Audit of HUF
business if Turnover within Rs.1 crores.(AY-2012-13). The Business Income can be
Computation @ 8% without books of account in case turnover is up to Rs. 1Crores
The Presumptive Basis (AY 2012-13)
There are 30% Standard Deduction on Annual value of house property (Rental Income)
to HUF u/s 24(a), Self occupied one Residential House & the tax gain specially by
way of Interest on Loan & Repayment of Loan u/s 24(b) and Exemption from Wealthtax on 1 Residential house in the name of HUF.
As per section 10(2) of the Income-tax Act, 1961 any sum received by an individual
from Hindu Undivided Family of which he is member is exempt from tax but Amount
received not as a member of Joint Family but in pursuance of some statutory
provision, etc. would not be exempted in this clause and Member of joint family
living apart from the other members does not affect his/her position in law to claim
the right as per section 10(2).

Taxation of money received by HUF without consideration


1. Provisions of section 56(2)(vi) applicable even to HUF if any sum of money is received by
the HUF exceeding Rs. 50,000 p.a.
2. Items received in kind subjected to the provisions of sec. 56(2)(vi).
Gift of HUF Property
1. Elementary proposition that Karta of HUF cannot gift or alienate
property except to the extent recognized under the Hindu Law,
namely necessity etc CGT v. P.Hanumanthappa 68 ITR 363, K.P.
Gupta v. CIT 233 ITR 456
2. Reasonable limits depends upon facts - CGT v. B.V. Narasimharaju
101 ITR 74 3. Karta can make reasonable gifts to daughters Sushil
Kumar & Sons v. ITO 234 ITR 98
4. Gift on Marriage Occasion is valid S. Lakshmamma v. Kotayya AIR 1936 Mad. 825.
5. Gift of immovable property should be for pious purpose CIT v. Ram Gopal Rajgharia 123
ITR 693
6. Gift to Strangers void Guramma v. Mallappa AIR 1964 SC 510.
Gift by a member of HUF
As per section 64(2) a gift by a member of a Hindu Undivided Family after 31-12-1969
would attract Clubbing of Income in the hands of the member and as such the income from
the converted property shall be deemed to arise to the individual & not to the family.
Partition of the HUF Only coparceners can demand partition. These are of two types-Total
Partition: Property divided amongst all the family, undivided family ceases to exist , Partial
Partition: Some family members go out of fold and others remain joint or some of the
property is divided and other remains joint not recognized for tax purpose, after 31.12.1978
As per section 171(9) of the Income-tax Act, 1961 the Partial Partition after 31-12-1978 is not
recognized. Even after Partial Partition the income of the HUF shall be liable to be assessed
under the Income-tax Act as if no Partial Partition had taken place.
Procedure to effect partition

Under the Hindu law HUF may be ended by portioning the property (or whatever assets) of
the HUF, but for IT purposes are to be recognized by the AO.

Share in assets of HUF: All coparceners, mother(in case of death of father), wife gets a share
separate from husband in case of partition between her husband and sons, son in womb of
mother at time of partition

At the time of making assessment u/s 143, 144, its claimed by any member that the partition
has taken place AO shall make inquiry after giving notice.

After inquiry AO shall record finding as to whether there has been TOTAL PARTITION
DATE of such partition.

Order u/s 171 passed by AO

Where partition took place in the previous year is recorded by AO: Income of HUF before
partition shall be assessed as no partition has taken place. Each member shall be liable
separately and jointly for the income tax thereon

For this section several liability of any member or group of member shall be computed
according to portion of joint family property allotted to him or it at partition.

The provisions are applicable in levy and collection of any penalty, interest fine or any
sum for period up to partition date

Total partition in the context of the I. T Act means partition by "Metes and
Bounds.

The Income Tax law will recognize its demise (for want of a better word, since a
divided Hindu family can be reunited again),only when the HUF each and every
layer of the clothing of property-tangible or intangible, movable or
immovable -it had has been removed
There are various advantages of HUF

Helps avoid service tax: If business turnover is split by setting up HUF, the
service provider can avoid the hassle of charging service tax and become
small scale service provider.

Salary to Karta: This salary is taxed as his income and will be fully
deductible from the HUF income.

Use HUF income for expenses: The income earned by the HUF can be used
for the household expenses of the family.

Distribute income to coparceners:

Karta can gift money to the

coparceners from the income earned by the HUF. This income is tax-free in

the hands of the coparceners. This way, person with a high income will be
able to get tax-free income.

Give loan for business: HUF can give loans to the Karta or coparceners for
setting up business & can charge interest on the loan. Interest paid on any
business loan is fully deductible.

No MAT or AMT: unlike other corporate entities, no minimum alternative


tax on HUF owned businesses.

Small-scale industry exemption: or the business community, various


exemptions and incentives given to small-scale units are crucial to
ensuring healthy margins.
HUFs can be made better by the following ways

In May 2005, the government passed a rule PREVENTING HUFs from


opening new accounts in the Public Provident Fund. All existing accounts,
which had completed 15 years since the initial deposit, were also to be
closed by 31 March 2011, HUF CANNOT invest in other government securities
such as the National Savings Certificates, as well. These restrictions should be
done away with. Why should HUFs be treated differently from any other
taxpayer, If the Karta of the HUF is crucial for its smooth functioning, the
HUF should be allowed to take a Key man life insurance cover for him and
should be made the nominee, Hindu Succession Act accords equal rights
to female coparceners of an HUF, its only applicable to the Mitakshara
school, it should be applicable to Dayabhaga school (West Bengal and
Assam) as well, Kerala does not have a HUF system. For the sake of
uniformity, the same rules should apply across the country, HUFs are not
eligible for some tax benefits enjoyed by individual taxpayers. They
should also be able to claim deduction for interest paid on education
loans, benefits for pension fund contributions.

Bibliography

Dr.Poonam Pradhan Saxena, Family Law Lectures, 3rd Edition(2013),


Lexis Nexis
M.P Tandon, Family Law in India , 4th edition (1990), Allahabad Law
Agency
Dr.Paras Diwan, Modern Hindu Law(2014), Allahabad Law Agency