ASSESSMENT OF HINDU

UNDIVIDED FAMILIES

Presented by:-
Bhoopendra Chauhan
MBA(int.) 5th Sem
 ASSESSMENT OF
HINDU UNDIVIDED
FAMILIES
INTRODUCTION

THE RELATION OF PARTNERSHIP ARISES FROM AN

AGREEMENT, WHILE THE RELATION OF A HINDU
UNDIVIDED FAMILY ARISES FROM STATUS. THE HINDU
UNDIVIDED FAMILY IS ASSESSED TO INCOME TAX AS A
SEPARATE INDEPENDENT UNIT. THE INCOME TAX ACT
NOT DEFINED THE MEANING OF A H.U.F. HENCE, WE
HAVE TO DEPEND FOR THIS PURPOSE ON THE DEFINITION
GIVEN UNDER THE HINDU LAW.
ACCORDING TO HINDU LAW,

A HINDU UNDIVIDED FAMILY CONSISTS OF ALL MALE PERSONS LINEALLY

DESCENDED FROM A COMMON ANCESTOR (EXCEPT THOSE WHO HAVE
SEPARATED FROM THE JOINT FAMILY BY PARTITION OF ASSESTS) AND
INCLUDES THEIR WIVES AND UNMARRIED DAUGHTERS, AND ALSO A
STRANGER WHO HAS BEEN ADOPTED BY THE FAMILY.
HINDU UNDIVIDED FAMILY

A HUF CONSISTS OF TWO TYPES OF MEMBERS :

(A) MEMBERS WHO ARE ENTITLED TO MAINTENANCE ONLY,
e.g., FEMALE MEMBERS OF THE FAMILY.
(B) MEMBERS WHO ARE ENTITLED TO DEMAND THEIR SHARE
ON A PARTITION OF THE FAMILY.THESE PERSONS ARE
COPARCENERS.THESE BEING THE SONS,GRANDSONS AND
GREAT GRANDSONS OF THE HOLDERS OF THE PROPERTY
FOR THE TIME BEING.
HOWEVER, AFTER COMMENCEMENT OF HINDU SUCCESSION
(AMENDMENT) ACT, 2005 (W.E.F. 9.9.2005), IN A JOINT
HINDU FAMILY GOVERNED BY THE MITAKSHARA LAW, THE
POSITION OF A DAUGHTER HAS BECOME AS UNDER:
1. THE DAUGHTER OF A COPARCENER SHALL BY BIRTH
BECOME COPARCENER IN HER OWN RIGHT IN THE SAME
MANNER AS THE SON.
2. SHE WILL HAVE THE SAME RIGHTS AND LIABILITIES IN
RESPECT OF COPARCENARY PROPERTY AS THAT OF A
SON.
3. THE FAMALE HEIR CAN DEMAND THE PARTITION OF A
COPARCENARY PROPERT IN THE SAME MANNER AS THE
SON.
FOR INCOME TAX PURPOSES A H.U.F. IS ONE WHICH HAS
COMMON PROPERTY OF THE FAMILY AND AT LEAST TWO
MEMBERS:

1.COMMON PROPERTY OF THE FAMILY:-

INCLUDES:
 ANCESTRAL PROPERTY.
 ANY OTHER PROPERTY OF THE FAMILY ACQUIRED WITH THE
AID OF ANCESTRAL PROPERTY.
 ANY PROPERTY AQUIRED BY A MEMBER OF THE FAMILY BY
HIS PERSONAL EFFORTS WITHOUT THE AID OF ANCESTRAL
PROPERTY, BUT TREATED BY HIM AS THE PROPERTY OF THE
FAMILY.
2. H.U.F. MAY CONSIST OF:

 ALL PERSONS LINEALLY DESCENDED FROM A COMMON

ANCESTOR AND INCLUDES THEIR WIVES AND UNMARRIED
DAUGHTERS;
 A MALE AND WIDOW OR WIDOWS OF DECEASED MALE
MEMBERS OR MEMBERS;
 HUSBAND AND WIFE;
 BROTHERS ONLY;
 WIDOWS OF THE MEMBERS OF THE FAMILY;
KARTA OF THE FAMILY

THE SENIOR MOST MALE MEMBER OF THE FAMILY IS

ORDINARILY REGARDED AS THE KARTA OF THE FAMILY.IF
HE SURRENDERS HIS RIGHT OF MANAGEMENT, A JUNIOR
MALE MEMBERS MAY BE APPOINTED AS KARTA. IF THERE
IS NO MALE MEMBER IN THE FAMILY OR THE MALE
MEMBER IS NOT COMPETENT TO CONTRACT, THE
SENIOR MOST FEMALE MEMBER WILL BE REGARDED AS
KARTA OF THE FAMILY.
TWO SCHOOLS OF H.U.F.
ACCORDING TO HINDU LAW

1. MITAKSHARA SCHOOL :- It applies to the whole of India

except the state of Bengal, Assam and some parts of
Orissa. According to this school, the son acquires an
interest in his father’s ancestral property by mere
birth, and has a right to demand partition.
2. DAYABHAGA SCHOOL :- It applies only in Bengal,
Assam and some parts of Orissa. According to this law
the son gets a right in the ancestral property only
after the death of the father. During his life-time
father has got an absolute right to sell, donate or
transfer the ancestral property, in any manner he
likes.
RESIDENCE OF HINDU
UNDIVIDED FAMILY
 A HINDU UNDIVIDED FAMILY IS RESIDENT IN INDIA IF THE
CONTROL AND MANAGEMENT OF ITS AFFAIRS IS
SITUATED WHOLLY OR IN PART IN INDIA.IT IS ONLY
WHEN THE CONTROL AND MANAGEMENT IS SITUATED
WHOLLY OUTSIDE INDIA THAT A HINDU UNDIVIDED
FAMILY IS REGARDED AS NON-RESIDENT.THE CONTROL
AND MANAGEMENT OF A BUSINESS IS SITUATED AT THE
PLACE WHERE “THE HEAD AND BRAIN OF THE TRADING
ADVENTURE” IS SITUATED; AND THE PLACE OF CONTROL
MAY BE DIFFERENT FROM THE PLACE WHERE THE
OPERATIONS OF THE BUSINESS ARE CONDUCTED.
A H.U.F. IS SAID TO BE ‘NOT ORDINARILY
RESIDENT’ IN INDIA IN ANY PREVIOUS YEAR
IF:

 THE MANAGER OF THE FAMILY HAS BEEN A NON-

RESIDENT IN INDIA IN 9 OUT OF 10 PREVIOUS YEARS
PRECEEDING THAT PREVIOUS YEAR ; OR
 THE MANAGER OF THE FAMILY HAS BEEN IN INDIA FOR A
PERIOD AMOUNTING IN ALL TO 729 DAYS OR LESS
DURING THE 7 PREVIOUS YEARS PRECEEDING THAT
PREVIOUS YEAR.
IN THIS COONECTION IT IS MANAGER’S RESIDENCE IN
INDIA THAT IS TO BE CONSIDERED AND NOT HIS
RESIDENCE OUTSIDE INDIA.
INCOMES WHICH ARE NOT TREATED AS
FAMILY INCOME

 THE PERSONAL EARNINGS INCLUDING INCOME FROM

SEPARATE PROPERTY OF A MEMBER OF THE H.U.F.,
EVEN THOUGH HE HAS SONS SHALL BE ASSESSED AS THE
INCOME OF AN INDIVIDUAL.
 INCOME FROM THE SELF-ACQUIRED PROPERTY OF A
FATHER IS ASSESSABLE AS THE INCOME OF AN
INDIVIDUAL.IF THE FATHER MAKES A PERSONAL GIFT OF
HIS SELF-ACQUIRED PROPERTY TO HIS MAJOR SON, THE
INCOME FROM SUCH PROPERTY SHALL BE ASSESSED AS
THE PERSONAL INCOME OF THE SON LIKE AN INDIVIDUAL.
(ANCESTRAL PROPERTY : INCOME OF THE FAMILY)
 AFTER THE DEATH OF HER HUSBAND IF THE WIFE IS THE SOLE
OWNER OF THE PROPERTY OF THE FAMILY, SHE WILL BE
ASSESSED AS AN INDIVIDUAL IN RESPECT OF INCOME FROM
SUCH PROPERTY.
 IF A MEMBER OF JOINT FAMILY CARRIES ON HIS PERSONAL
BUSINESS, THE INCOME FROM BUSINESS SHALL BE ASSESSED AS
THE INCOME OF INDIVIDUAL EVEN IF THE CAPITAL EMPLOYED
IN THE BUSINESS HAS BEEN OBTAINED BY TAKING A LOAN
FROM THE FUNDS OF THE FAMILY.
 INCOME OF THE MEMBERS OF THE FAMILY FROM A
PARTNERSHIP BUSINESS CARRIED ON BY THEM ON
PERSONAL ACCOUNT SHALL BE ASSESSED AS THE INCOME
OF THE FIRM.
 UNDER SECTION 64(2) , WHERE AN INDIVIDUAL CONERTS,
AFTER 31ST DECEMBER, 1969, HIS SEPARATE PROPERTY
INTO PROPERTY BELONGING TO H.U.F. OF WHICH HE IS A
MEMBER, THEN THE ENTIRE INCOME DERIVED FROM THE
CONVERTED PROPERTY OF THE INDIVIDUAL WOULD BE
INCLUDED IN THE TOTAL INCOME OF THE INDIVIDUAL AND
NOT OF THE FAMILY INCOME.
 Amount given to wife of the karta and unmarried
daughters for marriage expenses at the time of partition
of the family cannot be thrown into hotchpot of H.U.F.
and the income earned there from is not included in
income of H.U.F.
ASSESSMENT OF H.U.F.

 A HINDU UNDIVIDED FAMILY IS A DISTINCT SEPARATE

ASSESSEE.THE ASSESMENT IS DONE IN THE NAME OF THE
FAMILY JUST LIKE AN INDIVIDUAL BUT THE RULES
GOVERNING THE RESIDENCE OF THE FAMILY ARE
DIFFERENT FROM THOSE OF AN INDIVIDUAL. A H.U.F. IS
ASSESSED THROUGH ITS MEMBERS.THE ELDEST MALE
MEMBER OF THE FAMILY BECOMES THE
MANAGER.COPARCENERSHIP IS THE NECESSARY
QUALIFICATION FOR THE MANAGERSHIP OR KARTA OF A
JOINT FAMILY.THE SHARES OF INCOMES RECEIVED BY
MEMBERS OF THE FAMILY OUT OF THE FAMILY INCOME
ARE NOT INCLUDED IN THEIR TOTAL INCOMES IN THEIR
ASSESSMENT, EVEN IF THE FAMILY HAS NOT PAID ANY TAX
ON ITS INCOME.
SALARY PAID TO MEMBERS OF
FAMILY
 SALARY IS PAID TO ANY MEMBER OF THE FAMILY
INCLUDING THE MANAGER, IT WILL BE ALLOWED AS AN
ADMISSIBLE DEDUCTION IN COMPUTING THE TOTAL
INCOME OF THE FAMILY ONLY IF THAT MEMBER HAS
RENDERED SOME SERVICE OR HAS, IN ANY MANNER,
CONTRIBUTED TO THE EARNING OF THE FAMILY AND THE
SALARY IS GENUINE AND NOT EXCESSIVE.