SPARK INSTITUTE

IPCC\GRP1\INCOME TAX

HINDU UNDIVIDED FAMILY

Meaning

AHUFistreatedas
aseparateentityfor
thepurposeof
assessment.HUF
hasnotbeen
definedunderthe
IncomeTaxAct.
Howeverithas
beendefinedin
Hindulaw,asa
familywhichconsist
ofallpersons
lineallydescended
fromacommon
ancestorand
includestheirwives
andunmarried
daughters.The
relationofaHindu
undividedfamily
doesnotarisefrom
contractbutby
HUF:
status

Hindu
Coparcenary
AHinducoparcenary
includedthose
personswho
acquiredbybirthan
interestinjoint
familyproperty.
Anothertestof
coparcenaryisthata
coparcenerenjoys
righttoenforce
partition.Theright
toenforcepartition
isenjoyedbyonly
malemembersofa
Hinduundivided
family.Female
membersdonot
enjoytherightto
enforcepartition
thoughtheyare
entitledfor
maintenanceoutof
familyproperty

PREPARED BY : ASHWIN GILDA

Basicconditionsfor
assessmentasHUF
1.Thereshouldbe
coparcenership.
2.Thereisajointfamily
propertywhichconsistsof
ancestralproperty,property
acquiredwiththeaidof
ancestralpropertyand
propertytransferredbyits
members.Ancestralproperty
inthisconnectionmaybe
definedasthepropertywhicha
maninheritsfromanyofhis
threeimmediatemale
ancestors.Thereforethe
propertyinheritedfromany
otherrelationisnotancestral
property.
Note:onceajointfamily
incomeisassessedasHUF,it
continuestobeassessedas
suchinsubsequentassessment
yearstillpartitionisclaimedby
itscoparceners

CalculationoftaxableincomeofHUF
1.IfFundsofHUFareinvestedinacompanyorafirm,any
feesorremunerationreceivedbyanymemberofHUFas
beingadirector/partnerinthecompany/firmshallbe
treatedasincomeofFamily,ifsuchincomeisearned
essentiallyasaresultofinvestmentoffundsofHUF.
Howeverifthefees/remunerationisearnedonlyforthe
servicesrenderedbythemember,thensuchincomeshallbe
treatedasincomeofthememberandnotoftheHUF.
2.AnyremunerationpaidtotheKartabytheHUF,is
deductableif
Remunerationispaidunderavalidbonafied
agreement,
Intheinterestofanexpedientforthebusinessofthe
family,
Itshouldbegenuineandnotexcessive.
3.Personalincomeofmemberscannotbetaxedinthe
handsofHUF.
4.Stridhanisabsolutelypropertyofwoman,incomethere
fromisnottaxableinthehandsofHUF.
5.WhilecomputingincomeoftheHUF,clubbingprovisions
shouldalsobetakenintoconsideration.
6.Taxrates,surchargeandeducessshallbesameas
applicabletoindividuals

CHAPTER 16

SPARK INSTITUTE

IPCC\GRP1\INCOME TAX

Tax implication on partition of HUF

Partitionmeansdivisionof
property.Howevermere
shareofincomedoesnot

amounttopartition.In
caseofpropertywhich
cannotbephysically
divided,thenpartition
meanssuchdivisionasthe
propertymayadmit.

Whocanclaimshareatthe
timeofpartition:
Allcoparceners
Asoninthewombof
hismotheratthetime
ofpartition.
Mothergetsequal
shareifthereis
partitionb/tsonsafter
thedeathoffather
Wifegetsequalshareof
asonatthetimeof
partitionb/tfatherand
sons.

PREPARED BY : ASHWIN GILDA

Partition

Totalpartition

Whentheentire
jointfamilyproperty
isdividedamongall
coparcenersandthe
familyceasesto
existasan
undividedfamily.

Partialpartition

Assessmentafterpartition:
Incaseofpartition,incomeofthe
HUFfromthefirstdayofPYtilldate
ofpartitionisassessedasincomeof
HUFandthereafterincomeofthe
propertyisassessedasindividual
incomeoftherecipient.

Partitionisregardedaspartialwhen
oneormorecoparcenersseparatefrom
otherandtheremainingcoparceners
continuetobejoint.Thereforein
partialpartitiononlytheshareofthe
outgoingmember/sinpropertyis
separatedandrestoftheproperty
continueasjointFamilyproperty.
Incaseifthepartialpartitionhastaken
placeafterDec31,1978,thenforthe
purposeofassessment,familyshallbe
deemedtobecontinuedasHUFasifno
partitionhasbeentakenplace.

CHAPTER 16

SPARK INSTITUTE

PREPARED BY : ASHWIN GILDA

IPCC\GRP1\INCOME TAX

CHAPTER 16