HUF (Hindu Undivided Family) is a peculiar notion below the Hindu Law which is not prevalent in any other religion. All the assets of an HUF are owned collectively by all the members. As the share of every single of the members in the HUF assets fluctuates with death and birth in the family, no member can predicate his precise share in the HUF house till a partition requires spot.
Types of partitions recognised below the Hindu Law and Income Tax Laws
Under the Hindu Law, either a complete partition of HUF assets can take spot or a partial partition can be performed. Under the partial partition all the assets owned by the HUF are not distributed as regards all the members. A partial partition is mentioned to have taken spot when only a handful of of the HUF assets are distributed amongst its members. Even when division in respect of all the assets is made with respect to some of the members and not all the members and other members continue to stay members of the HUF, a partial partition is mentioned to have taken spot. However, when all the assets are partitioned as regards all the members and the HUF comes to an finish, it is named a complete partition.
Under the Income Tax Laws there is no absolute restriction for partial partition but the law does not recognise a partial partition. In case of a partial partition, tax law treats as if no partition has taken spot and revenue from the assets transferred continues to be taxed in the hands of the HUF although in reality the revenue may well be enjoyed by the persons who have received the asset below partial partition. Even in case of complete partition, you have to make an application to the assessing officer for issuing an order taking on record the complete partition of the HUF.
After the complete partition, the clubbing provisions will cease to apply in respect of revenue arising from the asset transferred by the a member to the HUF earlier, but the clubbing will continue to apply in respect of the share of assets allotted to the spouse of the members who had transferred such asset to the HUF.
Who can ask for partition of HUF assets
All the coparceners have a ideal to ask for a partition or file a suit for partition but a member simpliciter can not ask for a partition but could get a share in the HUF house as and when a partition really requires spot. All the male members no matter whether born in the family or adopted as properly as daughters are coparceners as properly as members but all the female who come in the family by virtue of a marriage are members simpliciter. A Karta can not disentitle any coparcener of his ideal in the HUF house. The assets of the HUF belong to the Karta as a great deal as to the coparcener. In case any coparcener demands partition of the assets of the HUF, the Karta has to give such coparcener his share from the HUF assets.
This predicament will outcome into a partial partition. Though recognised below the Hindu Law, it is not recognised below the revenue tax laws as discussed above. It is only the adult coparceners who are entitled to ask for a partition and can even file a suit for partition of HUF assets. Generally, a minor is not entitled to ask for partition of the HUF assets but a suit can be brought on behalf of the minor in case the house is wrongfully alienated adversely affecting the interest of the minor.
How the assets are distributed at the time of partition of HUF
As and when a complete partition of assets of the HUF requires spot, all the coparceners get their shares in the house. After the amendment in 2005, of Section 6 of the Hindu Succession Act, 1956, daughters are also made coparceners and their rights are equal to these of the sons, and thus sons and daughters get the exact same share in the HUF house on partition. It is not only all the living members but also the kid in the womb which is born subsequently entitled to get share in the HUF house. When partition requires spot among father and his kid, the mother also gets an equal share that of a son. Likewise, on partition of the HUF house following death of the father, mother gets a share equal to the share of a son/daughter. The share of every single branch of the family will be per stripe and then it will be distributed among the coparceners of the branch per capital.
Let us have an understanding of this with an instance. Suppose Mr. A has an HUF obtaining his wife W and sons B and C as properly a married daughter D. Both the sons are married and have two children every single. On a partition of the assets of the HUF every single one of A, W, B, C and D will get 1/5 share in the HUF assets. The shares of B and C in the HUF assets will be additional shared amongst themselves and their children equally. So every single one will get 1/15 share of the HUF assets (1/3 of 1/5 share allotted on the partition). It could be noted that the daughter will take her share as her person house.
I am sure the above discussion is beneficial to the reader in understanding the notion of partition in an HUF.
(The author is a tax and investment specialist and can be reached at [email protected])