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3. Assessment of Hindu Undivided Family. [ Assessments of 'HUF']


The Hindu Undivided Family is a separate unit of assessment and is taxable through its manager or Karia. A single person, male or female, does not constitute a family. The following rules are to be observed while making the assessment of Hindu Undivided Family


1.         Once a family is accorded the status of Hindu Undivided Family, it shall continue to enjoy this status till partition takes place and I.T.O. accepts the partition u/s 171.


2.         The share of income received by a member of H.U.F. from the income of family is not to be included in his individual income being exempted in the hands of the coparcencer of H.U.F. even though the family may not have paid the tax on such income.


3.         The income received by a member from an asset which was previously owned by him but has been put into common pool of H.U.F. shall remain as his individual income.


4.         Salary paid out of the fund of H.U.F. to a member is allowed as the legitimate expenditure of the H.U.F., if the member has rendered some service to the H.U.F. [Jugul Kishore Baldeo Sahai v. C.I.T. (U.P) Supreme Court 1966].


5.         A member can carry on any business in his own name and the income from such business shall be included in his individual total income. It is immaterial that the funds were provided by H.U.F.


6.         Jam and Sikh families are also treated as Hindu Undivided Families.


7.         A gift of property to the wife out of the family property is a bonafide transfer and as such income from such property shall belong to the wife.


8.         On the death of manager, the succeeding manager— not the member of family or wife, shall be his legal representative.


9.         In case any H.U.F. holds shares in a company and any loan is advanced to members of H.U.F., it will not be deemed as dividend u/s 2 (22) (e) because individual members are not shareholders of that company. [Rameshwarlal Sanwarmal v. C.I. T. Assain].

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