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5. Assessment on Partition. [ Assessments of 'HUF']


In case I.T.O. is satisfied that the partition has taken place during the previous year and records his findings to this effect, in such an event the total income to the H.U.F. up to the date of partition shall be assessed in the hands of H.U.F. as if no partition has taken place. Each member of the family shall be liable jointly and severally for the tax liability of H.U.F.


Impartible Estate. In certain cases a person holds some property which is family property but is still not divisible among other members. The income from such property belongs absolutely to the person who holds it. The income from such property shall not be included in the total income of H.U.F. It will be included in the total income of individual who holds property.

Income not treated as family income

I.          Income earned by a member of H.U.F. in his individual capacity with his own efforts shall be his individual income.


2.         Income of the father from property other than ancestral inherited property, shall be his individual income and not the income of H.U.F.


3.         Income from impartible estate shall be the income of individual who holds it.


4.         Income from a business carried on by a member of H.U.F. in his individual capacity is assessable in his hands. It is immaterial whether the capital for business was provided by the family.


5.         Income received by a member of H.U.F. for acting as director of company in his individual capacity and when he is not representing H.U.F. is individual income.


6.         On the death of father if there is sole surviving male member he will not constitute H.U.F. Instead he will be assessable as individual.


7.         Income of a member received by way of profits from firm in which he is partner in his individual capacity shall be his own income.

Individual Income or Family Income

In case Karta of H.U.F derives some salary, commission etc. from company, firm etc. in which the funds of the family were invested, such remuneration received shall be taxed in the hands of the H.U.F. and not in the individual capacity of the Karta. It is contented in this case that the income is primarily earned by investing family funds on assets and the amount of personal efforts or services rendered by the Karta shall not alter character of the income. A similar view was expressed by the Supreme Court in the case of P.N. Krishana Iyer v. C.l.T. (1969) 73 I.T.R 539 However, in case the circumstances of the case state that the remuneration received was for services rendered by him and there was no real and sufficient connection between the investment of family funds and the remuneration paid to manager, the remuneration received by the Karta shall be assessed as individual income of Karta and not that of the H.U.F. The Supreme Court also held the similar view is the case of Preni Nath and others v. C.I. T. (1970) 78 1. T.R. 319 S.C.)

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