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25.  ‘HUF’ consisting of Husband, Wife and Daughter can be treated as Assessable Unit for Income Tax Purpose

Whether an HUF created by gift, and consisting of self, wife and daughter, can be treated as an assessable unit for income tax purposes, is a common question posed by tax payers specially in light of Rajasthan H.C. decision in the case of Mukut Biharilal Bhargava v. CIT. reported at 53 ITR 613.

Generally, people think that HUF creation is possible only if there is a male child. This is not correct because HUF created by Gift and consisting of self, wife and daughter can also be treated as an assessable unit under the Income Tax Act, 1961. The decision by the Rajasthan High Court in the case of Mukat Beharilal Bhargava (lbid) has been given under different circumstances. In that case the Hon’ble Judges of the Rajasthan High Court were concentrating their attention on the right of maintenance of a son, wife or a daughter and finally held, that the mere right of maintenance of a son, wife or daughter has no effect in converting property in the hands of a person into joint family property.

Likewise, the Hon’ble Judges in this case came to a conclusion, that they have not been referred to any authority in which the ancestral property in the hands of a sole surviving male might have been considered as belonging to an HUF, simply because he had a wife living at a time when the property devolved upon him or because a daughter was subsequently born to him. Well, there have been innumerable judgments of various High Courts to throw light on the above aspect. In many judgments it has been held, that even with a single male coparcenary, the HUF could come into existence. With due respect to the Judgment of the High Court in the above case, we are of the view that a valid HUF can come into existence even with husband, wife and a daughter. The citalions of various judgments of High Courts, to support this reasoning, are contained in subsequent paragraphs.


Long back, the Bombay High Court, in the case of CIT v. Gomedalli Lakshminarayan 3 ITR 367, opined that because there is no coparcenary, it does not follow that there is no undivided Hindu family. The joint status of the family does not come to an end merely because, for the time being, there is only one member of the family in possession of the family property. Likewise, the Calcutta High Court in the case of Moolji Sicka & Others 3 ITR 123 had opined, that every married Hindu possessing property or income, would become, with his wife a Hindu undivided family and would be subject to taxation as such. In my opinion, therefore, wherein the Sections of the Income Tax Act a Hindu undivided family is mentioned, a Hindu coparcenary is meant. However, the Supreme Court of India in the case of Gowli Buddanna v. CIT 60 ITR 293(SC) expressed no opinion on the question whether a Hindu undivided family may, for the purposes of the Indian Income Tax Act, be treated as a taxable entity when it consists of a single member — male or female but came to the conclusion that property of a joint family, therefore, does not cease to belong to the family merely because the family is represented by a single coparcener who possesses rights, which an owner of property may possess. The Supreme Court of India in the case of N.y. Narendranath v. CWT 74 ITR 190 held that when a coparcener having a wife and two minor daughters and no son receives his share of joint family properties on partition, such property, belong to the Hindu undivided family of himself, his wife and minor daughters and cannot be assessed as his individual property for the purposes of wealth-tax.

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