One of the important methods of tax planning in India has been to make a partial partition of the assets of an HUF so that the income of the family is divided amongst various hands in such a manner that the least income tax is paid by the HUF and the members of the HUF taken together. Hence, partial partition of an HUF after 31.12.1978 has been de-recognised. It is provided in Section 171 (9) of the Income Tax Act that where a partial partition takes place amongst the members of a Hindu undivided family after 3 1.12.1978, such a family shall continue to be liable to be assessed under the Income Tax Act as if no such partial partition had taken place’. Further, each member or group of members of such a family immediately before such partial partition and the HUF shall be jointly and severally liable for any tax, penalty, interest, fine or any other sum payable under the Income Tax Act by the family in respect of any period, whether before or after such partial partition. Hence, tax planning requires that there should not be any partial partition of a Hindu undivided family. If at all partition becomes necessary, then full partition under the provisions of Section 171 may be made amongst the different members of the family. Thus, from the point of view of proper tax planning a non-resident Indian like any other resident person should never make a partial partition of the assets of his undivided family of which he may be the Karta or Manager. Rather, if he has major sons in the family he may make full partition of the family so that his major sons in turn may have their independent and separate HUFs. |
