Legal Framework: Section 171 of the Income Tax Act, 1961, governs the partition of a Hindu Undivided Family (HUF). This section provides the legal basis for dividing the assets and liabilities of the HUF among its members.
Total Partition Requirement: For a partition to be recognized under the Income Tax Act, it must be complete, meaning all HUF assets must be divided among members. Partial partitions are not recognized for tax purposes under Section 171.
Determination of Members' Shares: At the time of partition, each member's share in the HUF’s assets and liabilities is determined based on factors like the value of ancestral property, each member’s contributions, and any pre-existing agreements among the family members.
Tax Implications for Income: Income earned or received by the HUF before the partition remains assessable as HUF income. Post-partition, however, any income generated from previously HUF-owned assets is taxed individually in the hands of each member.
Binding Nature of Assessments: Any tax assessments made on the HUF before the partition apply to the HUF and its members, though adjustments may be made to reflect the division of assets and liabilities.
Relevance of Hindu Succession Act: While the Hindu Succession Act, Section 6, determines members' rights within the HUF, the Income Tax Act, specifically Section 171(1), governs the partition's tax implications. [Maharani Raj Laxmi Devi 224 ITR 582 (SC)]
Recognition by the Income Tax Officer (ITO): For tax purposes, the ITO must recognize a partition by issuing an order under Section 171(1). Without such recognition, the HUF remains liable for taxes as a joint entity, despite any family partition arrangements. [Ambika Prasad Sonkar 168 ITR 444 (Allahabad)]
Monday, 28 October 2024
Partition of a Hindu Undivided Family (HUF):
Subscribe to:
Post Comments (Atom)
ITAT Amendment Rules, 2025 – Key Procedural Changes and Practical Takeaways
The Income-tax Appellate Tribunal has recently notified the Income-tax (Appellate Tribunal) Amendment Rules, 2025, introducing important p...
-
A new website launched for TDS related matters www.tdscpc.gov.in TRACES – T DS R econciliation A nalysis and C orrection E nabling S yste...
-
Section 68 -Cash credits Section 69 -Unexplained investments Section 69A - Unexplained money, etc Section 69B -Amount of investme...
-
In a landmark development that could have far-reaching implications for multinational groups operating in India, the Hon’ble Bombay High C...
-
An eminent concern within the GST framework pertains to the entitlement of Input Tax Credit (ITC) concerning expenditures associated with In...
-
LEASE-DEED (A brief Introduction) Lease defined. A lease of immovable property is a transfer of a right to enjoy such property, mad...
-
The taxation of transactions within a Hindu Undivided Family (HUF) is governed by specific provisions under the Income Tax Act, 1961. This...
-
The overall effective tax rate of a U.S. multinational corporation may have significant impact on the value of its stock. Therefore, it ...
-
In the case of "Maya Gopinathan vs Anoop SB 2024 INSC 334," the Hon'ble Supreme Court provided insightful guidance on the de...
-
Introduction The law relating to companies is laid down in Companies Act, 2013 and the rules made thereunder and t...
-
As per Income Tax Laws, any sum received or receivable in cash or kind under an agreement for not carrying business or profession is treat...
No comments:
Post a Comment