Assessment of huf.bose

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Assessment of huf.bose

  1. 1. Presented by:Shankar BoseInspector of Income-taxMSTU, Puri
  2. 2.  Not defined in the Act but mentioned in thelist of “persons” under Sec.2(31). As per Hindu Law, HUF is a family whichconsists all persons lineally descendantfrom a common ancestor and includes theirwives and unmarried daughters. Mainly Applicable to Mitakshara school. It is all about undivided share in inheritedproperty.
  3. 3.  Income of HUF will be assessed if thefollowing conditions are fulfilled :- There is a Coparcenership.And There is Joint-Hindu-Family which yieldsincome
  4. 4.  All persons of HUF are called members. Male members are called coparceners. The coparceners acquire, by birth, a rightin the joint family property. They have the right to enforce partition. Female members have no such right. They are entitled to maintenance out ofthe family property.
  5. 5.  The successor in Mitakshra has to sharethe right to inherited property with others The successor in Dayabhaga hasabsolute ownership on inherited property.
  6. 6.  HUF comes into existence whenever-- Inheritance from paternal ascendants takesplace No of Coparcener is more than one In case of non testamentary death where one hasself acquired property HUF will take over Once HUF is in place, it almost becomesperpetual.
  7. 7.  The Concept of coparcener Right to inherited property while still in mother’swomb irrespective of gender. The share of coparcener is variable. Inheritance from 3 generation of lineal paternalascendants (Apratibandh Daya). No rights on inheritance from others(Sapratibandha Daya) The senior most male member will usually be theKarta.
  8. 8.  Upon Karta’s / Copercener’s death hisshare will devolve upon his widow andmother. He cannot give his share toanybody through will. No rights to ascendant’s self acquiredproperty or ascendant’s inheritedproperty from other sources.
  9. 9.  On such Properties the concerned personwill have absolute right and can maketestamentary disposition. One person may be coparcener / karta ofmore than one HUF. If development of HUF property is madeby any coparcener then such income willbe proportionately charged.
  10. 10.  HUF can come into existence evenwithout inherited property. Individual property may be transferred tocommon stock. Section 64(2) will be attracted in all the cases HUF will be assessed just asIndividual, though some of thedeductions under chapter VIA will not beavailable.
  11. 11.  Any property received throughinheritance but not through the paternalascendants will not come into thecommon stock. The recipient is absoluteowner of such property. If this property is shown in the commonstock then sec 64(2) will be attracted. Coparceners have no liability till partition.
  12. 12. INHERITEDPaternalAscendantsClubbingu/s 64(2)Direct Transfer of SelfAcquired PropertyDirect Tr. of InheritedProperty (diff. source)Taking a circuitous route
  13. 13.  Partial Partition is no more recognised. On total partition A.O. to cause Inquiry Separate assessment for broken period. Members are jointly and severally responsiblefor tax in arrears in post partition stage. However the joint liability is limited to the shareof property received on partition. (Sec 171).
  14. 14.  Income assessed in the hands of HUFcannot be assessed in the hands ofindividual. {Sec. 10(2)} Karta of HUF can be prosecuted unlesshe can prove that offence was committedwithout his knowledge. The other coparceners can also beprosecuted if his complicity is proved.
  15. 15.  Total income of HUF is to be computedas per general rules: Compute head-wise income excludingexempted incomes. Allow deductions under Chapter-VIA. Calculate tax payable, as per ratesapplicable to individuals.
  16. 16. Points to be noted : Fund of the HUF invested in company orfirm and any fees remuneration ordinarilyreceived by any member from the companyor firm will be Income of HUF unless it isderived by the member in his individualcapacity. Any income arising out of propertyconverted by the individual u/s.64(2) to thecommon stock of HUF will not be includedin HUF’s income. It will be the member’sindividual income.
  17. 17.  Points to be noted : Stridhan is the absolute property ofwoman. Any income arising out ofStridhan will not be includible in HUF’sincome. Under the Dayabhaga system anyincome arising out of the property to thefather will be his personal income unlesshe has a brother to own such propertyjointly and to form coparcenary.
  18. 18. However, in case of House Property jointlyowned by co-owners, where each owner’sshare is definite and ascertainable, houseproperty income will be computed as perSec. 26.Share of income from HUF received byany member will be exempted in his handu/s.10(2).

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