Write a Short Note on Hindu Undivided Family.

Question: Write a Short Note on Hindu Undivided Family.

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Answer

A Hindu Undivided Family or HUF comprises all persons of a family who descend linearly from a common ancestor and includes, their wives and also their unmarried daughters. However, after her marriage, the daughter ceases to be a member of her father’s family and becomes a member of her husband’s family. However, the presence of a joint estate is not a prerequisite for the constitution of a joint family.

In Surjit Lal Chabra v. CIT, 1976 AIR 109, the Supreme Court made it clear that Hindu Undivided Family or Joint Family are synonymous.

In the case of Gowli Buddhana v. CIT, (1966) 60 ITR 293 (SC), it was observed by the court that even a wife and a husband can constitute a Hindu Undivided Family in the absence of more than one coparcener in the family

Requirement of a Joint Family

It is important for a joint family to have at least two members. However, as mentioned earlier, joint family property is not necessary to constitute a Hindu Undivided Family. A Hindu Undivided cannot be created under a contract as is it created automatically in a Hindu family. It must consist of all persons who are lineal descendants of a common ancestor and includes their wives and unmarried daughters.

Hindu Undivided Family (HUF) and Income Tax Act

As per Section 2(31) of the Income Tax Act, 1961, a Hindu Undivided Family is treated as a legal person. However, there are two conditions that must be fulfilled for a HUF to be considered as a separate assessable entity:

• Coparcenary is essential – In legal terms, coparcenary means a joint inheritance of a property. Coparcenary exists in a Hindu Undivided Family if the right to joint enjoyment, the right to call for partition, and the right of survivorship are held in coparcenary.
• There should have a joint family property – The joint family property consists of ancestral property, property acquired with the aid of ancestral property, and property transferred by its members. Ancestral property is any property that a man inherits from any of his three immediate male ancestors, i.e., his father, grandfather, and great grandfather. Property inherited from any other relationship is not treated as ancestral property.

It is also to be noted that Sikh and Jain families though not governed by Hindu Law, can be treated as a HUF for Income Tax purposes.

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