What Is The Process of Dissolution of HUF Vis-À-Vis Under The Indian Succession Act and Income Tax Act

1.
What is the process of dissolution of HUF vis-à-vis under the Indian

Succession Act and Income Tax Act.
Dissolution of HUF occurs when partition of HUF’s property is done. Partition

of HUF can done at anytime i.e. either on survival of karta or on death of
karta. Partial Partition of HUF is not allowed as per Income Tax Act, 19611.
To dissolve HUF, you may do so by a partition of the HUF where the

coparceners and members would be entitled to a share. Pursuant to the
amendment in the Hindu Succession Act, 1956 (“Act"), in 2005, read with the
Supreme Court judgment in the case of Prakash and Ors v. Phulavati and
Ors2, if you wish to dissolve your HUF, you may do so by a partition of the
HUF where the coparceners and members would be entitled to a share.
2. What is the procedure for claiming exclusive right by the Karta of the Family
over the HUF property, on the basis that though the property was self-acquired
from his own source of funds, but registered in the name of HUF?
There is no such procedure as established by the laws. But, there are certain
circumstances that the Supreme Court held that “if a member of a Hindu
Undivided Family (HUF) wants to stake exclusive claim over any joint family
property, then he or she will have to establish that this asset was self-acquired
and not ancestral, the Supreme Court has held.”
If a member of a Hindu Undivided Family (HUF) wants to stake exclusive
claim over any joint family property, then he or she will have to establish that
this asset was self-acquired and not ancestral, the Supreme Court has held. A
bench of Justices R K Agrawal and Abhay Manohar Sapre said the burden lies
upon the member, who after admitting the existence of jointness in the family
properties, asserts the claim that some properties out of the entire lot of
ancestral properties are self-acquired by him or her.
The apex court, while upholding the Karnataka high court order which had
declared a property as joint property of the family, rejected the plea of some
members of a joint family claiming ownership over an agricultural land on the
ground that they had acquired the property and other members of their family
had no right over it. “It is a settled principle of Hindu law that there lies a legal
presumption that every Hindu family is joint in food, worship and estate and in
the absence of any proof of division, such legal presumption continues to
operate in the family. “The burden, therefore, lies upon the member who, after
admitting the existence of jointness in the family properties, asserts his claim
that some properties out of entire lot of ancestral properties are his self-
acquired property,” the bench said. The court also observed that the members
1
Section 171 of the Income Tax Act, 1961
2
2016) 2 SCC 36
of a HUF family, who stake exclusive claim over a property, fail to adduce
sufficient evidence that the property was self-acquired.3
Usually, any property that a person holds is self-bought, inherited or held by a

coparcener in case of a Hindu Undivided Family (HUF). If the property is self-
acquired, the owner can bequeath it as per his wish. But if the owner has
inherited a property through a Will or otherwise, his children are also
considered legal heirs to that property.4
3. Will Karta be eligible for share in the HUF property?
Yes, Karta is eligible for the share in the HUF property as equal to the
coparcener. Only coparcener can become the karta of the HUF, hence the karta
is eligible for the equal share as coparcerners.
It is well settled that a coparcener's right to enjoy his share in the HUF
property separately accrues to him only after partition. The ownership of a
coparcenery property vests in the whole body of the coparcenery. A member
of the coparcener is entitled to a definite share only after partition and until
such partition takes place, their possession and enjoyment of the coparcenary
property is common. The person, ordinarily the father or other senior member,
who manages the property of the joint family is called 'karta'. Till the time the
members of the joint family remain undivided, the 'karta' is entitled to manage
the family property. The coparcenary property can be divided on a partition.
Every coparcener is entitled to a share upon such partition. On a partition
between a father and his sons, each son takes a share equal to that of the
father.5
3. What is the process of partition of the HUF property and in that process,
whether Karta can divide the HUF property as per his discretion, since it was
purchased from his own source of funds and not from the source of family
funds?
The Partition of HUF can be categorized as under:-

1. Partial Partition - Partial partition means a partition which is partial as
regards the persons constituting the HUF, or the properties belonging to the
HUF, or both.
2. Total or Complete Partition – Assets of HUF are physically divided. As per
explanation to section 171 of the Income Tax Act, ‘Partition’ means (i) where
the property admits of a physical division, a physical division of the property,
but a physical division of the income without a physical division of the
3
https://www.financialexpress.com/india-news/hindu-undivided-family-member-can-claim-right-only-
on-self-acquired-property-supreme-court/855262/
4
https://www.livemint.com/money/personal-finance/if-legal-heirs-give-up-inheritance-right-children-
can-t-stake-claim-to-property-1550671012180.html
5
Gauri Shankar Agarwalla v. Madanlal Agarwalla and Ors., MANU/GH/0718/2010
property producing the income shall not be deemed to be a partition; or (ii)
Where the property does not admit of a physical division, then such division as
the property admits of, but a mere severance of status shall not be deemed to
be a partition. Therefore a transaction can be recorded as a partition u/s 171
only if, where the property admits of a physical division, such division has
actually taken place.
If it is a HUF property, all the coparcerners would be entitled for the equal
share. However, they can mutually decide for the unequal shares among
themselves.
If Karta would like to transfer the HUF property to only one son out of his sons, then which
would be better either registered Gift Deed or WILL?
HUF cannot make any gift of HUF property to any coparcener or any other
person. Any gifts made by HUF are void-ab-initio.

What Is The Process of Dissolution of HUF Vis-À-Vis Under The Indian Succession Act and Income Tax Act

Uploaded by

Copyright:

Available Formats

What Is The Process of Dissolution of HUF Vis-À-Vis Under The Indian Succession Act and Income Tax Act

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

What Is The Process of Dissolution of HUF Vis-À-Vis Under The Indian Succession Act and Income Tax Act

Uploaded by

Copyright:

Available Formats

1.

What is the process of dissolution of HUF vis-à-vis under the Indian

Dissolution of HUF occurs when partition of HUF’s property is done. Partition

To dissolve HUF, you may do so by a partition of the HUF where the

Usually, any property that a person holds is self-bought, inherited or held by a

3. Will Karta be eligible for share in the HUF property?

The Partition of HUF can be categorized as under:-

You might also like