What Is The Difference Between A Member & A Coparcener of An HUF?

I was a member of HUF of which my father was Karta. My mother & myself were co-parceners. Recently, we have made partition & new HUF is formed of which I am Karta. My wife, Priyanvada, & my son, Pratik, are the co-parceners of this new HUF.I want to open HUF saving account in bank. But the bank says that my wife, Priyanvada, cannot be an account holder because she cannot be a member / co-parcener of HUF. As per their opinion, wife cannot be a member of HUF, but a son is. How can it be, because my mother was a member of my father's HUF. I request for your clarification.Laxmikant.

I feel there is confusion regarding the term member of HUF and coparcener of an HUF. A Hindu Undivided Family consists of all males lineally descended from common ancestor , their wives and unmarried daughters. Male members of HUF are having the right to enforce partition. Those members who have right to enforce partition are called Co-parceners. Therefore, wife of coparcener or daughters are members but can not enforce partition of HUF. Accordingly, you can say that all coparceners are members of HUF but all members of HUF are not coparceners.

As far as your question is concerned, the banker is wrong when he says your wife can not be member of HUF of which you are karta. She can not be coparcener.As far as bank account opening is concerned, that depends on banking rule. So, if bank rule says only Coparcener of an HUF can open accounts in the name of HUF , in that case, your wife can not be . But remember, she has got the right in property equal to her son , whenever partition takes place.

I suggest you read this posting also .

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Is Distribution Of Capital Assets by HUF to Its Memebers Taxable?

If a house-property belonging to an HUF is divided (in 4 portion) and then transferred to Karta and his 3 sons, what will be the tax impact of this transaction in the hands of HUF and each of the co-parcener?viki1102@......com

The house property is a capital asset. Its transfer result in capital gains which is chargeable to tax under the I T Act. However, transfer of assets from HUF to its members is special case . There is express provision under the I T Act which says that the distribution of capital asset on total or partial partition of HUF is not regarded as transfer for the purpose of I T Act. The said provision contained in section 47(i) of the I T Act is as under:

"47. Nothing contained in section 45 shall apply to the following transfers :(i) any distribution of capital assets on the total or partial partition of a Hindu undivided family;"

The partition in Hindu law is effected by a definite and unequivocal indication of a coparcener's intention to separate. Similarly, a partial partition is effected by a definite and unequivocal indication of the coparcener to partition a particular business or property of the joint family leaving the other assets as joint family property. Therefore ,it is very important to understand words"total or partial partition".In that case only, distribution of assets is not regarded as transfer and no capital gains occur in hand of HUF. However , in individual's hand there is no taxable income in any case on transfer of house property from HUF.

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Is One Male Member Enough For HUF?

Whether a person with wife and two daughters only can have HUF?
njakhotia@......com

Whether only one male member is suffice to form an HUF is now legally well settled as per decision of Supreme Court in case of Gowli Buddana vs CIT (1966) 60 ITR 293 . An HUF is no different than a joint property. The concept of HUF is very simple codified in Hindu law .A Hindu joint family consists of lineally descended persons -like Great Grand father, Grand father ,father,uncle,son etc.All these persons have right over common ancestral property by birth. The dictum that once Hindu undivided family always Hindu undivided family" has been accepted all along .

The expression 'Hindu undivided family' in the Income-tax Act is same as a joint family which may consist of a single male member and widows of deceased male members. In Dr Prakash B Sultane v CIT ([2005] 148 Taxman 353) the Bombay High Court held that that the property does not lose its character merely because at one point of time there was only one male member or one co-parcener.

In this case , the assessee was a doctor by profession assessable in his hands as an individual. The assessee was a member of a bigger Hindu undivided family which was partitioned on January 1, 1972. At the time of partition and right upto January 22, 1980 the assessee was a bachelor. During these years, the income from assets on partition was assessed in his hands as his individual income.

When the assessee got married on January 22, 1980, he claimed that the income from assets received on partition is assessable in status of the Hindu undivided family consisting of himself and his wife.

The Assessing Officer observed that the decisions referred to by the assessee were considered in the judgment of the Madhya Pradesh High Court in CIT v. Vishnukumar Bhaiya (142 I.T.R. 357). Relying upon this judgment, he rejected the application of the assessee and continued to assess his income from the Hindu undivided family property in his individual capacity. In the above case also, the assessee had obtained his share on partition before his marriage and, on his marriage, had claimed the status of Hindu undivided family. His claim was rejected on the ground that "until a son is born the status of the assessee would continue to be that of an individual.
However, the High Court ruled otherwise and upheld the contention of the assessee that once HUF property always HUF property

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Junior Member Can Become Karta Of HUF!

My father is the Karta of the HUF which has been in operation for a few decades. He is 83 years old. In view of his old age, can he transfer the Karta ship to me? I am 31 years old, married with a child. What is the procedure for the same? Should this be declared to the IT authorities and how do I get a new PAN? Should the old PAN be cancelled?My child is a month old. Should addition of members in the HGUF be declared to the IT authorities? visva.neurosurgeon@gmail.com

It is presumption under Hindu Law, that senior most member can be Karta of the HUF. His position under the law is unchallengeable . He is manager of the assets and income of the HUF. It has been held in Narendrakumar J Modi v. CIT 1976 S.C. 1953 that in case there is agreement among members of HUF , a junior member can become Karta of the HUF.

Therefore , in your case , you can become karta , but before that its better if you get an agreement signed among all HUF members stating that your father , owing to his age , is passing on kartship to you and that other members are agreeing to it.

As far as Income tax Act is concerned , there is not big impact for such change of guard since the income shall always be assessed in the status of HUF . The return can be signed by you. What you should do is to inform the A.O on plain paper that now you have become the Karta of the HUF and that you will be filing returns thereafter.

As far as your son is concerned , he is certainly part of HUF and you can inform the I T Authorities on your own volition, and keep a record of that.

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I am a salaried person & karta of HUF. I want to know whether profit of HUF will be added in my yearly income.

Someone Asked on this blog-24/10/06

See , the HUF is a separate entity i.e person for I.T Act. Hence, whatever is the profit of HUF, a separate return has to be filed in the status of HUF.Therefore the profit of the HUF is taxable separately .You will sign the return as you are the Karta of HUF. Any income which has already been taxed can not be taxed in your hand.Hence its not taxable in your hand.
Treat the profit of HUF as profit of any of your relative may be your wife, son or any body. Those persons are taxed separately as HUF will. And when they give you money , it may be GIFT or loan or Advance -depending upon facts. Remeber there is amendment in I T Act which made gift above Rs 25000 from persons other than relatives is TAXABLE as "Income from other sources " under Section 56(2)(v) of the I T Act.I would advice you to go through Gift section of my blog.

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