Law relating to partition of HUF

HUF (Hindu Undivided family) is peculiar concept under Hindu Law which is not prevalent in any other religion. All the assets of an HUF are owned collectively by all the members. As the share of each of the members in the HUF assets fluctuates with death and birth in the family, no member can predicate his specific share in the HUF property till a partition takes place.

Types of partitions recognised under the Hindu Law and Income Tax Laws

Under the Hindu Law either a full partition of HUF assets can take place or a partial partition can be done. Under the partial partition all the assets owned by the HUF are not distributed as regards all the members. A partial partition is said to have taken place when only a few of the HUF assets are distributed amongst its members.  Even when division in respect of all the assets is made with respect to some of the members and not all the members and other members continue to remain members of the HUF, a partial partition is said to have taken place. However, when all the assets are partitioned as regards all the members and the HUF comes to an end, it is called a full partition.

Under the Income Tax Laws there is no absolute restriction for partial partition but the law does not recognise a partial partition. In case of a partial partition, tax law treats as if no partition has taken place and income from the assets transferred continues to be taxed in the hands of the HUF though in reality the income might be enjoyed by the persons who have received the asset under partial partition. Even in case of full partition, you have to get make an application to the assessing officer for issuing an order taking on record the full partition of the HUF.

After the full partition, the clubbing provisions will cease to apply in respect of income arising from the asset transferred by the a member to the HUF earlier, but the clubbing will continue to apply in respect of the share of assets allotted to the spouse of the members who had transferred such asset to the HUF.

Who can ask for partition of HUF assets

All the coparceners have a right to ask for a partition or file a suit for partition but a member simpliciter cannot ask for a partition but may get a share in the HUF property as and when a partition actually takes place. All the male members whether born in the family or adopted as well as daughters are coparceners as well as members but all the female who come in the family by virtue of a marriage are members simpliciter. A Karta cannot disentitle any coparcener of his right in the HUF property. The assets of the HUF belong to the Karta as much as to the coparcener. In case any coparcener demands partition of the assets of the HUF, the Karta has to give such coparcener his share from the HUF assets. This situation will result into a partial partition though recognised under the Hindu Law, it is not recognised under the income tax laws as discussed above. It is only the adult coparceners who are entitled to ask for a partition and can even file a suit for partition of HUF assets. Generally, a minor is not entitled to ask for partition of the HUF assets but a suit can be brought on behalf of the minor in case the property is wrongfully alienated adversely affecting the interest of the minor.

How the assets are distributed at the time of partition of HUF

As and when a full partition of assets of the HUF takes place, all the coparceners get their shares in the property. After the amendment in 2005, of Section 6 of  Hindu Succession Act, 1956 daughters are also made coparceners and their rights are equal to those of the sons and therefore sons and daughters get the same share in the HUF property on partition. It is not only all the living members but also the child in the womb which is born subsequently entitled to get share in the HUF property. When partition takes place between father and his child, the mother also gets an equal share that of a son. Likewise, on partition of the HUF property after death of the father, mother gets a shares equal to the share of a son/daughter. The share of each branch of the family will be per stripe and then it will be distributed between the coparceners of the branch per capital. Let us understand this with an example. Suppose Mr. A has an HUF having his wife W and sons B and C as well a married daughter D. Both the sons are married and have two children each. On a partition of the assets of the HUF each one of A, W, B, C and D will get 1/5 share in the HUF assets. The shares of B and C in the HUF assets will be further shared amongst themselves and their children equally. So each one will get 1/15 share of the HUF assets (1/3 of 1/5 share allotted on the partition). It may be noted that the daughter will take her share as her individual property.

I am sure the above discussion is helpful to the reader in understanding the concept of partition in an HUF.

Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant his twitter handle.