Undivided Ancestral assets acquired / owned by the family are HUF assets. Gift from mother can also be source of HUF property as held in CIT vs. Satyendra Kumar (1998) 232 ITR 360(SC).
Self acquired properties of ancestors not HUF assets.
A family (including adopted child), consisting of only husband & wife can be recognized as Hindu Undivided Family (HUF) under the present interpretation of Hindu law.
There is no Deed required to form a HUF. HUF is created on happening of an event. Deed required by Bank / Income Tax are just affirmation of the formation.
A HUF as such cannot to be a partner in a partnership firm. The Karta can become partner and represent the HUF.
HUF can make investment and recognized in all financial assets.
HUF cannot make nomination as succession process is inbuilt in HUF.
By virtue of amendment to Sec. 6 of the Hindu Succession (Amendment) Act, 2005, daughters are co-parceners in the HUF and their rights and liabilities are equal to other co-parceners (sons & father).
Exception:
- “Provided that, nothing contained in this sub-section shall effect or invalidate any disposition or alienation, including any partition or testamentary disposition of property which had taken place before the 20th day of December 2004.”
Hence, this amendment does not apply to HUF partitioned before the above date but reactivated the rights of daughters on all HUF divided/undivided after that day.
The shares of each co-parceners and members of HUF are not fixed, till the time the partition is done.
On partition, all the coparceners (Husband, Son, Married / Unmarried Daughter) & member (wife) are entitled to equal share.
On death of any co-parcener, there is a deemed partition and his / her share goes to his / her legal heirs. Only coparceners can make a will of his / her share.
A member (wife) cannot make WILL in respect of her share. She cannot claim partition during her life time but she is entitled to share in the event of partition, during her life time.
The partition of HUF can be unequal if mutually agreed upon by the coparceners & member.
(CGT vs. N.S Getti Chettiar 91971 82 ITR 599(SC))
A coparceners or member can release himself/ herself form the HUF.
Only complete partition of HUF is now recognized under Income Tax Act.
After complete partition of HUF, coparceners/member desirous of reuniting can form a HUF without some of the coparceners / member.
Share received by an individual from partition of bigger HUF goes to his HUF, not his individual
When only one member remains or in case of partition in the HUF, the HUF ceases to exist, the same gets merged in the HUF / Individual assets.
The eldest coparceners in the family becomes the Karta. Any (adult person) other than the eldest coparceners can become Karta by mutual agreement.
Mother remains a Manager of the HUF on death of the Karta or till coparceners are minors.
