Rama aged 65 years is Karta of his HUF, which consists of himself, his wife and two sons viz., C of 28 years and Minor D aged 16 years. The HUF is assessed to income tax and has business income from the year 2010-11 onwa

CS Professional · Direct Tax Law & Practice · PYQS · December 2021
Rama aged 65 years is Karta of his HUF, which consists of himself, his wife and two sons viz., C of 28 years and Minor D aged 16 years. The HUF is assessed to income tax and has business income from the year 2010-11 onwards. The business income of HUF for the year ended 31st March, 2021 is ₹ 5,00,000. Rama is employed in a private company and his salary income for the same period is ₹ 6,10,000 (computed). You are required to answer the following treating each of them as independent situations: (ii) The HUF has one house property fetching rent of ₹ 10,000 per month and some movable assets. There is a proposal to make a partial partition of HUF by allotting the house property to C on 1st July, 2020. Is it advisable to do a partial partition? In whose hand the rental income is taxable after the partial partition of HUF.

Answer & Explanation:

Partial Partition (after 31st December, 1978) is not recognized and the HUF, which has been hitherto assessed to tax, shall continue to be liable to be assessed as if no such partial partition has taken place [Section 171(9)]. The rental income in this case would continue to be assessed in the hands of the HUF, even after partial partition. Therefore, it is not advisable to do a partial partition.

Topics: Hindu Undivided Family (HUF)

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