Hindu undivided family (HUF) is a taxable entity under the Income Tax Act 1961 but has not been defined under any enactment of law. however, as per various decisions, it is to be understood as per Hindu law. As per Hindu Law, a Hindu joint family consists of all persons lineally descended from a common ancestor, and includes their wives and unmarried daughters. A question arises whether HUF can be formed? Most of the professionals are confused over this issue despit the settled position. The apex court has held that the joint Hindu family, with all its incidents, is thus a creature of law and cannot be created by act of parties, except to the extent to which a stranger may be affiliated to the family by adoption. (in the case of Surjit lal Chhabra). Another exception is that of reunion (Bhagwan Dayal v. Reoti Devi AIR 1962 SC 287) Many times, it is said that HUF can be created through gifts. This idea is misconceived. Gift itself involves two parties. So, HUF must be in existence before receiving gifts. Gifts are given to HUF to provide funds for the purpose of doing business or for acquiring property where HUF does not have any property.
Posted on: Fri, 14 Jun 2013 05:00:49 +0000
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