Huf continuation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 January 2016 Mr.X is Hindu Aged about 36 yrs, No Children

Events in Chronological Order :

Feb 2011 Mr.X got married

1/4/2011 Formed Mr.X (HUF) (consist of Mr.X & Wife)

June 2013 Mr.X (HUF) got 25% share in Immovable property from distant relative by WILL.

Dec 2013 25% share got registered by Probate in name of Mr.X (HUF)

Feb 2014 Started getting Rental income from 25% share in Immovable property (Rs.8 lakh annually)

Jan 2015 Mutual Divorce happens between Mr.X & His Wife

Dec 2015 Mr.X is still Single

Questions:

1) Can Mr.X Continue his HUF after Divorce ?

2) If no then what happens to the 25% share in property which got registered in Govt. Land records in Mr.X (HUF)

3) What about Rent as HUF was getting rent as 25% owner in property ?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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08 January 2016 1. Provided if gets re-married he can continue. Otherwise income can be assessed in the hands of Mr X .
2. The property registered in the name of an HUF is a subject of partition. It can go in the Individual hands of Mr. X. But...
(We may leave Mr.X free for deciding whether to get re-married or " to wait & watch" for the time being. )
3. Rent will be assessed in the hands of Mr X as he is the single member of the HUF .
(The reply may vary according to the mood of MR X. I pray ex-Mrs. X, will come again.)

Querist : Anonymous

Querist : Anonymous (Querist)

08 January 2016 Thanks Bafna ji. How will Income tax Authority know that Mr X HUF (Karta) is a divorcee and they have no children ? If Mr.X gets married again after 2 yrs then new HUF again or shall currently wait for 2-3 yrs and file regular returns of existing Mr.X HUF ??

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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08 January 2016 In hypothetical situations , it is difficult to imagine. Practically, the divorce cases involve huge costs, Capital as well as revenue. Every divorcee is not as lucky as your Mr.X is. His vacated bank account, shrinked sources of income, lesser withdrawals, all are indicative.
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Mr X is advised not to take further burdens in such distressed situation by playing fowl games with the tax authorities. Being an honest tax payer and a law abiding person, he should do as prescribed in the law of land. Till his fate is decided by the almighty, he should pay taxes in Individual. " Jab Kripa Aani shuru hogi, tau sab taraf se aayegi".