26 July 2010
Section 10(2) clearly mention that any sum received by a member of HUF (out of the income of huf) is fully exempted however that amount should already been taxed in the hands of HUF. For better understanding please read the following: Receipt by HUF members [Section 10(2)] Amount must be received in position as member of HUF - If a person who is a member of a HUF received an allowance not because he is such a member but wholly apart from that position, the exemption does not apply. It is only if the assessee has received the sum in question by virtue of his position as a member of the undivided family to which he claims to belong, that the applica¬tion of section 14(1) of the 1922 Act is attracted - Maharaj Kumar of Vizianaga¬ram, In re. [1934] 2 ITR 186 (All.)/Vijayananda Galapati, Maharaj Kumar of Vizianagaram v. CIT 9 ITC 73 (All.). Proper test is to see whether payment would cease on cessation of membership - The unfailing test for the applicability of section 14(1) of the 1922 Act is to determine whether the allowance would cease if the assessee ceased to be a member of the undivided family - CIT v. Smt. Chandramoni Pattamahadevi Rani Saheba [1946] 14 ITR 134 (Pat.). Exemption is not related to assessment in HUF’s hands - The exemption is in absolute terms, not qualified in any manner and not dependent on any conditions. Legally, therefore, what is to be determined is whether the sum assessed in the hands of the assessee can be so assessed or not, irrespective of the fact whether this sum has already been assessed elsewhere or not - Smt. Chanan Devi, In re. [1944] 12 ITR 153 (Lahore). Member must be entitled to demand partition or maintenance - Only those members of a HUF can claim exemption who either on partition would be entitled to demand a share or are entitled to maintenance under the Hindu law and who, therefore, might be said to have an interest in the joint income of the family - Kedar Narain Singh v. CIT [1938] 6 ITR 157 (All.). Assessee must prove entitlement to receive amount - All that was required to be proved by the assessee at the time of the assess¬ment in order to claim exemption under the above section was that she was receiving the sum in question in her capacity as a widow of the deceased coparcener of a HUF. If she proved that she was receiving the sum in that capacity or status, then she would be enti¬tled to exemption under the section. She need not prove anything more. The argument that because of the disruption of the joint family (in 1923) the assessee could no longer claim herself to be member of a HUF could not be accepted - CIT v. Musammat Bhagwati [1947] 15 ITR 409 (PC).
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