Kinds Of Properties:-
In a coparcenary property, every coparcener has a joint interest and joint possession. A joint family property cannot be disposed of, except out of legal necessity or for the benefit of the family. While selling an immovable property, care should be taken to obtain the high court’s permission if there is a minor in the family. The high court, generally, gives the go-ahead only if the minor’s interest is safeguarded. Any coparcener may, voluntarily, blend his separate property with the HUF’s property with the intention of abandoning a separate claim on it. But under tax laws, income arising from such transferred or gifted property to the HUF will continue to be included in the income of such a coparcener.
Partition :-
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Every coparcener has a right to ask for partition, which may be total or partial. A partition is total when all properties of the family are divided among the members, and on such a partition, the HUF ceases to exist. Under Hindu Law, it is not necessary to divide all property by metes and bound, but without that the partition will not be recognised under tax laws.
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Partial partition is of two types: partial partition vis-a-vis property, which means distributing certain property to the members and retaining balance properties with the family; partial partition vis-a-vis person, which implies distributing certain properties to some members of the family, following which such member won’t remain part of the family any longer. In partial partition, an HUF continues to be a separate entity. The only change is some of the property/ coparcener don’t continue to be part of the family. All coparceners can, after effecting valid total partition, decide to reunite by bringing the entire property back into the HUF. Such an act is known as reunion. Female members, like the mother, who cannot ask for partition, are entitled to a share equal to that of a son in the event of partition.
Coparcenary interest in HUF :-
A coparcener’s interest devolves by survivorship to other coparceners and not by succession. But, if a deceased Hindu has left a surviving relative specified in Class I of the Schedule to the Hindu Succession Act, 1956, his/her interest in Mitakshara coparcenary property does not go by survivorship, but will devolve by testamentary or intestate succession to his/her legal heirs. If the share of the coparcener is devolved to the legal heir by succession, he acquires indefeasible interest in the HUF that will remain undiminished. His/her share will be determined as if the notional partition has taken place immediately prior to death of the coparcener. A coparcener is entitled to will away his coparcenary interest in the family.
Tax aspect:-
HUF is a separate taxable entity. Its income is taxed independently of the members’ income. Income up to Rs 1.5 lakh earned during the assessment year 2009-10 is exempt from tax. It can also claim deductions under Chapter VI-A. Under Section 80C, up to Rs 1 lakh is available for investing in specified avenues. If other members of the family are in the highest tax bracket, it’s prudent to generate income of the HUF by investing its funds in income-earning avenues to take advantage of the lower tax base.
Tax impact on partition of HUF :-
If the capital or income base of the HUF is large, it may be more viable to make a total partition of the HUF property. On the partition of the larger HUF, each of the married sons will receive the property for and on the behalf of his own smaller HUF. If the smaller HUFs are in the lower tax bracket, it will help save tax in view of spreading income of the larger HUF. If a total partition takes place among members of the HUF, which were hitherto assessed to tax, an application for getting this fact recognised will have to be made to the assessing officer. Partial partition is not recognised for tax purposes. Income earned on the property received by a member on partial partition would be clubbed with the income of HUF as if there’s no partition.
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