Page 11 - DTPA Journal Aug 18

DTPA - J | 2017-18 | Volume 3 | August 2018

TAX MANAGEMENT THROUGH PARTITION,
FAMILY ARRANGEMENT / SETTLEMENT.

N. M. Ranka, Senior Advocate

Tax Management : would remain intact as that of a son. Discrimination on
account of gender stands abolished for good, though
A rupee of tax saved is much more than the rupee of
income earned. After understanding the tax laws, belated..
availing of various exemptions, deductions and 3. Concept and Assessment : The concept of Joint
incentives provided under the tax laws and resorting to Family under Hindu law as well as the HUF in Income-
tax management / tax planning, many tax payers could tax Act, 1961 is broadly the same. HUF is purely a
promote their resources and prosper. So much so that creature of law and cannot be created by an act of
one could reduce the tax burden to a tolerance limit. parties (except in case of adoption and reunion). A HUF
Brunt of taxation can be substantially reduced by is a fluctuating body, its size increases with birth of a
adopting proper tax planning. Tax Management is member in the family and decreases on death of a
sound law and certainly not bad morality to so arrange member of the family. Females come into HUF on
one's affairs as to reduce the brunt of taxation to a marriage. If there is family necleus, under the Hindu
minimum. Arranging affairs in such a manner that system of law a joint family may consist of a single male
charge of tax is reduced is not prohibited. Availing member and widows of deceased male members, and
various recognized methods of tax planning is lawful the Income-tax Act does not indicate that a Hindu
and has the sanctity of the courts. Avoidance of tax is undivided family as an assessable entity must consist of
not tax evasion. End effect of tax planning, tax at least two male members (Refer Gowli Buddanna Vs.
avoidance and tax evasion is one and the same but tax C.I.T. (1966) 60-ITR-293 (SC). Where a Coparcener
evasion alone deserves to be deprecated and need not having a wife and minor daughters and no son receives
be resorted to. Adopt / Suggest Tax Management - It is his share of joint family property on partition, such
your duty. Not Tax Evasion - It is a crime against property, in the hands of the coparcener, belongs to the
Society and needs to be deprecated and tax evaders HUF of himself, his wife and minor daughters. (Refer N.
socially boycotted. V. Narendranath Vs. C.W.T. (1969) 74-ITR-190 (SC).
Assessment in the status of a Hindu undivided family
2. Hindu Undivided Family : The Expression
can be made only when there are two or more members
“Hindu Undivided Family” has not been defined under
the Income-tax Act or in any other statue. When we of the Hindu undivided family. (Refer C. Krishna Prasad
Vs. C.I.T. (1974) 97-ITR-493 (SC). Husband and wife
dissect – essentials are (I) Should be Hindu, (Jain,
can constitute H.U.F. if property is received on partition.
Sikh and Buddhist are treated as Hindus but not
Musalman or Christian); (ii) A family i.e. group of (Refer C.I.T. Vs. Parshottamdas K. Panchal (2002)
257-ITR-96 (Gujarat).
persons – more than one; and (iii) should be
undivided i.e. living jointly and having commonness 4. Ancestral Property : All property inherited by a
amongst them. All the three essentials are cumulative. male Hindu from his father, father's father or father's
It is a body consisting of persons lineally descended father's father, is ancestral property. The essential
upto three generations or three degrees from a feature of ancestral property according to Mitakshara
common ancestor and include their wives, children and Law is that the sons, grandsons and great-grandsons of
adopted child. By the Hindu Succession (Amendment) the person who inherits it, acquire an interest, and the
th
Act, 2005 w.e.f. 9 September, 2005, daughter, even rights attached to such property at the moment of their
after marriage, would be a co-parcener, of which her birth. Thus, if 'A' inherits property, whether movable or
father is a co-parcener and in addition, on her marriage, immovable, from his father or father's father, or father's
shall become a member of her husband's joint Hindu father's father, it is ancestral property, as regards his
Undivided Family. Her rights in the parental family male issue. (AIR 1936 Orissa 331). A person inheriting

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