Can a single coparcener maintain HUF status? Tax implications explored

A HUF consisted of a father, his wife and their son. The wife passed away in 2010, but the HUF continued with the father and son as members. Differences arose between the father and the son. The son was allotted specific properties and separated himself from the HUF. No order was sought from the Income Tax Officer to recognise the partition of the HUF. The father continues to file the return in the status of an HUF. Whether the father can continue to retain the HUF status for the assets left and how the HUF properties devolve after the father's death. The son is the only legal heir of the father.

Since the mother was entitled to get a share equal to that of her son in the event of the partition and as required under the Hindu Succession Act, a notional partition was assumed to have occurred upon her death. So her share would have been devolved on the husband and the son in their capacity, and the same would have become their individual property.

Partition and Dissolution of HUF

Only the father was left after the son parted ways to get his share in the HUF assets. Since a single member can not constitute a HUF, the incidence of the son getting his shares of assets in the HUF amounted to and resulted in the complete dissolution of the HUF. The father should have informed the income tax officer to recognise the complete partition that was consequent to the HUF partition.

Though two coparceners are needed to initially constitute a HUF, an existing HUF may continue with one copier and other members. Please note that a HUF cannot continue with the sole copier alone; thus, it ends.

As per the income tax laws, the full fact of the complete partition must be recorded by the income tax officer by passing an order. Until the order is passed, the HUF with the combined assets will continue in the status of the HUF. The income accruing to the son on the properties given away to him will continue to be taxed in the hands of the HUF.

The father cannot continue with the assets left under the status of a HUF. After the partition, the assets left in the HUF belong to him, and income arising and accruing concerning such assets should be included in his personal ITR along with his regular income. After the father's death, all the assets owned by him, along with the assets devolved on him from the HUF, will be inherited by the son unless the father makes a valid will bequeathing the assets to someone else.

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Balwant Jain is a tax and investments expert and can be reached on jainbalwant@gmail.com and @jainbalwant on his X handle.

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