Partition of HUF property

In the previous article, we discussed What are the rights over property of female in HUF? In this article, we will discuss about the Partition of HUF property under Hindu law.

The Hindu Law defines the HUF (Hindu Undivided Family or Joint Hindu Family) as a family, which consists of males lineally descended from a common ancestor and includes their wives and unmarried daughters. HUF is also recognized under Income and Wealth tax Act, as a separate legal entity and is liable to pay tax, is entitled to deductions and exemptions and to hold/own property (both movable and immovable) in it’s name.

Affairs of HUF are managed by it’s Karta. Hindu law is comprised of two schools of law governing HUF, Dayabhaga and Mitakshara school. Dayabhaga is applicable only in West Bengal and Assam whereas Mitakshara is applicable in rest of India.

Partition of HUF property under Hindu law can be total or partial. In total, partition all the members of HUF cease to be members of the HUF and the entire property of the HUF ceases to be property of HUF. In partial partition some of the willing members get out of the HUF and rest continue to be members. Again, the partial partition may be property specific also when some of the properties are divided among the members and balance continue to be property of the HUF.

Partition of property under Hindu law and under Income tax Act are different on two accounts:-

1. For partition under Hindu law division of the property by metes and bounds is not necessary, but for partition recognized under Income tax Act, division of property by metes and bounds is necessary.

2. Partial partition of HUF property, either property specific or member specific is valid under Hindu law, but under Income tax Act, 1961 it is not recognized.

Partition of HUF property can be done either through family settlement OR through a partition deed. Family settlement does not attract stamp duty and is not required to be registered, but partition deed attracts stamp duty and must be registered. To avoid expenses inherent with “Partition deed” family settlement is preferred, but must be ensured that:-

1. The family settlement is bona fide, for fair and equitable division of property amongst the members and to resolve family disputes.

2. It must be voluntary and without any force, threat, coercion, misrepresentation and fraud.

3. Fair and equitable family settlement, though unstamped and unregistered, is final and binding on the family members.