Whether HUF can be a fictional entity or a group of natural persons who can reside in the house and take benefit of Sec 23(2)?

Commissioner Of Income Tax Vs. Hariprasad Bhojnagarwala (High Court of Gujarat at Ahmedabad) Income Tax Reference No. 174 Of 1995 | 02-08-2011

Short overview of the case:

Facts:

1. The assessee is a Hindu Undivided Family (HUF). It derived its income from house property. The claim of assessee for deduction u/s. 23(2) of the I.T. Act was rejected by Income Tax Assistant Commissioner.

2. Sec 23(2) allows benefit to self occupied property, wherein, the annual value shall be nil.

3. The question was whether HUF can be a fictional entity or a group of natural persons who can reside in the house and take benefit of Sec 23(2)?

The Hon Gujarat HC held as below:

1. A Hindu Undivided Family can be seen being a family of a group of natural persons. There is no dispute that the said family can reside in the house, which belongs to Hindu Undivided Family.

2. A family cannot consist of artificial persons.

3. So the benefit of Sec 23(2) can be taken by the HUF too.