Mode & Way to form HUF
How to form HUF is one of the most common question by the new taxpayers.
First of all, let us know how Hindu Undivided Family (‘HUF’) come into existence?
It can be following mode:
- a) Date of marriage
b) Date of child birth
c) Date of making Deed of HUF or applying for PAN
Whether a single person, male or female, does not constitute a family?
Let us assume that there is a single male person. He does not have any family for a HUF to come into existence. A ‘family’ always signifies a group. Plurality of persons is an essential attribute of a family. A single person, male or female, does not constitute a family.
Definition of the term ‘person’ in Section 2(31) of the Income-tax Act, 1961, treats a HUF as an entity distinct and different from an individual. Assessment in the status of a HUF can be made only when there are two or more members of the Hindu undivided family [refer C. Krishna Prasad vs. CIT (1974) 97 ITR 493(SC)]. Further, the Income Tax Act does not indicate that a HUF as an assessable entity must consist of at least two male members [refer Gowli Buddanna vs. CIT (1966) 60 ITR 293(SC)].
So now, when this single male person (in my example) gets married, a ‘family’ gets created. A HUF, as known under Hindu law, can consist of even husband and wife only. Once such a HUF has come into existence upon marriage of a Hindu male, such family (i.e., consisting only of husband and wife) can receive property from any source and regard the same as HUF property.
Therefore, the date of marriage will be date of incorporation of HUF.
Children of this family, both male and female, upon their birth become coparcener in the HUF of their parents. A new/ separate HUF does not come into existence at the time of birth of a child. Thus, option (b) is ruled out.
The concept of HUF is not related to possession of any property by the family nor is the existence of such joint property an essential pre-condition for constituting a HUF. Therefore, making of HUF Deed or applying for its PAN has no co-relation with the date of incorporation of the HUF. Thus, option (c) is ruled out.
