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Friday, 11 July 2014

PARTITION OF JOINT HINDU FAMILY PROPERTIES-HUF

Partition of joint Hindu family property has an important bearing in the matter of taxation under the direct tax laws. On partition of the joint Hindu family property, the incomes arising from the shares allotted to the different members of the family becomes assessable to income-tax in their respective hands has individuals or if the coparceners are married a new status of joint family is brought in to existence for all such members.

The partition can be either of a joint family property or that of joint properties. There is essentially a difference between the joint family properties and the joint properties. In the former case it is the partitioning of properties belonging to the joint Hindu family and in the letter case it is partitioning of properties belonging to the co-owners.

1.     Writing not necessary but advisable

It is not necessary that a partition of the joint Hindu family be effected by means of an instrument of writing. A partition of joint property is neither a sale within the meaning of section 54 of the transfer of property Act nor on exchange as defined Under section 118 of the transfer of property Act. As such the condition that it has to be necessarily in writing does not apply.

A partition can thus be effected orally or by an instrument in writing. If the partition of immovable properties of the value of Rs.100 or more is effected in writing, the instrument must be registered in accordance with the provisions of the Indian Registration act.

The term of an oral partition  made by the consent of the parties can be reduced ton writing in the form of memorandum as a record of something already done and achieved. An instrument of memorandum although reduced to writing is not required to be registered nor the instrument has the bear the stamps required on a deed of partition. The memorandum can be on a plain paper or a stamp paper or a stamp paper required for an affidavit, since it can be devised as declaration and a record of something which is completed or an act which already stands accomplished.

2. Admissibility of memorandum – saving stamp duty

A partition of the immovable property of joint Hindu family can be effected by an oral agreement irrespective of the value of the property. There fore a memorandum recording the fact of the partition which has already taken place is admissible in law, even if it is not registered under the Indian registration Act.

It has been held that a document acknowledging the previous partitions of a Hindu Undivided family does not require registration Act.

It has been held that a document acknowledging a previous partition of a Hindu undivided family does not require registration. Such a Document is admissible in evidence as proof of partition.

3. Necessary parties in a deed of partition

The parties necessary in a deed of partition are those who are entitled to share at the time when the partition is to take place. In case the parties who are to be allotted shares are minors, they are required to be represented by their natural guardian, the natural guardians are firstly the father and secondly the mother . if the father is alive, then father has to represent the minors and if father is dead or is otherwise incapacitated then the mother is to represent the minors, while in the absence of both the natural guardians, the parties can be represented by a guardian appointed by the court, who can be his next friend.

4. Necessary recitals in a Deed of partition

The necessary recitals in a deed of partition are:
(a) Whether the properties to be partitioned are the joint property or the joint family property of the parties.
(b) In case of joint property the source and mode of its acquisition, the rights and the respective shares of the parties among whom the partitions is to take place.
(c) In case joint family property , the family to whom it belongs, branch or branches of the family among whom the partitions is to take place.
(d) In case partition among the members of a specific branch the members entitled to share and their respective shares.
(e) Whether partitions is total or partial.

(f) In case of a total partition, a list of properties sought to be partitioned and a separate list of the properties which have to continue to remain the joint family properties of the family.

5. Registration of partition deed

When a deed of partition effecting immovable property is reduced to writing or deed of partition effecting any immovable property valued at Rs.100 or more is reduced to writing, the document is required to be compulsorily registered under the provisions of section 17 of the Indian registration Act.

According to section 23 of the registration act, the deed of partition is required to be presented for registration before the registering authorities within a period of four months from the date of its execution.

A document effecting the partition of an immovable property has to be presented for registration in the office of sub-registrar within whose sub-district the whole or some portion of the properties to which such document relates is situate, which implies that if the properties which are the subject-matter of partition are situated in more than one state, the document can be presented for registration in any one of the sub-strict within whose jurisdiction the property is situate.

6. Stamp duty payable

The stamp duty payable an a partition deed according to the provision of article 45 of the first schedule of the Indian stamps Act is to be calculated on the total sum of the value of the property which is the subject matter of partition, after excluding one major share. For instance, if a partition is effected between the two branches of a family and also an inter se partition amongst the members of one of the branches, the major share being that one of the branches, who continue to remain joint and his allotted the property as such has to be excluded out of the total value of the property and the stamp duty shall be calculated on the balance amount arrived at from the total value after exclusion of one major share.

The stamp Act is Central act and applies to the whole of India excepting the state of Jammu and Kashmir and the formula for arriving at the value on which stamp duty is payable remains the same, but so far as the rate of stamp duty is concerned, it varies from state to state as the states are vested with the legislative territories.

7. Witnessing of documents

According to the transfer of property Act, the instrument of partition is required to be attested by two or more witnesses each of whom has seen the executant sign or affix his mark to the instrument or has seen some other person signing the instrument in the presence or by the direction of the executant  or has received from the executant a person acknowledgement of his signature or mark of the signature of such other person. Each of the attesting witness is also required to sign the instrument in the presence of the executant.

It is not necessary that more than one of such witness shall have been present at the same time.Attestation need not be in any particular form; a  mere signature is sufficient. The attesting required to sign After execution of the document and not earlier. A party to a deed cannot be an attesting witnesses. For, the object of attestation is protection against fraud and undue influence.