Assessment of HUF/Firm/AOP
HINDU UNDIVIDED FAMILY
Hindu undivided family has not been defined in Income tax Act 1961. Still it is treated as a separate legal entity and is considered as a person under section 2(31) of the Income-tax Act, 1961. As per Hindu Law, Hindu undivided family is a family which consists of all persons who are lineally descended from a common ancestor and HUF also includes wives and unmarried daughters of such descendants. Jain and Sikh families are also treated as HUF under the Act.
A Hindu undivided family cannot be created by a contract and it is created automatically in a Hindu Family. Creation of a HUF is a God gifted phenomenon as birth of a child to a married Hindu, automatically creates a new Hindu undivided family.
In case of R. Subramania Iyer v. CIT it was held that it is not at all necessary that every HUF must have joint property or family income, however, for a Hindu undivided family to become an assessee under the Income Tax Act 1961, there must be INCOME YIELDING joint property of the family.
As per section Section 2(23) of the Income tax Act 1961, the terms FIRM includes Partnership under Indian Partnership Act, 1932 and a Limited Liability Partnership incorporated under Limited Liability Partnership Act, 2008.
A Hindu undivided family cannot be a partner in a partnership firm however KARTA of Hindu undivided family may enter into contract with a firm.
As per Section 84 of Income tax Act 1961 a partnership firm in the first assessment year shall be assessed as a firm if the following conditions are satisfied
1. The partnership is evidenced by an instrument that is partnership deed. Partnership deed should be in writing which must contain all the necessary clauses.
2. The individual share of the partner should be specified and it should also specify how the loss will be borne by major partners in case a minor is admitted as partner for benefits only.
3. A copy of the partnership deed signed by all the partners or their duly authorized agents, in should be submitted along with the return of income in respect of which assessment as a firm is first sought.
These online MCQ tests and MCQ for Assessment of HUF/Firm/AOP questions includes all main concepts of the chapter (Assessment of HUF/Firm/AOP) in CS Executive Module I Tax Laws & Practice (MCQ based OMR) Exam
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