under the income-tax act, 1961(“the act”), a hindu undivided family (“huf”) is treated as a separate entity for the purpose of assessment. the term huf is not defined under the act. it is defined under the hindu law as consisting of all the members lineally descending from a common ancestor, including their wives and daughters.

the income of a huf will be assessed as such if there is a coparcenership and there should be a joint family property which consists of ancestral property.

the total income of a huf is determined on the similar lines of that of individual; various deductions available to the individual are also available to the huf. accordingly first step is to ascertain the income under different heads of income. on the net income, tax is payable at the rates applicable to individuals. If the huf has agricultural income, then due consideration to the rules so applicable is to be given to arrive at non-agricultural income. thereafter deduction u/s 88 is allowed. on resultant tax amount surcharge (applicable only if income is more than 10 lacs) and education cess and secondary education cess (applicable a.y 2008-09) is added and then rebate u/s 86, 90 and 91 of the act is allowed. thereafter to the balancing amount is advance tax, tax deducted at source or collected at source, etc. shall be deducted to find out the amount to tax payable.

in order to be acceptable partition u/s 171 of the act, a partition should be complete with respect to all members of huf in respect of all properties of huf and there should be actual division of property as specified to each member. setting apart certain assets of huf in favour of certain coparceners on condition that no further claim in properties will be made by them is nothing but partial partition and not a family arrangement and that is not recognized u/s 171(9) of the act.