• HUF property total partition

My dad is Karta of HUF property and has 2 siblings. We have decided to go for total partition of HUF property. A house is the only asset of HUF property.

One of the sibling is willing to compensate rest of the HUF coparcerners by paying cash and retaining house property in his name. All of coparcerners are ok with this arrangement as we do not want to sell the house.

1. Is this acceptable as total partition?
2. What is the procedure to change the title of house to the sibling who gave compensation to rest of the coparcerners? 
3. Will there by any capital gain tax due to transfer of house in the name of the sibling who provided compensation?
4. Will the cash compensation received by rest of HUF coparcerners be taxable?
Asked 2 years ago in Property Law from Mumbai, Maharashtra
Religion: Hindu

1.yes it is acceptable as the total partition.

2.engage local lawyer because it has long procedure

3. Liable for capital gains..

4. Yes they are taxable under income tax act

Hemadri Chandrakanth
Advocate, Vijayawada
98 Answers
8 Consultations

4.0 on 5.0

1. Yes if property cannot be divided by meats and bounds other coparcener can take share by monetary compensation.

2. The siblings has to make an relinquish deed in favour of the other sibling purchasing it and then after registration title can be mutated.

3. Yes

4. Yes long term capital gain tax.

Shubham Jhajharia
Advocate, Ahmedabad
22882 Answers
93 Consultations

5.0 on 5.0

1. It is not a partition but a Family Arrangement, if reduced in writing then you must get it registered in the office of Registrar.

2. File an Application before the Tahsildar (by whatever name he may be called there in Maharastra) for mutation of name in favour of the sibling with a NOC by other coparceners and the copy of registered Family Arrangement.

3. No tax of any kind because it does not amount to transfer of property. Transfer of property includes only by sale, gift, mortgage, lease.

4. No, the compensation is not taxable.

Mayank Srivastava
Advocate, Allahabad
61 Answers
16 Consultations

5.0 on 5.0

1) Yes, this is acceptable if all coparcerners are ready for total partition like this.

2) It will be treated as sale deed, among family members.

3) Yes, it will come under capital gain tax as this is sale deed transaction.

4) same as above.

Ganesh Kadam
Advocate, Pune
9026 Answers
74 Consultations

4.9 on 5.0

1. Yes if the house is the only asset of HUF, then it amounts to total partition

2. First enter into a deed of partition where the arrangement will be recorded in writing

3. Then all siblings who wish to give up their right can sign a release deed in favour of the sibling who is desirous to buy their shares

4. The siblings who receive compensation under the release deed will have to pay capital gains tax

5. No capital gains tax on the sibling who is buying the shares of other coparcenors

6. Cash received will be taxable in the hands of the recipient

Yusuf Rampurawala
Advocate, Mumbai
4858 Answers
29 Consultations

5.0 on 5.0

Partition of HUF can be done through deed of family settlement or through partition deed.

2)deed of family settlement should be stamped and registered

3) dont accept any cash component . take payment by cheque only

4)The realignment of interest by way of family arrangements among the family members has not construed a transfer. No liability of capital gain tax should arise in such cases. I

Ajay Sethi
Advocate, Mumbai
72060 Answers
4334 Consultations

5.0 on 5.0

Dear Client,

Through release deed, above is permissible.

1. Is this acceptable as total partition? -- It`s not partition but release of right in HUF.

2. What is the procedure to change the title of house to the sibling who gave compensation to rest of the coparcerners? -- All release/relinquish their right in sibling than he will become absolute owner.

3. Will there by any capital gain tax due to transfer of house in the name of the sibling who provided compensation? -- Yes - In J.K. Kashyap v. Asstt. CIT [2008] 302 ITR 255 a Bench of this Court held that if the assessee relinquishes his rights in the property for a consideration it amounts to transfer under Section 2(47) of the Act and he is liable to capital gain tax under Section 45 of the Act.

4. Will the cash compensation received by rest of HUF coparcerners be taxable? - In their individual hand.

Yogendra Singh Rajawat
Advocate, Jaipur
16743 Answers
21 Consultations

4.6 on 5.0

1. Is this acceptable as total partition?

Answer: Yes this is acceptable;

2. What is the procedure to change the title of house to the sibling who gave compensation to rest of the coparcerners?

Answer: It is at the sweet will of the co-parceners and members as to whether to allot on partition in accordance with the share specified under the Hindu Succession Act or to allot lower or more to anyone or more persons. You can also execute a relinquishment deed;

3. Will there by any capital gain tax due to transfer of house in the name of the sibling who provided compensation?

Answer: Once you execute a relinquihsment deed, the stamp duty will be nominal;

4. Will the cash compensation received by rest of HUF coparcerners be taxable?

Answer: The clubbing provisions u/s. 64(2) of the Income Tax Act as well as section 4(1A) of the Wealth Tax Act shall apply. Under the Income Tax Act, the income arising from such converted property will be deemed to be income of the transferor individual. Moreover, on Partition of such property, in case such property is allotted to the wife of such individual the income arising there from shall continue to be taxed in the hands of the transferor individual.

Rest you can read up online:

http://itatonline.org/articles_new/the-entire-law-relating-to-hindu-undivided-family-huf-explained/

Gowaal Padavi
Advocate, Mumbai
1887 Answers
3 Consultations

5.0 on 5.0

1. If this is mutually agreed by all the coparceners, then it is maintainable provided the same is reduced to writing and duly registered before the sub registrar within the jurisdiction.

2. On the basis of the registered deed, the person who has bought the property by compensating the cosharers shall automatically becomes the absolute owner with marketable title.

He can transfer the revenue and other records on his name producing the copy of the registered document

3. The arrangement shall be termed as sale of their respective shares in the HUF property, hence the person who sold his share shall be subjected to the LTCG taxes as applicable.

4. Read the above answer.

T Kalaiselvan
Advocate, Vellore
61997 Answers
800 Consultations

5.0 on 5.0

Yes it is acceptable as total partition.

Just, go to the court file a suit for partition and mention everthing there let it be on record of the court, about amount to each paid etc.

Yes, the amount will be a taxable amount.

Sanjay Baniwal
Advocate, South Delhi
5036 Answers
11 Consultations

5.0 on 5.0

You would be absolute owner of house as per registered deed of family settlement

2) you can create new HUF with you as karta if you so desire

Ajay Sethi
Advocate, Mumbai
72060 Answers
4334 Consultations

5.0 on 5.0

1. Yes the HUF can transfer it assets with consent of all coparcener to you and then title.shall be yours not huf.

2. If your settling only house then not necessary to close HUf, you can buy property in individual.capacity, if dissolving huf make a deed of total partition and disloving huf. Or you can form your own huf if you wish to do so.

3. No

4.planning and managment of Huf commercial publishers you will get it on Amazon.

Shubham Jhajharia
Advocate, Ahmedabad
22882 Answers
93 Consultations

5.0 on 5.0

1. You can purchase their share of property by a registered sale deed.

2. There is no necessity or it is not mandatory to form a fresh HUF.

3.This is not maintainable.

T Kalaiselvan
Advocate, Vellore
61997 Answers
800 Consultations

5.0 on 5.0

1. Will house property title become in my individual self name? --- On the basis of release deed, property can be transfer in your name.

2. Or is it mandatory to create a new HUF with me as Karta for this house property? I am married with 2 kids, son and daughter. As it is total partition should the existing HUF be closed? --- U can make a new HUF.

3. Or can I continue with the existing HUF and i become the Karta and only members as my wife and my siblings? -- Previous HUF will dissolve after partition.

4. Can you suggest any good book on HUF covering all aspects?

Yogendra Singh Rajawat
Advocate, Jaipur
16743 Answers
21 Consultations

4.6 on 5.0

You each can relinquish your rights by Registered relinquishment deed. The capital gains may get taxable under individual receipt or income tax returns of both the coparcener and karta.

Prashant Nayak
Advocate, Mumbai
16701 Answers
30 Consultations

4.6 on 5.0

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