You can dissolve it with a formal deed of dissolution and then divide the assets. You need to complete the tax liability procedure if any pending.
The businesses will be run independently now without huf.
You need to decide how you divide it
Dissolution of huf
My father has an HUF , the only assets under the HUF are : 1. Proprietorship company - my father is the karma and me being the eldest son is running the business, my other siblings are not part of the business and do not run the business. My father in principle has handed over the business to me ( the eldest son ) to continue running under my name. 2. 2 cars - both in the name of the HUF and have auto car loan running on both of them. 3. No other asset Questions : 1. How do we dissolve the HUF and what is involved ? 2. What formality is required to continue running the business ( company ) which was under the HUF. As i am responsible for running it. 3. What do we do about the cars ? As he wants the 2 cars to run under me in the current business/company.
Asked 5 years ago in Family Law
Religion: Hindu
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12 Answers
Since business is run by HUF, on its dissolution business income will distribute between all members equally. It will dissolve by executing partition deed.
Aster partition, you can execute MOU with your brothers and HUF members to gift car to you and than you can transfer the cars in your name.
HUF (Hindu Undivided Family) is assessed as a separate person under provisions of Income Tax Act, 1961. It has its own identity and right to own property but not a juristic person. It can sue and be sued as a person. It is governed by Karta of the family and consists of co-parceners of a single family
Partition means division of property. There must be property which can be physically divided among the members of the family. The division will be such as that the share of each member will be determined physically.
Regarding two cars can be kept by any partner of the HUF, it can be decided in the partition of HUF.
1. The only way a HUF can be dissolved is by a partition , and all members should agree to dissolve the HUF.
- Further, under a partition, each member has an equal right to the assets/property owned by an HUF , and it cannot be sold without having each member of the family on board, and even an unborn child, who is still in the womb of its mother, has a right to the property , however it is not necessary to divide the properties in metes and bounds
2. Partition can be total or partial, and in total partition all the members cease to be members of the HUF and all the properties cease to be properties belonging to the said Partition could be partial also, and in partial some of the members go out on partition and other members continue to be the members of the family i.e. some of the properties, can be divided among the members other properties continue to be HUF properties.
- Further, it is not necessary that other members should agree to the partition , and other members can continue to remain joint.
3. Cars can be kept by the continuing members of HUF.
Dear sir,
For continuing the HUF, you are not required to do anything and you may run the business without any issue. For dissolution of the HUF, a deed is to made and the assets are to be distributed among the members.
1. Dissolution of HUF occurs when partition of HUF’s property is done.
Partition of HUF can be done at any time i.e. either on Survival of Karta or on death of Karta.
Partial Partition of HUF is not allowed as per Income Tax Act 1961.\
2. For running the business now under HUF, the HUF should remain in tact and cannot be dissolved.
You are running the business on behalf of the HUF and not as an individual.
Hence you can continue the business on behalf of the HUF.
3. The cars also will be under the HUF property or under the business run by HUF, you cannot claim ownership of the car.
Do you have HUF deed registered or unregistered by your father?
I would advice and answer your questions legally and chronologically 1 to 3 after disclosure of HUF deed or agreement between and amongst you, siblings and father.
We suggest that you should dissolve the HUF and execute an deed whereunder you should divide each person share. The deed which you execute you are required to get the same registered
A dissolution can be done. Contact a CA. all the persons part of the HUF have a share in the company and its assets and liabilities. Act accordingly.
1. HUF can be dissolved through a deed of dissolution between karta and coparceners.
2. No formality is required to continue running the business. In the HUF dissolution deed it can be mentioned that business will be transferred to you.
3. The cars can also be given to you through the dissolution deed.
1. For dissolution of HUF all the assets of HUF must be partitioned among coparcenars of HUF.
2. You can pay consideration to your siblings for giving up their share from business of HUF as per dissolution deed of HUF.
3. You can pay consideration for car as well to siblings.
Settlement deed.
