Section 315: assessment after partition of a Hindu undivided family

Introduction

A Hindu undivided family previously assessed as undivided continues to be so assessed until the Assessing Officer records a statutory partition finding.

The section governs the inquiry, the allocation of tax after partition and the treatment of partial partitions claimed after 31 December 1978.

Key takeaways

Deemed undivided until a formal finding of partition

A Hindu family hitherto assessed as undivided is deemed, for the Act's purposes, to continue as a Hindu undivided family, except where and to the extent a finding of partition has been recorded under this section.

The inquiry into partition

Where, at the time of making an assessment under section 270 or 271, a member of a Hindu family assessed as undivided claims that a total or partial partition has taken place, the Assessing Officer must inquire into it after giving notice of the inquiry to all family members.

On completing the inquiry, the Assessing Officer records a finding on whether there has been a total or partial partition and, if so, the date it took place.

Tax treatment where partition took place during the tax year

Where a finding of total or partial partition is recorded and the partition took place during the tax year: the joint family's total income up to the date of partition is assessed as if no partition had taken place; and each member or group of members is jointly and severally liable, in addition to any tax they are separately liable for, and irrespective of anything against Schedule III (Table, Sl. No. 1), for the tax on the income so assessed.

Tax treatment where partition took place after the tax year

Where a finding of total or partial partition is recorded and the partition took place after the tax year ended, the joint family's total income for that tax year is assessed as if no partition had taken place, and the joint-and-several-liability rule above applies in the same way.

Recovering tax after assessment, if partition is discovered later

If the Assessing Officer finds, after completing an HUF's assessment, that the family had already effected a total or partial partition, he proceeds to recover the tax from every person who was a family member before the partition - each such person is jointly and severally liable for the tax on the income so assessed.

This joint-and-several-liability regime also applies to the levy and collection of penalty, interest, fine or other sums relating to any period up to the date of the total or partial partition.

Partial partitions claimed after 31st December, 1978 are not recognised

Irrespective of anything else in this section, where a partial partition is claimed to have taken place after 31st December, 1978, among the members of a Hindu undivided family hitherto assessed as undivided: the claim will not be inquired into under Section 315(2), and no finding of such partial partition will be recorded under Section 315(3) - any finding purporting to record such a partial partition is null and void; the family continues to be liable to be assessed under the Act as if no such partial partition had taken place; and each member or group of members immediately before the partial partition, and the family itself, remain jointly and severally liable for any tax, penalty, interest, fine or other sum payable by the family for any period, whether before or after the partial partition.

Computing several liability, and key definitions

A member's or group's several liability under this section is computed according to the portion of the joint family property allotted to him or it at the partition, whether total or partial.

• "Partition" means, where the property admits of physical division, a physical division of the property (a physical division of income alone, without dividing the property producing it, is not a partition); or where the property does not admit of physical division, such division as it does admit of (a mere severance of status is not a partition).
• "Partial partition" means a partition that is partial as regards the persons constituting the HUF, or the properties belonging to the HUF, or both.

Step-by-step flow for a partition claim by an HUF under Section 315

1. 1

   Is the claim of a partial partition that took place after 31 December 1978?

   • Yes: Under Section 315(8), the claim is not inquired into and no finding is recorded. The family continues to be assessed as undivided, and the members and the family are jointly and severally liable for its tax and other sums.
   • No (a total partition, or an earlier partial partition): Go to the next step.
2. 2

   Was the partition claimed during an assessment under Section 270 or 271?

   Until a finding of partition is given, the family is deemed to continue as an HUF (Section 315(1)). On a claim, the Assessing Officer inquires after notice to all members (Section 315(2)).

3. 3

   Is there a partition within Section 315(10)?

   Partition means physical division of the property where it admits of one; dividing only the income, or a mere severance of status, is not enough. The Assessing Officer records whether there was a total or partial partition and its date (Section 315(3)).

4. 4

   Did the partition take place during the tax year or after it ended?

   • During the tax year: Income up to the date of partition is assessed as if no partition had taken place, and each member or group is jointly and severally liable for that tax (Section 315(4)). Go to step 5.
   • After the tax year: The whole tax year's income is assessed as if no partition had taken place, and Section 315(4)(b) applies (Section 315(5)). Go to step 5.
5. 5

   Work out each member's several liability

   Under Section 315(9), several liability is computed according to the portion of joint family property allotted at the partition. Under Section 315(7), the same rules apply to penalty, interest, fine or other sums for the period up to partition. If the partition is found only after the assessment is complete, Section 315(6) lets the tax be recovered from every pre-partition member.

Practical checklist

Frequently asked questions