THE JOINT FAMILY AS A BUSINESS INSTITUTION: A STUDY

5.3 – Family Law -II

Submitted By-

Pranoy

Goswami;

SM0117037.

3rd Year, 5th Semester.

Faculty in Charge

Mr. Mehul Shah;

Guest Faculty of

Law.

NATIONAL LAW UNIVERSITY AND JUDICIAL ACADEMY, ASSAM

 Table of Contents

Table of Cases............................................................................................................................ii

Table of Statues..........................................................................................................................ii

Table of Abbreviation................................................................................................................ii

1. INTRODUCTION..............................................................................................................1

Overview..................................................................................................................................1

Literature Review............................................................................................................2

Research Questions..................................................................................................................2

Aim 3

Scope and Limitation...............................................................................................................3

Objectives................................................................................................................................3

Research Methodology............................................................................................................3

2. CONCEPT OF JOINT HINDU FAMILY......................................................................4

3. CONCEPTS OF JOINT HINDU FAMILY, COPARCENARY AND HINDU

UNDIVIDED FAMILY................................................................................................................6

4. JOINT HINDU FAMILY AS A BUSINESS ORGANISATION..................................8

5. MERITS AND DEMERITS OF A JOINT HINDU FAMILY AS A BUSINESS

INSTITUTION.........................................................................................................................14

6. CONCLUSION...............................................................................................................16

BIBLIOGRAPHY.....................................................................................................................iii

i
Table of Cases

1. C. Krishna Prashad v. CIT

2. CIT v. Veerapa Chettiar
3. Gowli Buddanna v. Commissioner of Income Tax, Mysore
4. Kalloomal Tapeshwari Prasad (HUF) v. CIT
5. M.S.M. Meyappa Chettiar v. CIT
6. Prem Kumar v. CIT
7. Ram Chander Dubey And Anr. v. The Deputy Director of Consolidation
8. Sushil Kumar (Sunil) and Anr. v. Ram Prakash and Ors.
9. Union of India v. M.V. Valliappan

Table of Statues

1. 1950 – Constitution of India

2. 1956 – Hindu Succession Act
3. 1961 – Income Tax Act

Table of Abbreviation

1. AIR All India Report

2. Ed. Edition
3. ILR Indian Law Report
4. Mad. Madras
5. SC Supreme Court
6. SCC Supreme Court Cases
7. SCR Supreme Court Report
8. v. Versus
 Abstract

This paper focuses to explain the concept of Joint Hindu Family as a business institution
and comparatively analyses the idea of Joint family, Hindu Undivided Family and
Coparcenary with help of relevant case laws in this regard. This research paper also shed
light on the tax implication of Hindu Undivided Family Business under the Income tax Act,
1961 and what status has been given to an HUF and a Joint Hindu family business. Through
the course of the paper the researcher seeks to achieve the objective of determining the Joint
Hindu Family as a business institution.
Keywords: Joint Hindu Family Business, Hindu Undivided Family Business and Hindu Law.

1. INTRODUCTION

Overview

A Hindu joint family is an extended family structure which has a tremendous legal
significance in India. A Hindu joint family would be simply defined as linear descendants
and their children, who trace their roots to a common ancestor. The essence of Joint family is
that it traces its roots to a common ancestor, and even after the death of any member within
the joint family it continues to be operational or if all the male members of the family die the
joint family continues to be operational. The Hindu joint family does not have a separate
legal identity from the member who constitutes it as it not considered as a juristic person.
Nevertheless the Hindu Joint Family has been given the statutory recognition only for the
purposes of taxation under the Income Tax Act, 1961 where it was originally termed as
Hindu Undivided Family. The Hindu undivided family is treated as a legal person as it is a
separate entity for the purpose of assessment under in the Income Tax Act, 1961.

Joint family is a group of people with linear descendant living under the same roof. It
begins once the sons in family who live with their brother, unmarried sisters and parents,
does not leave their parents’ home once they grow up and bring their spouse to the same
home after the marriage and after them their children lives with them. Then their children’s
children, and so on, live under the same roof. It is not only confined to the male members, the
mother, grandmother, daughters, the grand daughters and even the great granddaughters all
live under the same roof. The daughters of the Hindu joint family leave their parental homes
after getting married and join his husband’s joint family as daughter-in-law.

1
 The concept of Joint Hindu Family can be said to be partially different from that of a
coparcenary. There are certain differences that lie between these two ideas. Also, the normal
Joint Hindu Family when once converts into a business organization that is when it is started
to be referred as a Hindu Undivided Family, especially in legal terms.

Literature Review

Kusum in her Family Law Lectures- Family Law II1 highlights many aspect of Hindu
Law. She discuss about the testamentary and intestate succession among Hindus. She also
explains the sources of Hindu Law in her book. The author also analyses the various
judgments of the Supreme Court of India as well as various High Courts. The author also
analyses the various contradiction in State as well as the Centre legislation after the
amendment act of 2005. This book further analysis the way by which property of Hindu died
intestate devolves upon his coparceners. It also further talks about position of Karta in the
family and how does he manages family affairs in matter relate to finance.

S. Shandrasekhar in his article, The Hindu Joint Family2, discuss about the various
features of Joint Hindu family in India. He also traces the history behind the formation of
Joint Hindu Family in India. He analyses the various laws that govern Hindu Joint Family.
This article provides overall development of Joint Hindu Family. He talks about the
advantages and disadvantages of Joint Hindu Family. Apart from this in his article he has also
talked about the evolution of the Joint Hindu family through time and what impact does this
evolution have on Hindu joint family.

Research Questions

1. What is Joint Hindu Family?

2. What is the difference between the concepts of Joint Hindu family, Coparcenary a
Hindu Undivided Family?
3. What are some features of Joint Hindu Family business?

1
2 POONAM PRADHAN SAXENA, FAMILY LAW II 146-49 (3rd ed. 2016)
2
S. Shandrasekhar, The Hindu Joint Family, 21(3), JSTOR 327,329 (1943).
 4. What are the advantages and disadvantages of a Joint Hindu Family as a business
institution?

Aim

The aim of this project is to understand the concept of Joint Hindu Family as a business
institution and also the concept of Hindu Undivided Family.

Scope and Limitation

The scope of this project is restricted to study about the Joint Hindu Family as business
institution and to know about its merits and demerits.

Objectives

The objectives of the project are

 To know about the concept of Joint Hindu Family
 To understand the difference between the Joint Hindu Family, Coparcenary and
Hindu Undivided family
 To study about Joint Hindu Family Business
 To know about the merits and demerits of Joint Hindu Family Business

Research Methodology

The researcher has used Doctrinal research methodology in this project. Doctrinal research is
basically library - based research where the resources available in the library have been used.
The nature of research is descriptive, analytical as well as comparative. Data has been
collected from both primary and secondary sources likewise.
(a) Primary Sources: Bare Acts and Case Laws.
(b) Secondary Sources: Books, reports, articles.
Citation Style: Bluebook 20th edition has been followed in the research article.
 2. CONCEPT OF JOINT HINDU FAMILY

The concept of the Joint Hindu family is very ancient and it has evolved from the
patriarchal society which is considered as one of the earliest units of the human society. The
roots of the Hindu joint family can be traced back to the time, when there was abundance of
resources but the labour force was limited. By merely asking for it, large stretches of land
were granted to the people and because of this reason the large family became the best unit to
own and take care of land. This structure of staying together and jointly owning the land was
so successful that it was recognized by the entire population. The system was suitable for that
period because there was lack of competition. There was no rivalry as between the family
members as everything owned by the family was enough for everyone to stay together.

But in the recent centuries all the economic conditions which brought the joint family into the
existence passed away and exact the opposite conditions came into being, due to which the
completion among different people emerged. The population grew rapidly and all the free
land was occupied, the pressure of population on the unoccupied land began to be felt 3. Even
though these circumstances were directly contrary to that which gave rise to the joint family
system, these conditions surprisingly did not weaken or dismantle the structural unit of the
joint families. Even now in the present era, sons prefer to stay at their parental home even
though they wanted to set up a separate home to start their nuclear family. During the British
regime the joint family proved to be an ideal family unit and presented themselves as a united
family to face these great odds and difficulties 4. Thus the system of joint family has fulfilled
its purpose in protecting the integrity of the family when different situations sought to destroy
these values.

In the case of Ram Chander Dubey And Anr. v. The Deputy Director of
Consolidation5, the Joint Hindu Family has been defined as:-
A joint Hindu family consists of male members descended lineally from a common male
ancestor together with their mother, wives or widows and unmarried daughters bound
together by the fundamental principles of family relationship. This body is a creature of law
and cannot be created by act of the parties.

3
S. Shandrasekhar, The Hindu Joint Family, 21(3), JSTOR 327,329 (1943).
4
Id. 328.
5
Ram Chander Dubey And Anr. v. The Deputy Director of Consolidation, A.I.R. 1978 All. 157.
 A Joint Hindu family can only come into existence with the presence of a common
male ancestor, although his presence is not required for the continuation of a Hindu Joint
family because a joint family continues to be operational after the death of the senior most
member of the family, who is also known as “Karta” of family. The Karta is the head of
family and he represents the family. After the death of Karta, the next senior most member of
the family assumes the power of Karta.
The membership of Hindu Joint family is that anyone can be the member of the joint
family by birth, marriage or adoption, but people cannot form a joint family through an
agreement or contract. Thus it is a creation of law not the act of parties. If a joint family owns
a property, then that property is collectively owned by the members of that joint family, but
the legal interest in the property resides with the coparceners of the family.
A Joint Hindu Family does not have a legal entity, separate from the persons who
constitute it. It is not a corporation and is not considered as a juristic or a legal person. It is a
unit which is represented by its Karta. The absolute right of alienation resides with karta
which he exercises in a bona-fide manner and other members of the family have only the
right of enjoyment.
 3. CONCEPTS OF JOINT HINDU FAMILY, COPARCENARY AND HINDU
UNDIVIDED FAMILY

The concept of Joint Hindu Family, Coparcenary, and Hindu Undivided Family are closely
interlinked. Though these concepts may sound similar to a layman but in reality they are
different to each other. All the above term comes from the same source of the joint family but
each term has different implications. The term joint family basically means that members of
family who decent lineally from common male members. A joint family is basically
considered as an extension of the nuclear family.

In the case of Sushil Kumar (Sunil) and Anr. v. Ram Prakash and Ors. 6, the Supreme court
has defined the Coparcenary as: “The coparcenary consists of only those persons who have
taken by birth an interest in the property of the holder and who can enforce a partition
whenever they like it is a narrower body than joint family. It commences with a common
ancestor and includes a holder of joint property and only those males in his male line who
are not removed from him by more than three degrees. The reason why Coparcenarship is so
limited is to be found in the tenet of the Hindu religion that only male descendants up to three
degrees can offer spiritual ministration to an ancestor. Only males can be coparceners.”

The Hindu Undivided family is majorly termed as Hindu Coparcenary as it consists of

both the concept of Hindu joint family and the Coparcenary. A Joint family when enters into
the business institution gets a separate entity or legal status to that of members who constitute
it, then that business becomes a taxable business and gets converted to a Hindu Undivided
Family. This has been elucidated by the court in the case of Gowli Buddanna v.
Commissioner of Income Tax, Mysore7:

“A Hindu joint family consists of all persons lineally descended from a common
ancestor and includes their wives and unmarried daughters. A Hindu coparcenary is a much
narrower body titan the joint family: it includes only those persons who acquire by birth an
interest in the joint or coparcenary property, these being the sons, grandsons, and great-
grandsons of the holder of the joint property for the time being: Therefore, there may be a
joint Hindu family consisting of a single male member and widows of deceased
coparceners.”

6
Sushil Kumar (Sunil) and Anr. v. Ram Prakash and Ors, (1988) 2 SCC 77.
7
Gowli Buddanna v. Commissioner of Income Tax, Mysore, A.I.R. 1986 SC 1523.
Therefore from the above cases it can be said that concept of joint family, coparcenary and
Hindu Undivided family are somewhat different from each other. In both Hindu joint family
and Coparcenary plurality of members is an essential, but there is slight difference between
coparcenary and the Hindu Joint family, is that the coparcenary follows the 4 generation rule
all members within the four generation constitute the coparcenary. But the members in the 5th
generation are not considered as a coparecenar. He only becomes the coparcenar when the
eldest male member of the coparcenary dies and then the generation get reduced to four. One
of the similarities between the two is that the, in both membership cannot be acquired through
the act of parties. Membership to Hindu Joint Family and Coparcenary can only be acquired
by the virtue of birth or by adoption. The exception is in Hindu Joint Family where
membership can be acquired by women after the marriage.

The concept of Hindu Undivided family emerges when the joint family enters into a
business organization, it also have the characteristics of coparcenary. It can be said that it is a
blend of both Hindu joint Family and coparcenary.
 4. JOINT HINDU FAMILY AS A BUSINESS ORGANISATION

A Joint Hindu Family business is a form of business organization which is found in

India alone, as this type of business institution cannot be found anywhere in the world. It is
primarily regulated by the Hindu Law, which is one of the prevalent religious laws of India.
Like coparcenary it also follows the 4 generation rule and anyone can be part of it
irrespective of its gender, but this family is also represented by the senior most male member
of the family, the Karta. This family is basically known as Hindu Undivided Family. The
Karta of the HUF is responsible for all the economic and the financial activities of the family,
as he is the head of the family. The HUF is closely related to Hindu Joint Family and the
Coparcenary, even it can be said that HUF is a subset of a Joint family formed from the
amalgamation of the concepts of Hindu Joint Family and Coparcenary.
In the present scenario, after the amendment act of Hindu Succession Act, 1956 which
was brought in 2005, daughters were given the same right as of son. Thus daughter became
the coparcener in the family by virtue of birth but a women married into the family does
become a coparcener in the family. Therefore it can be said that after the amendment of the
Act in 2005 the HUF consists of both male and female members, who are coparcenars in the
family. Here a difference between he coparcenary and joint family can be pointed out that,
joint family constitute of all the members in the family whether they are male or female and a
joint family can exist even if all the male members of the family have died, but in HUF, only
coparcenars have the right in the property and is limited to 4 generation rules including
common male ancestor and the daughter. Hence it can be said that HUF is blend of
Coparcenary and the Hindu Joint family.8
Hindu Undivided Family (HUF) is not expressly defined under the Income Tax Act
1961, but has been provided a separate legal entity and is considered as a legal person under
the provisions of Section 2 (31) of Income Tax Act, 1961. HUF is covered under the Hindu
Law and is a legal expression which deals with taxation law relating to family and where a
family is considered to be a separate legal entity from the members who constitute it. It
closed linked with the Hindu Joint family and also includes some concepts of Coparcenary.
The HUF can be formed when there is plurality of members, the HUF can be
constituted at the moment when the Hindu male marries. Thus a husband with his wife and
his children can form a HUF but it cannot be just created with the act of parties.
8
Pramod Jain, Taxation of Hindu Undivided Family, Lunawat & Co. (October 24, 2019, 11:40 PM)
http://lunawat.com/Uploaded_Files/Presentation/TaxationofHUF-August2014-DelhiTaxBarAssociation.pdf.
 In the case C. Krishna Prashad v. CIT9 , the Supreme Court of India has held that:
“The word family always signifies a group. Plurality of persons is an essential attribute
of a family. A single person, male or female, doesn’t create or constitute a family.”
Thus in order to form a HUF plurality of members is required, a person on its own
cannot form a HUF, there should be more than one person present who are coparcenar in a
family to form a HUF.
In another landmark judgement of Prem Kumar v. CIT10, the Supreme Court of India
held that:
“However, the property held by a single Coparcenar does not lose its characteristics of
Joint Family property solely for the reason that there is no other male or female member at a
particular point of time. Once the Coparcenar marries, an HUF comes into existence yet
again as he along with his wife constitutes a Joint Hindu Family.”
An HUF or a Joint family continues even after the death of the last male member in the
family, this was held by the Supreme Court of India in the case of CIT v. Veerapa Chettiar11:
“Even after the death of the sole male member so long as the original property of the Joint
Family remains in the hands of the widows of the members of the family and the same is not
divided amongst them; the Joint Hindu Family continues to exist”

1. Salient Features
i. Formation: A Joint Hindu Family business cannot be created by the act of the parties
coming under a mutual agreement as it is formed by the operation of law. It can only
be formed between the members of the joint family by birth or by adoption through
the operation of law.
ii. Membership: The Hindu Joint family business also follows the four- generation rule
like coparcenary. This type of family includes two types of member, one is the head
of the family who represents the family known as Karta and other family members are
known as Coparcenars.
iii. Management: The Karta of a Joint Hindu family Business has the absolute economic
powers, it is the Karta who is the head of family therefore he is the one who manages
the Family business. He may take any decision for the benefit of family or in regard to
the financial activities for that he may also take the advice from the family members.

9
C. Krishna Prashad v. CIT (1974) 97 ITR 493 (SC).
10
Prem Kumar v. CIT 121 ITR 347 (All.).
11
CIT v. Veerapa Chettiar 76 ITR 467(SC).
 iv. Legal Status: In the Joint Hindu Family business registration is not at all mandatory;
hence it does not have any legal status. Though this business is recognized under the
Income tax Act,1961 but it does not have a separate entity from the person
constituting it
v. Liability: The Liability of Karta is towards the other coparcenars but the liability of
coparcenars is limited to their own shares in the family business.
vi. Partition: Any member of the family can ask for the partition in the Joint Family
business property, once the partition is done the shares of the member who asked for
the partitions get solidified. If any member is not satisfied with the decision of Karta
can at any time demand for partition
vii. Profit and losses - All members of the family have an equal share and right in profits
as well as losses in the family business.
The Hindu Family business continues to be stable as long as it is governed by the senior
most member of the family called the Karta, but his death or incapability to manage the
business does not affect the continuation of the joint family. The joint family still remains
operation after the death of Karta.

2. Karta
The senior most male member of the Hindu Joint family is known as Karta. Generally the
position is taken by the eldest male alive. The consent of other members of the family is not
required. If Karta of a family dies or relinquish his position the next eldest male becomes the
Karta. Even a minor can become a Karta through a guardian in special circumstances when
the whereabouts of the Karta is unknown, when the Karta has wen to remote place and the
family doesn’t know as to when he will return or if the Karta has relinquished its position and
there is no male alive than minor. After the 2005 amendment act of Hindu Succession act of
1956, a female can also become a Karta. Some of the specific powers that have been allotted
to Karta of a Hindu Undivided Family are:-
i. He represents and manages the affairs of the HUF.
ii. He has a lot of economic power vested in him as he is the head of the family.
iii. He has the power of Alienation of property but doesn’t have an absolute authority to
alienate. He can exercise the power of alienation only in the cases of legal necessity,
befit of the estate or for the performance of any religious duties. It is on the desire of
Karta whether he wants to consult about this alienation with rest of the member of the
family. The only remedy available to coparcenars is to sue the Karta or partition.
 iv. He can lend or borrow money on behalf of HUF in bona-fide manner without
consultation of the Coparcenars.

3. Partition
Partition is term used in property or assets which means to divide the current property
or assets into separate portions in order to represent the interest of the members. The property
of Hindu undivided family and also the joint family business can be partitioned. There are
two ways in which the partition of an HUF can be done:
(i) Partial Partition – In this partition not all the members of the family get separate but
only some of them get separated due to which only some part of the property or assets are
divided . This type of partition is done when only one coparcenar ask for partition. The
consent of all the members of the joint family business is not required as only one is
exercising his right in order to solidify his share.
(ii) Total Partition – In this type of partition all the members get separated, due to
which the partition of the whole property is required. The consent of all the coparcenars is
compulsory as are asking for their respective shares
The partitions must be fair otherwise it will lead to disputes between the members of
the family. But it is nowhere mentioned that the partition must be equal, there are many
instances where the apex court has held that unfair partition are also valid. Member of family
are allowed to accept larger or smaller share in the property and the income tax department
cannot avoid these types of partition on the reasoning of inequality. 12 Sometimes the partition
are done because of disputes arising between the member of family and occasionally
partitions are done reduce the tax liability in HUF. When the individual income of a family is
less, the member of the family should go for the partition, here in this case partial partition is
done but when the individual income is somewhat greater then there is no need to go for a
partition.
The partial and total partition has been recognized by the Hindu law, but the concept of
partial partition has been removed from the Income Tax Act, 1961 according to which the
partial partition which was effected after the date of 31.12.1978 will not be recognized. The
partial partition was an effective was through which one can reduce its tax liabilities of HUF.
Partition once done can be reunited if the members of HUF want to do so. But in order to do

12
M.S.M. Meyappa Chettiar v. CIT 18 ITR 586 (Madras).
so there are certain conditions which have been laid down under Hindu law for an effective
reunion.
i. Reunion is only permissible between the persons who were the members of
HUF during the partition.
ii. The partition should have been done in factor reality.
iii. Reunion can only be done by members who had started the partition. If a person
was not a part of HUF at that period of time cannot claim for reunion.
iv. The property must be the same property on which partition was done earlier.

4. Tax Implications
The Hindu Joint Family Business is regulated by Hindu law. Although the Hindu Joint
Family business is not considered to be separate legal entity, the Income Tax Act, 1961,
controls the tax implications of the Hindu Family Business. The Income Tax Act, 1961,
considers a Hindu Undivided family business to be a taxable entity, thus providing it with the
status of a business organization within the Indian society, though in reality it does not have
its own separate legal entity.
13
In the case of Union of India v. M.V. Valliappan it was said that ;- “That for the
purposes of income-tax, the concept of partial partition of the Hindu undivided family was
recognized, but is done away with by the amendment which specifically provides that where a
partial partition has taken place after December 31, 1978, no claim of such partial partition
having taken place shall be inquired into under sub-section (2) and no finding shall be
recorded under sub-section (3) that such partial partition has taken place. If any such finding
is recorded under subsection (3) whether before or after June 18, 1980, being the date of
introduction of the Finance (No. 2) Bill, 1980, the same shall be null and void.”
There are also certain additional provisions that are needed to be satisfied in order to
claim partition under the Section 171 of Income Tax Act of 1961.
Interpreting this section, the Supreme Court has held that Hindu law does not recquire
that the property should be portioned in every case into several portions to complete the
partition.14 There are certain methods through which the taxes of HUF can be reduced:-

i. By increasing the number of assessable units through which the device of partition of
the HUF.

13
Union of India v. M.V. Valliappan (1999) 238 ITR10271.
14
Kalloomal Tapeshwari Prasad (HUF) v. CIT [1982] 133 ITR 690.
 ii. By creation of separate taxable units of HUF through will in favor of the HUF or
gift to HUF.
iii. Through family settlement or arrangement.
iv. By the payment of remuneration to the Karta and other members of the HUF.
v. By use of loan from HUF to the members of the HUF.
vi. Through gift by HUF to its members especially to the female members.
 5. MERITS AND DEMERITS OF A JOINT HINDU FAMILY AS A BUSINESS
INSTITUTION

Merits15
i. These types of business can be easily started even without the consent of the
members, there are no legal formalities involved while starting the business.
ii. In a Joint Hindu Family business, there is a sense of security and trust among the
members of family. The members of the family feel safe while working around
with their own family. There is trust among the members of the family that they
will never misuse the family business property.
iii. The joint Hindu family business is of a perpetual nature, it continues even when
the eldest member of the family dies. The Karta is considered as head of the family
and the position of Karta is assumed by the eldest member of the family. After the
death of the Karta of the family, the joint family business continues the position is
assumed by the next eldest member of the family. The business of joint family
does not get terminated unless all the members of the family consent for the
termination of the joint family business.
iv. The Joint Hindu Family business is considered as a matter of prestige for the
family. The members of the family also work with more enthusiasm and devotion
as the name of the family is involved. A member of Hindu family will do anything
to protect the status of his family.
v. The Karta is the head of the family and manages all the financial and business
activities of the family. His decision in matters relating to family is considered to
be final. So even when there is conflict between the family members, the Karta can
efficiently manage the joint Hindu family business as he is the sole decision maker.
This leads to effective and flexible decision making.

Demerits16
i. Karta is head of the family and the financial powers reside with him. He can even
alienate the Joint Hindu Family business property. This power is often misused by

15
Hemant More, JOINT HINDU FAMILY BUSINESS(HUF), The Fact Factor (October 26, 2019, 10:25 PM)
https://thefactfactor.com/facts/management/general/joint-hindu-family-business/2367/.
16
Id.
 the Karta because he has an arbitrary power in matters related to the family, where
the consent of all male members is not required.
ii. In Joint Hindu family business no stranger can be introduced. It is a business
among the family member of which the membership can only be acquired by virtue
of birth, or by marriage, or by adoption. This limits the growth of the business
because sometime skilled labour cannot be involved in the business.
iii. The scope of growth of family business is very limited because within a family
only certain amount of capital can be raised. The Karta in order to expand the
business can only raise the capital from his own funds or from the joint family
property. If he raises the funds from the joint family property the consent of all the
members of the family is required.
iv. The Karta is liable for all the business activities as he is the head of the family
representing the Joint Hindu Family business. In order to repay the loans or debts
of the business his separate property can be used or sold off. Therefore Karta is
personally liable for the business activities.
v. The position of Karta is given to the eldest male member of the family but it is not
taken into consideration whether he is qualified or not. The business may suffer
due to his inability and mismanagement.
 6. CONCLUSION

The Hindu Joint Families has existed in Indian society for a very long time. These
families include all family members, whether they are near or farther. It is not just limited to
father, husband, wives etc. but uncles, aunts, cousins, all come under the concept of joint
family. Today, with the change over time, people began to leave their families in search of
better prospects in life and started living in nucleus family, but this doesn't imply that it leads
to break down of joint family; the idea of joint family is still prevalent in such families. The
Joint families have changed over time and implemented many improvements to them, people
are moving out in modern times but are still related with their origins because of their
joint family relations.

The business started by the joint families is known as Hindu Joint Family business or Hindu
undivided family business carried by the member of HUF, here the HUF is a separate legal
entity for the assessment under the Income Tax Act, 1961 but the joint family business does
not have a separate legal entity. This kind of business can only be found in India. Joint
family business provides a sense of trust and security while working around with their own
family. Due to this trust and belongingness the member of the joint family prefer working
with their families, whom they can trust. They work with dedication and loyalty in order to
keep the prestige of their family. There are several advantages and disadvantage of owning
the HUF business that we have discussed earlier. The HUF business is also opted because it
is a very efficient way of reducing the taxes of the family members, it is also advisable for the
family members to go for Joint Hindu Family business when the incomes of the individuals
are very high, in order to reduce the amount of tax deduction.

But nowadays the Joint Hindu family business is losing popularity because of the present
needs of the society, more and more people are breaking from their joint families and are
starting to join the industrial sector which gives a better security of job than the family
business. In family business the capital is limited, the Karta has all the powers in matters
relating to business because of which sometimes act arbitrary. That’s why in today’s
generation, this is major cause for the decline of Joint Hindu Family business.
 BIBLIOGRAPHY

Books and Journals

1. Poonam Pradhan Saxena, Family Law II 146-49 (3rd ed. 2016
2. S. Shandrasekhar, The Hindu Joint Family, 21(3), JSTOR 327,329 (1943).

Online Resources
1. Hemant More, JOINT HINDU FAMILY BUSINESS(HUF), The Fact Factor
https://thefactfactor.com/facts/management/general/joint-hindu-family-business/2367/
2. Pramod Jain, Taxation of Hindu Undivided Family, Lunawat & Co.
http://lunawat.com/Uploaded_Files/Presentation/TaxationofHUF-August2014-
DelhiTaxBarAssociation.pdf
3. HINDU UNDIVIDED FAMILY (HUF), Income Tax
Department https://www.incometaxindia.gov.in/Pages/i-
am/huf.aspx
4. Mayank Shekhar, Joint Hindu Family, Legal Bites https://www.legalbites.in/joint-
hindu-family/
5. Mohammed Julfekar, Features of Joint Hindu Family Business, India Study Channel
https://www.indiastudychannel.com/resources/124903-Features-Joint-Hindu-Family-
Business.aspx
6. A Hindu Joint Family Setup, Lawteacher.net, November 2019
https://www.lawteacher.net/free-law-essays/indian-law/a-hindu-joint-family-
setup.php?vref=1
7. Joint Family and Coparcenary, Toppr
https://www.toppr.com/guides/legal-aptitude/family-law-II/joint-family-and-
coparcenary/

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