IT Act 2025
Section 315
IT Act 2025
Section 315
Shipping business of non-residents.
315. (1) A Hindu family, hitherto assessed as undivided, shall be deemed for the purposes of this Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under this section in respect of the Hindu undivided family.
(2) Where, at the time of making an assessment under section 270 or section 271, it is claimed by or on behalf of any member of a Hindu family assessed as undivided that a partition, whether total or partial, has taken place among the members of such family, the Assessing Officer shall make an inquiry thereinto after giving notice of the inquiry to all the members of the family.
(3) On the completion of the inquiry, the Assessing Officer shall record a finding as to whether there has been a total or partial partition of the joint family property, and, if there has been such a partition, the date on which it has taken place.
(4) Where a finding of total or partial partition has been recorded by the Assessing Officer under this section, and the partition took place during the tax year,— (a) the total income of the joint family in respect of the period up to the date of partition shall be assessed as if no partition had taken place; and (b) each member or group of members shall, in addition to any tax for which he or it may be separately liable and irrespective of anything contained against Schedule III (Table: Sl. No. 1), be jointly and severally liable for the tax on the income so assessed.
(5) Where a finding of total or partial partition has been recorded by the Assessing Officer under this section, and the partition took place after the expiry of the tax year, the total income of the tax year of the joint family shall be assessed as if no partition had taken place, and the provisions of sub-section (4)(b), shall so far as may be, apply to the case.
(6) Irrespective of anything contained in this section, if the Assessing Officer finds after completion of the assessment of a Hindu undivided family that the family has already effected a partition, whether total or partial, the Assessing Officer shall proceed to recover the tax from every person who was a member of the family before the partition, and every such person shall be jointly and severally liable for the tax on the income so assessed.
(7) The provisions of this section shall, so far as may be, apply in relation to the levy and collection of any penalty, interest, fine or other sum in respect of any period up to the date of the partition, whether total or partial, of a Hindu undivided family as they apply in relation to the levy and collection of tax in respect of any such period.
(8) Irrespective of anything contained in the foregoing provisions of this section, where a partial partition has taken place after the 31st December, 1978, among the members of a Hindu undivided family hitherto assessed as undivided,— (a) a claim that such partial partition has taken place shall not be inquired into under sub-section (2) and no finding shall be recorded under sub-section (3) that such partial partition had taken place and any finding recorded under sub-section (3) to that effect at any time, shall be null and void; (b) such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place; and (c) each member or group of members of such family immediately before such partial partition and the family shall be jointly and severally liable for any tax, penalty, interest, fine or other sum payable under this Act by the family in respect of any period, whether before or after such partial partition.
(9) For the purposes of this section, the several liability of any member or group of members thereunder shall be computed according to the portion of the joint family property allotted to him or it at the partition, whether total or partial and the provisions of this Act shall apply accordingly.
(10) For the purposes of this section,— (a) “partition” means,— (i) where the property admits of a physical division, a physical division of the property, but a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition; or (ii) where the property does not admit of a physical division, then such division as the property admits of, but a mere severance of status shall not be deemed to be a partition; (b) “partial partition” means a partition which is partial as regards the persons constituting the Hindu undivided family, or the properties belonging to the Hindu undivided family, or both.
Analysis
Analysis of Section 315 – Partition of Hindu Undivided Family (HUF):
1. Objective of Section 315: Section 315 provides the framework for tax assessment of a Hindu Undivided Family (HUF) after partition.
Its aims are:
i. To prevent misuse of partition claims as a tax-avoidance device.
ii. To clarify that an HUF shall continue to be treated as such until the Assessing Officer (AO) records a finding of partition.
iii. To hold all members jointly and severally liable for tax dues of the HUF up to the date of partition.
iv. To prohibit recognition of partial partitions after 31.12.1978, thereby simplifying taxation of HUFs.
This ensures both fairness for taxpayers (tax stops at partition date) and protection of revenue (no escape by claiming informal partitions).
2. Key Terms:
Term Meaning
Partition Physical division of HUF property (mere severance of status or division of income not sufficient).
Partial Partition Partition that is partial either with respect to members or properties or both. Not recognised under tax law after 31.12.1978.
Total Partition Complete division of HUF property among all members.
Joint and Every member is liable for the whole tax, though internally Several Liability liability is computed based on share received.
3. Structure of Section 315:
Sub-section Scenario Covered Tax Treatment
315(1) HUF continues to be treated as undivided HUF deemed continuing
unless AO accepts partition. until AO records partition finding
315(2) Member claims partition at time of assessment AO must conduct inquiry after notice to all members.
315(3) AO’s finding on partition AO records finding (total/partial + date).
315(4) Partition during tax year Income till date of partition assessed in HUF’s hands; members jointly/severally liable.
315(5) Partition after tax year Entire year’s income assessed in HUF’s hands; members liable jointly/severally.
315(6) AO discovers partition Recovery from all members jointly/severally.
after assessment
315(7) Penalty/interest/fine treatment Same rules as tax liability.
315(8) No recognition of partial Such claims ignored; HUF deemed partitions post 31.12.1978 continuing.
315(9) Computation of liability Based on property share allotted at partition.
315(10) Definitions of partition & partial partition Clarifies physical division required.
4. Clause-by-Clause Analysis:
A. Section 315(1): Presumption of Continuity:
HUF continues to be assessed as undivided unless AO records a finding of partition.
Prevents fictitious partitions to avoid tax.
B. Section 315(2) & (3): Inquiry into Partition Claim:
When claim is made, AO must:
Issue notice to all members.
Conduct inquiry.
Record finding: total or partial partition, with date.
Example: Member claims partition on 1st August 2025. AO verifies and records date → only then partition is recognised.
C. Section 315(4) & (5): Assessment Rules:
If partition during tax year:
Income up to partition date taxed as if no partition.
Members jointly/severally liable for such tax.
If partition after tax year:
Entire year’s income taxed in HUF’s hands.
Members liable jointly/severally.
D. Section 315(6): Discovery After Assessment:
Even if AO learns later that partition had occurred, tax recovery can be made from all members.
Prevents revenue loss due to delayed discovery.
E. Section 315(7): Penalties & Interest:
Same rules as tax – members liable jointly/severally up to partition date.
F. Section 315(8): Ban on Partial Partitions after 31.12.1978:
Claims of partial partition not recognised.
Even if made, deemed null and void.
HUF continues as if no such partial partition happened.
Members + HUF jointly liable.
G. Section 315(9): Liability Computation:
Liability apportioned as per share of property received at partition.
Ensures fairness between members.
H. Section 315(10): Definitions:
Partition: Physical division of property; not just income. Mere severance of status not sufficient.
Partial Partition: Division affecting only some members or properties. Not recognised post 1978.
5. Rights and Duties:
A. For Taxpayers (HUF & Members):
Rights
Duties
Right to recognition of genuine total partition.
Must prove partition with documentary evidence.
Members entitled to limit liability to share of property received (though jointly/severally liable for recovery).
Must cooperate with AO’s inquiry.
Right to challenge AO’s refusal to record partition.
Cannot claim partial partition after 31.12.1978.
B. For Assessing Officers:
Responsibilities
Practical Actions
Presume HUF continues until partition proved.
Insist on documentary proof & physical division.
Conduct inquiry when claim made.
Issue notice to all members before finding.
Record partition finding with date.
Keep detailed record of inquiry outcome.
Enforce joint/several liability.
Recover from any member, then allow internal adjustment.
Reject partial partition claims post 1978.
Deem HUF continuing in such cases.
6. Flow of Taxation Decision:
Is HUF assessed as undivided? → Yes, unless AO records partition.
Is partition claimed? → AO conducts inquiry → finding recorded.
If partition during year → HUF taxed till partition date → members jointly liable.
If partition after year → Whole year taxed in HUF → members jointly liable.
Partial partitions after 31.12.1978 → ignored → HUF deemed continuing.
AO discovers partition later → recover dues from all members.
7. Practical Examples:
Scenario
Outcome
HUF claims partition on 1st Sept 2025
AO inquiry → records date → tax till 1st Sept in HUF, then members jointly liable.
Partition claimed but only income divided, not assets
Not recognised as partition.
HUF dissolved after 31.12.1978 through partial partition (only 2 sons separate)
Not recognised → HUF continues for tax.
AO discovers partition after completing assessment
Recovery from all members jointly/severally.
8. Safeguards:
For Taxpayers:
Maintain partition deeds, property division records, and family settlement agreements.
Ensure physical division of assets.
Avoid partial partitions (not recognised).
For AOs:
Conduct inquiry with notices to all members.
Record date and nature of partition clearly.
Reject partial partition claims after 1978.
Enforce joint liability without letting dues escape.
9. Summary Table:
Scenario
Section Applied
Treatment
HUF continues till AO records partition
315(1)
HUF deemed undivided.
Claim of partition at assessment
315(2)-(3)
AO inquiry + finding.
Partition during year
315(4)
HUF taxed till partition; members jointly liable.
Partition after year
315(5)
Full year taxed in HUF; members jointly liable.
AO finds partition after assessment
315(6)
Recovery from all members.
Penalty/interest
315(7)
Joint liability.
Partial partition post-1978
315(8)
Ignored; HUF continues.
Liability sharing
315(9)
As per property received.
10. Conclusion:
Section 315 ensures orderly taxation of HUFs upon partition.
For taxpayers: It clarifies that only genuine total partitions are recognised; members share liability based on assets received. Partial partitions post-1978 are ignored.
For AOs: It provides tools to verify claims, prevent revenue loss, and enforce liability jointly across members.
Above article can also be viewed at
https://1drv.ms/b/c/0f527a60e6f7d291/EeHsZzsQ2EdAl8eevvzN1SEB95IKpwQFxHquBFV8hGk4uQ?e=Hhyt84