Can one create a Hindu undivided family by gift?
QUESTION: What do you think of tax planning by creation of a Hindu joint family by gifts? ANSWER: Hindu Law had always considered a Hindu joint family as an incident of status and not created by contract. However, it does not always require survivorship or partition of ancestral nucleus as a pre-requisite for a Hindu joint family. But the development of Hindu law in recent times even apart from the various legislations under Hindu Code has resulted in what would have been unthinkable in the edicts of ancient law. One such development is partial partition, which was unknown to ancient law. But in view of its effect in splitting up taxable income, partial partition made after December 31, 1978 was derecognised for income-tax purposes, though it is still valid under general law. Yet another development is the effect of Hindu Gains of Learning Act, 1930, which statutorily treated salary and other income including professional income earned by a Hindu due to his learning at the cost of the
