title: The Hindu Family Firm and Its Future in the Light of Indian Tax Laws.
Creators: name: Chakraborty, Samir Chandra
Publisher: name: School of Oriental and African Studies, University of London
Year: 1977

description: The first chapter deals with the origin of the joint family business and how it has been distinguished from a partnership firm right from the early sastric law till the Indian Partnership Act, 1932, expressly excluded it from being a partnership under the Act. This leads us to the next chapter which deals with the incidents of such firms and its relation with other property, if any, of the family. Here it is shown that though it might be a major asset of the family, the joint family business is just one of the many forms of joint family property that a family might possess. Hence a study of the manager of a joint family property became necessary. But it is seen that exigencies of trade had forced courts to make some changes as to the law of joint family property. This in turn resulted in wider powers to the manager who already had much more power than a partner in a partnership firm. This brings us to an area of major problem - the law relating to acquisition of joint family property. The sastric law was clear that a man could make separate acquisition for himself inspite of being in a joint-family. This was put into effect by the Hindu Gains of Learning Act, 1930. But this helped the manager, whose fiduciary obligation was to act for the benefit of the family, to make acquisitions for himself and his close family members, sometimes at a cost to the joint family. This resulted into a situation where it became difficult to ascertain which acquisition was a personal one and which was a joint family one. The next three chapters deals with this problem and how it was tackled by the Courts, pointing out the flaws in the judgments and suggesting means of tackling the law. The levying of income tax on such business firms is the subject of the next chapter. The chapter traces out when and how the joint family was taxed first and how the law developed over the years with clarifications of statutory provisions. It also shows how these provisions compare with those of individuals and partnerships and the apparent disadvantage of the Hindu joint family if the provisions were applied as it is. This necessitated the manager acting for the benefit of the family, and the family is benefited if less tax is paid. This is done by the manager by use of the law of acquisition, bogus partition, both full and partial, use of the doctrine of blending and forming partnership firms. The next chapter deals with this situation showing, with examples, how they take place, and reviewing judicial decisions, checking on the attitude of the judiciary to such a problem. The efforts of the Legislature to plug these loopholes and their effect is also discussed. The chapter also shows how the manager, with his wide discretionary powers, can use these methods to gain himself and some members against the other members of the family. The law regarding insolvency of a Hindu joint family firm provides another reason why the Manager of a Hindu joint family would choose to form a registered partnership or a private limited company. The ninth chapter discusses this in detail comparing the position of a coparcener with that of a partner of a partnership firm. The next chapter deals with the effect of the Estate-Duty Act, 1953.It traces out the origin of the Estate-Duty Act and discusses the nature of such a duty with emphasis on the provisions pertaining to the levying of Estate Duty on the undivided interest of a coparcener, showing how this also attempts to penalise the Hindu joint family member and the attempts by the Manager to lessen the burden through the forming of registered partnership concerns. The harmful effect of these manoeuvres by the Manager on the Hindu joint family in general and on the joint family business in particular, and recommendations with the help of which the judiciary and the legislature can make a joint effort to resolve this anomalous situation to the benefit of both the revenue and the family forms the substance of the concluding two chapters.