The Hindu Business Line : Daughters better off than sons

RIGHT from 1922, the Hindu undivided family (HUF) has enjoyed a unique status in the tax code. Treatment of HUF as a separate taxable entity as the individual, the company and the firm was a concession to the age-old Hindu sentiment, which regarded the joint family as arising from status, not contract. Till the mid-1950s, the Hindu law evolved through the law of precedence handed over by the Privy Council from time to time. Parliament then attempted to codify the law, introducing the Hindu Marriage Act, 1955, the Hindu Succession Act, 1956, the Hindu Minority and Guardianship Act, 1956, and the Hindu Adoption and Maintenance Act, 1956. These had a bearing on sastriac law.

The tax code, as such, does not define the term `HUF'. A joint Hindu family comprised all persons lineally descendant from a common ancestor and included even unmarried daughter.

The Hindu coparcenary, a narrower term than HUF, included only such of those persons who acquire interest in the joint family property by birth. The joint family consisted of a group of persons united by `sapindaship' arising out of birth, marriage or adoption.

Under Section 4 of the Income-Tax Act, 1961, the assessable entity is the HUF and not the coparcenary. By the very definition, only a son or a grandson through the son can be coparcener along with the father. The kartha has always to be a male member of the HUF. Daughter, whether married or unmarried, had no right to inherit by survivorship.

All this has undergone a change now. Parliament has passed the Hindu Succession (Amendment) Act, 2004. In the past, Hindu law had always been enriched by jurist-theologians who systemised the personal laws of the Hindus and accomplished legal innovations by combining all what the legal philosophy could yield.

The first major revolution in free India occurred in 1956. Section 6 of the Hindu Succession Act dealt with devolution of interest of a male Hindu in coparcenary property and recognised the rule of devolution by survivorship among the members of the coparcenary. The retention of the Mitakashara coparcenary property without including the female members meant that they could not inherit ancestral property as their male counterparts. The law, by excluding the daughter from participating in the coparcenary ownership, not only discriminated against her on the grounds of gender but also led to oppression and negation of her fundamental right of equality guaranteed by the Constitution.

The new law removes this discrimination by amending Section 6. It gives equal rights to daughters in the Hindu Mitakashara coparcenary property and declares that the daughter of a coparcener shall also by birth become a coparcener in her own right; the same manner as the son has. She will have the same rights in the coparcenary properties as she would have had if she had been a son and will be subject to the same liabilities in respect of the said coparcenary property as that of a son.

Any reference to a Hindu Mitakashara coparcener shall be deemed to include a reference to the daughter. The daughter, as coparcener, can will away her share in the coparcenry property in the same manner as a male coparcener. Intestate or testamentary succession will be governed by the new law, by deeming a partition and allotting the daughter the same share as allotted to a son. Such succession will not be governed by the law of survivorship hereafter.

The new law omits Section 23 of the Hindu Succession Act, 1956 and enables the daughter to demand a partition of a joint family dwelling house occupied by members of the coparcenary.

This all-India enactment comes long after Andhra Pradesh, Tamil Nadu, Karnataka and Maharastra had interpolated Sections 29A, 29B and 29C in the Hindu Succession Act, giving practically the same rights to the daughter as given now by the all-India legislation.

Secton 29B provides for devolution by survivorship in the case of death of a female Hindu with interest in the coparcenary property. Section 29C bestows a preferential right to other coparceners to buy out the share of the daughter who chooses to alienate her interest in the property to the determent of other co-heirs or coparceners.

These sections will remain in the new all-India enactment. The old law laid down that a female member of the HUF cannot convert her individual property into joint family property by the device of throwing into the hotchpotch. Now, she can.

The latest amendment makes no mention of the law regarding adoption, guardianship and maintenance. The Guardianship and Maintenance Act, 1956 casts a legal obligation on the kartha to get the daughter married in style, befitting the status of the family. Now that the daughter becomes a coparcener, her old right under this will remain along with the new right. Daughters will be better off than sons.

The HUF has always been considered a medium for tax avoidance. The new law adds grist for the tax-planning mill.

(The author is a former Chief Commissioner of Income-Tax.)

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