Direct Tax Laws and International Taxation · E-commerce Transaction and Liability in Special Cases

Special Cases: AOP, HUF, Trusts, Partition and Minors

Updated 11 October 2026 · Fact-checked

These special cases decide who is assessed and who pays when a person dies, a Hindu family partitions or an estate is administered. Identify the case, find the date of the event, apply the section rule (315, 312 or 302), then fix who is liable and how far. Liability is joint and several, or limited to the estate.

Understand Special Cases: AOP, HUF, Trusts, Partition and Minors

Normal assessment is simple: one assessee, one total income, one tax. Special cases arise when the assessee changes form or disappears. A family splits, a person dies, or the property sits with an executor. The Act then says who is assessed, on what income and who pays.

Start with the Hindu undivided family (HUF). Under section 315(1), a family assessed as undivided is deemed to continue as an HUF unless the Assessing Officer (AO) gives a finding of partition. If a member claims partition at the time of assessment under section 270 or 271, the AO inquires after giving notice to all members and records a finding on whether there was a total or partial partition and its date (section 315(2) and (3)).

The date of partition matters. If partition took place during the tax year, the income up to the date of partition is assessed as if no partition had taken place. If it took place after the tax year ended, the whole income of that tax year is assessed in the HUF's hands. Each member or group is jointly and severally liable for that tax, in addition to any tax they owe separately (section 315(4) and (5)). The several liability is computed by the share of joint family property allotted at partition (section 315(9)).

Partition means a physical division of the property where it can be divided. A mere division of income, or a mere severance of status, is not partition (section 315(10)). A partial partition is partial as to persons, properties or both. Where a partial partition occurred after 31 December 1978, no inquiry is made and no finding is recorded. The family is assessed as if it had not happened, and members and the family are jointly and severally liable (section 315(8)).

Now the deceased person and estate. Under section 302, the legal representative must pay what the deceased would have owed. Proceedings against the deceased continue against the representative, who is deemed an assessee. Liability is limited to the extent of the estate, except where the representative creates a charge on, or parts with, estate assets while tax is unpaid. Then the representative is personally liable up to the value of the asset dealt with. Under section 312, the income of the estate is taxed in the executor's hands, as an individual if there is one executor, or as an association of persons if there are more. Residential status follows that of the deceased for the year of death.

Key rules to remember

HUF presumption: Family assessed as undivided = deemed HUF until a finding of partition is recorded; Section 315(1). The AO records the finding and the date after notice to all members (section 315(2), (3)).
Partition during the tax year: Income up to date of partition: assessed as if no partition; members jointly and severally liable; Section 315(4). Income after partition is assessed in the members' own hands.
Partition after the tax year: Total income of the whole tax year assessed as if no partition; Section 315(5). Joint and several liability applies as in sub-section (4)(b).
Several liability of members: Several liability is computed by the share of joint family property allotted at partition; Section 315(9). Joint and several liability allows recovery from any member, subject to this computation.
Meaning of partition: Physical division of property (where divisible); division of income alone or severance of status alone is not partition; Section 315(10)(a).
Partial partition after 31-12-1978: No inquiry, no finding; family assessed as if no partial partition; Section 315(8). Members and the family are jointly and severally liable for tax, penalty, interest, before or after the partial partition.
Executor assessment: One executor: taxed as an individual. More than one: taxed as an association of persons; Section 312(1). Residential status is that of the deceased for the year of death (section 312(2)). Assessed separately from the executor's own income (section 312(4)).
Specific legatee income: Estate income distributed to a specific legatee in the year is excluded from the estate and included in the legatee's income; Section 312(6).
Legal representative liability: Liability limited to the estate's capacity to meet it; personal liability up to the value of the asset charged or disposed of; Section 302(4)-(6). Personal liability applies if the representative parts with estate assets while the tax is undischarged.
Notices after total partition: Serve on the last manager; if dead, on all adults who were members just before partition; Section 503(1). For a dissolved firm or association, notice may be served on a partner (not a minor) or member immediately before dissolution (section 503(2)).
Verification of HUF return: By the karta; if the karta is absent from India or mentally incapacitated, by another adult member; Section 265, Table serial 2.

How to solve Special Cases: AOP, HUF, Trusts, Partition and Minors questions

Use the same sequence for any question on a special-case assessee. It keeps you from mixing the rules of different cases.

1Identify the event: partition (total or partial), death, executor administering an estate, or dissolution of a firm or association.
2Note the date of the event and compare it with the tax year. Was it during the year, after the year, or after 31 December 1978 for a partial partition?
3Apply the matching section: 315 for partition, 302 for the legal representative, 312 for the executor, 503 for service of notice.
4State who is assessed and on what income. For partition, say whether the income is assessed as if no partition took place and for which period.
5State who is liable. Say joint and several, or limited to the estate, and mention any exception such as disposing of estate assets.
6Compute only what the question asks. Use the share of property allotted for several liability, and use the executor's category for the tax rate.
7Write a one-line conclusion naming the assessee, the income and the persons liable.

Quickest way: Three-question shortcut

When to use it: Use this in MCQs and in the opening lines of a descriptive answer when time is short.

Who has died or split? Death points to section 302 or 312. Partition points to section 315.
When did it happen? During the year: income up to that date is taxed as if no partition. After the year: the full year's income is taxed as if no partition. Partial partition after 31-12-1978: ignore it.
Who pays? Partition: members jointly and severally. Death: the representative, capped at the estate unless assets were parted with. Executor: taxed as an individual or AOP by number of executors.

Common mistakes in Special Cases: AOP, HUF, Trusts, Partition and Minors

Treating a division of income, or a mere change of status, as partition.
Students think any family arrangement ends the HUF.
Fix: Recall section 315(10): partition needs a physical division of property where it can be divided. A division of income alone or severance of status alone is not enough.
Accepting a claim of partial partition made after 31 December 1978.
Students apply the total partition inquiry to all partitions.
Fix: Under section 315(8), no inquiry is made and no finding is recorded for such a partial partition. The family continues to be assessed as if it had not occurred.
Saying the legal representative always pays without limit.
The rule that the representative pays the deceased's dues is remembered but its limit is forgotten.
Fix: Liability is limited to the extent the estate can meet it (section 302(4)). It becomes personal, up to the value of the asset, only if the representative charges or parts with estate assets while tax is unpaid (section 302(5) and (6)).
Taxing an estate with several executors as an individual.
Students remember only the single-executor rule.
Fix: One executor is taxed as an individual. More than one are taxed as an association of persons (section 312(1)).
Merging the executor's own income with the estate income.
The same person is the assessee in both capacities.
Fix: Section 312(4) requires a separate assessment. Compute the estate's total income separately for each tax year in the period up to complete distribution.
Assessing the post-partition income of an HUF as joint family income when partition occurred during the year.
Students ignore the cut-off date.
Fix: Only income up to the date of partition is assessed as if no partition took place (section 315(4)(a)). Later income belongs to members in their own hands.

Worked examples

Example 1

The Mehta HUF, assessed as undivided, divided its immovable and movable properties physically among members on 1 November 2026, within tax year 2026-27. The karta claims partition at the assessment. Explain how the AO will proceed and who is liable for the HUF's tax on income earned from 1 April 2026 to 31 October 2026.

Show the solution

The claim of partition is made at the time of assessment under section 270 or 271, so the AO must inquire after giving notice of the inquiry to all members (section 315(2)).
The property was physically divided, so it meets the definition of partition in section 315(10)(a). The AO records a finding of total partition and its date, 1 November 2026 (section 315(3)).
The partition took place during the tax year. Income up to the date of partition, that is 1 April 2026 to 31 October 2026, is assessed as if no partition had taken place (section 315(4)(a)). It is assessed in the HUF's hands.
Each member or group of members is jointly and severally liable for the tax on that income, in addition to any tax separately due from them (section 315(4)(b)). Several liability is computed by the share of property allotted at partition (section 315(9)).
Because total partition is recorded, notices for the HUF's income are served on its last manager, or if dead, on all adults who were members just before partition (section 503(1)).

Answer: The AO inquires and records total partition on 1 November 2026. Income from 1 April to 31 October 2026 is assessed as an HUF income as if no partition occurred. All members are jointly and severally liable, with several liability measured by the share of property allotted. Notices are served on the last manager.

Example 2

Ramesh Iyer died on 10 August 2026. His will names his sons Arun and Varun as executors. Arun distributed ₹3,00,000 of the estate's income of that year to a specific legatee, Ramesh's sister, in the same tax year. The estate's income for the year was ₹8,00,000 before that distribution. Arun also holds the unpaid tax liability of Ramesh's earlier year and sells a piece of estate property before paying it. Answer: (a) how the estate income is taxed, and (b) the effect of the sale.

Show the solution

There are two executors, so the income of the estate is chargeable in their hands as an association of persons (section 312(1)).
Residential status of the executors for the tax year of death follows Ramesh's residential status for that year (section 312(2)). The assessment is separate from their own personal assessments (section 312(4)).
Income distributed to a specific legatee during the tax year is excluded from the estate's total income, and included in the legatee's income for that year (section 312(6)). Estate income = ₹8,00,000 − ₹3,00,000 = ₹5,00,000.
The ₹3,00,000 is taxed in the hands of the sister, the specific legatee, in that tax year.
For the earlier-year tax, the legal representative is liable as the deceased would have been, limited to what the estate can meet (section 302(1) and (4)). Selling estate property while the tax remains undischarged makes the representative personally liable for that tax (section 302(5)).
That personal liability is limited to the value of the asset disposed of (section 302(6)).

Answer: (a) The estate is assessed as an association of persons on ₹5,00,000, with ₹3,00,000 taxed in the legatee's hands. (b) The executor who sells estate property while tax is unpaid becomes personally liable, up to the value of the asset sold.

Exam tips

Write the section number with the rule. For example, cite section 315 for partition, 312 for executors and 302 for legal representatives. Examiners reward the correct Income-tax Act, 2025 numbers, not the 1961 Act numbers.
In partition questions, underline the date of partition against the tax year. Your answer changes completely between partition during the year and after it.
For MCQs, watch for the traps: severance of status is not partition, partial partition after 31-12-1978 is ignored, and several executors mean an association of persons.
End every descriptive answer with a recommendation or conclusion line stating who is assessed, on which income and who is liable. Case-based answers are marked on application, not recall.

Practice questions from E-commerce Transaction and Liability in Special Cases

Special Cases: AOP, HUF, Trusts, Partition and Minors in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA IntermediateTaxation of HUF and Partition

Special Cases: AOP, HUF, Trusts, Partition and Minors: frequently asked questions

How is an HUF assessed after partition under the Income-tax Act, 2025?

The AO inquires into the claim, records a finding on total or partial partition and its date, and then applies section 315. If partition was during the year, income up to the partition date is assessed as if no partition occurred. If it was after the year, the whole year's income is assessed that way. Members are jointly and severally liable.

Is a partial partition of an HUF recognised for tax?

For a partial partition after 31 December 1978, no. The AO does not inquire or record a finding, and the family is assessed as if no partial partition took place. Members and the family stay jointly and severally liable under section 315(8).

How is the estate of a deceased person taxed in the executor's hands?

Under section 312, the estate's income is taxed in the hands of the executor as an individual if there is one executor, or as an association of persons if there are several. Residential status is the deceased's for the year of death. The assessment is separate from the executor's own income.

Is a legal representative liable beyond the estate?

Generally no. Under section 302(4), liability is limited to what the estate can meet. But if the representative creates a charge on, or parts with, estate assets while the tax is unpaid, they are personally liable up to the value of the asset.