can HUf enter in to patnership to do any business,
can HUf can enter in to two or more patnership business
The Honble Supreme Court in Rashik Lal’s case observed that a firm is a compendious way of describing the individuals constituting the firm. An HUF directly or indirectly cannot become a partner of a firm because the firm is an association of individuals. Even if a person nominated by the HUF joins a partnership, the partnership will be between the nominated person and the other partners of the firm. If a karta or any other member of the HUF joins a partnership, he can do so only as an individual. His rights and obligations vis-à-vis other partners are determined by the Partnership Act and not by Hindu Law. Whatever may be the relationship between an HUF and its nominee partner, in a partnership, neither the HUF nor any member of the HUF can claim to be a partner or connected with the partnership through a nominee.
From the judgments cited above it stands established that an HUF as such cannot be a partner in a firm but it is competent to the manager or karta acting on behalf of the HUF to enter into a valid partnership with a stranger or with the karta of another family.
Interest paid by firm on capital contribution to HUF is assessable in the hands of HUF, if family funds belonging to HUF are invested in the firm. However, generally the remuneration paid to KARTA representing HUF is treated as income of KARTA in his individual capacity for the reason that KARTA is rendering his services in his Individual capacity.
Where members of HUF become the partners in a firm by investment of family funds & not because of any special services rendered by them, [in other words, there is a “real and sufficient” connection between the joint family funds and the salary paid by the firm to the Karta] then the income will belong to HUF.
Further, there are lot of old judgements of High courts/supreme courts on the issue and the same needs to referred carefully.
Refer: links/hindi/cult/006
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