Can HUF be partner

Save Share

This query is : Resolved

Quick Summary

A Hindu Undivided Family (HUF) generally cannot be a partner in a partnership firm, as confirmed by Supreme Court rulings, because a firm is an association of individuals. However, the Karta or any member of the HUF can become a partner in their individual capacity. While an HUF cannot be a partner or designated partner in an LLP, its members can still participate in business ventures.

SHASHANK KUMAR SULTANIA

SHASHANK KUMAR SULTANIA (Querist)
Follow

16 December 2024 Hello,
One question that can HUF be partner in partnership firm? If yes, then can the karta of that HUF can provide the contractor service to that partnership firm in which HUF is partner?

Please guide 🙏

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

16 December 2024 The Supreme Court in the case of Rashik Lal & Co. v. CIT has explicitly stated that a 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 is considered to be between that nominated individual and the other partners, not the HUF itself.

The Ministry of Corporate Affairs has issued clarifications stating that while a HUF cannot be a partner or designated partner in an LLP, its Karta or any member can be a partner in their individual capacity.

SHASHANK KUMAR SULTANIA

SHASHANK KUMAR SULTANIA (Querist)
Follow

16 December 2024 Thank You for the reply 😊

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

16 December 2024 You are welcome.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now