Circular No. 224

Whether coparcener of HUF can be regarded as benamidar of HUF and thus obliged to file Form No. 12A in terms of Explanation (b) of section 185(1)

What this is

Circular No. 224 was issued by the Central Board of Direct Taxes on 22 June 1977. Its subject is Whether coparcener of HUF can be regarded as benamidar of HUF and thus obliged to file Form No. 12A in terms of Explanation (b) of section 185(1).

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

Extends to a coparcener the clearance already given to a karta. Circular No. 207 dated 24-9-1976 had explained that a karta who is a partner on behalf of his Hindu undivided family is not a benamidar of the family within the Explanation to section 185(1), so no Form No. 12A is required. The Board now holds that a coparcener other than the karta who is a partner in a firm on behalf of his Hindu undivided family equally cannot be regarded as a benamidar of the family, and that there is no obligation to file Form No. 12A in such cases either.

Why it was issued

The Board examined whether clause (b) of the Explanation to section 185(1) applied where the partner holding for the family is a coparcener rather than the karta.

Who it reaches

Firms in which a coparcener is a partner for his Hindu undivided family
Other partners who would otherwise have had to disclose in Form No. 12A
Income-tax Officers testing genuineness for registration under section 185

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.185	s.326

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

Whether coparcener of HUF can be regarded as benamidar of HUF and thus obliged to file Form No. 12A in terms of Explanation (b) of section 185(1)

1. Reference is invited to the Board’s Circular No. 207 [F. No. 220/20/76-IT (A-II)], dated 24-9-1976 [Clarification 2] wherein it was explained that the karta of the Hindu undivided family cannot be regarded as a benamidar of the Hindu undivided family within the meaning of the Explanation to section 185(1) and as such there is no obligation to file Form No. 12A in such cases.
2. The Board have examined the question whether the provisions of clause (b) of Explanation to section 185(1) will apply to a case where a coparcener other than a karta of Hindu undivided family is a partner in a firm on behalf of his Hindu undivided family. The Board is of a view that a coparcener of a Hindu undivided family cannot be regarded as a benamidar of Hindu undivided family and as such there is no obligation to file Form No. 12A in such cases.
Circular: No. 224 [F. No. 220/8/77-IT(A-II)], dated 22-6-1977.

What to watch

The clearance covers only a partner holding for his own Hindu undivided family; a partner holding benami for an outsider is untouched.
Clause (a) of the Explanation, on a partner who is benamidar of another partner, is not addressed.
Firm registration under sections 185 and 186 and Form No. 12A have long since gone from the scheme of the Act.

Where you meet it

On an old refusal or cancellation of firm registration where a coparcener partner is said to be a benamidar of the family.

What it names

Forms it names. Form No. 12A

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. Notification No. 103/2019 [F. No. 370149/159/2019-TPL]/SO 4455(E) — 2 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 13 December 2019
Notification No.59/2016 [F.No.142/8/2016-TPL] /SO 2476(E) — [To BE Published in the Gazette of INDIA, Extraordinary, Part II, section 3, Sub-section (ii)] 20 July 2016
Circular No. 207 — Whether coparcener of HUF can be regarded as benamidar of HUF and thus obliged to file Form No. 12A in terms of Explanat 24 September 1976
Circular No. 70 — New Form Nos. 11, 11A and 12 incorporating provisions of Explanation inserted by Taxation Laws (Amendment) Act, 1970 not 11 December 1971

← Circular No. 225 · Circular No. 223 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.