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February 2023

Hindu Gains of Learning Act

By Dr. Anup P. Shah, Chartered Accountant
Reading Time 9 mins

INTRODUCTION

Hindu Undivided Families (HUFs) often have a scenario wherein the family sponsors the education of one of the members and he goes on to become a successful professional/businessman. In such a case, the question that one comes across is whether the joint family, which has funded his education, can stake a claim to his earnings? In other words, can the other family members state that whatever income / wealth the member has on account of the investment made by the family in his education and hence, they should also share in the same? Let us examine this quite interesting facet of family law.

HINDU LAW AND HUF

Hindu Law is a unique statute since part of it is codified by the Parliament whereas part of it is governed by customs, traditions, and usages. The answer to the above questions could be dissected into two scenarios ~ the position before 1930 and the position post-1930.

POSITION BEFORE 1930

Before 1930, the position in this respect was dictated by the ancient uncodified Hindu Law which was explained by a Division Bench ruling of the Supreme Court in the case of Chandrakant Manilal Shah vs. CIT (1992) 193 ITR 1 (SC). It held that before 1930, it was settled law that income

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