Page 1 - Lesson Note 4

SAI INTERNATIONAL SCHOOL

CLASSS XI

SUBJECT: BUSINESS STUDIES

CHAPTER -2, BUSINESS ORGANISATION,

(CH 2 Lesson Notes 4Joint Hindu Family Business, Features, Merits and Limitations)

JOINT HINDU FAMILY BUSINESS

It is owned by the members of undivided joint Hindu family and managed by

the eldest member of the family known as KARTA. It is governed by the
provisions of Hindu law. The basis of membership is birth in a particular family.

Under the provisions of the Income Tax Act, 1961,Hindu undivided family
business is treated as a separate legal entity for assessing the income tax liability

of the business. This entity is known as Hindu Undivided family (HUF).

FEATURES (https://www.youtube.com/watch?v=N57UUMH8EXY)

1. Formation: For a joint Hindu family business there should be at least two

members in the family and some ancestral property to be inherited by them.

2. Membership: by birth there are two systems which govern membership
Dayabhaga System- It prevails in west Bengal andallows both male and
female member to coparceners. Mitakshara System- It prevails all over India

except West Bengal and allows only male members to be coparceners.

3. Liability: Liability of Karta is unlimited but of all other members is limited to

the extent of their share in property.

4. Continuity: The business is not affected by death or incapacity of Karta in such
cases the next senior male member becomes the Karta.

5. Minor members: A minor can also become full-fledged member of Family
business.

MERITS (https://www.youtube.com/watch?v=78tzKP8b5oI)

1. Effective control: The Karta can promptly take decisions as he has the
absolute decision making power. 2. Continued business