Partner's share as HUF property: partnership interest can be impressed with Hindu undivided family character.

A partner's interest in a partnership firm is transferable property and may be thrown into the common stock of a Hindu undivided family. The Partnership law restriction only limits the transferee's rights against the other partners during the partnership and does not prevent the partner from impressing that interest with HUF character. The possible liability of the family does not change the nature of the interest for this purpose. The Tribunal was therefore correct in holding that the assessee's individual share in the firm could validly become HUF property, and the issue was answered in favour of the assessee.

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Issues: Whether a partner's individual share in a firm can be impressed with the character of Hindu undivided family property.

Analysis: A partner's interest in a firm is an asset. The restriction in the law of partnership only limits the transferee's rights against the other partners during the continuance of the partnership and does not prevent the partner from throwing such interest into the common stock of the Hindu undivided family. The possibility of liability to the family does not alter the character of the interest as transferable property for this purpose.

Conclusion: The Tribunal was right in holding that the assessee's individual interest in the partnership could validly be impressed with the character of Hindu undivided family property, and the question was answered in the affirmative in favour of the assessee.

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