1997 (12) TMI 38 - HC - Income Tax

Summary

Issues:
Assessment of share income from the estate of a deceased individual in the hands of a Hindu undivided family.

Analysis:
The judgment pertains to the assessment year 1981-82 involving a Hindu undivided family where A. P. S. Parameswaran Pillai was the karta. The issue arose when income derived from assets devolved on the assessee from the estate of A.P.S. Sethurama Pillai was included as joint family income by the Income-tax Officer. The Appellate Assistant Commissioner ruled that this income cannot be assessed in the hands of the Hindu undivided family. The Revenue appealed this decision before the Income-tax Appellate Tribunal, which held that the income must be separately assessed under section 168 of the Income-tax Act and not in the assessment of the Hindu undivided family.

The Tribunal referred the question of law on whether the income from the estate should be separately assessed until full distribution of the estate took place. The Tribunal's decision was based on two grounds: first, that section 168 applies even in cases of intestate succession, and second, that income from properties devolved on succession must be assessed as individual income, not as Hindu undivided family income. The Tribunal's decision aligned with a Full Bench decision of the court and a subsequent Supreme Court ruling, which held that income from such properties should be treated as individual income, not joint family income.

The court reframed the question of law to focus on whether the share income from the estate was assessable in the hands of the Hindu undivided family. The court upheld the Tribunal's decision, stating that the share income cannot be assessed in the hands of the Hindu undivided family. The judgment was based on the alignment of the Tribunal's decision with previous court rulings, including a Full Bench decision and a Supreme Court ruling. Consequently, the court ruled in favor of the assessee-Hindu undivided family, concluding that the share income should not be assessed as joint family income.