1997 (4) TMI 63 - HC - Income Tax

Female Member, HUF Income, HUF Property, Income Of HUF, Income Tax, Minor Child, Total Income

Summary

Issues:
1. Interpretation of settlement deed creating rights in favor of daughters for agricultural income-tax exclusion.
2. Determination of the status of the assessee as an individual or Hindu undivided family.
3. Assessment of income derived from settled lands and properties inherited from father.

Analysis:
1. The case involved a question regarding the validity of a settlement deed creating rights in favor of daughters to exclude properties from agricultural income-tax. The settlement deed by the assessee in favor of his minor daughters was made for their education and marriage. The Tribunal held that the income from lands settled on minor daughters cannot be clubbed with that of the assessee, and the assessee will be assessable as an individual for a specific share of the grandmother's property.

2. The Tribunal determined the status of the assessee as a Hindu undivided family based on previous orders. The Division Bench expressed doubts regarding the concept of a karta in cases where properties exclusively belong to one person. The Full Bench referred to the Supreme Court's judgment in Gowli Buddanna v. CIT, clarifying that a Hindu undivided family can consist of a single male member and widows, and the income from joint family property is taxable as family income.

3. The judgment relied on various Supreme Court decisions, such as CWT v. Chander Sen and CIT v. P. L. Karuppan Chettiar, to establish that properties inherited from the father constitute individual separate property under the Hindu Succession Act. The assessment was directed to be made on the Hindu undivided family for specific properties and on the individual capacity of the assessee for others. The income from settled properties for minor children was deemed to be made by the assessee as the karta of the Hindu undivided family.

In conclusion, the judgment clarified the assessment of income derived from settled lands and properties inherited from the father, emphasizing the distinction between individual and Hindu undivided family status based on the Hindu Succession Act. The Tribunal's decision was upheld, and the Assessing Officer was directed to assess the income accordingly.