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1996 (10) TMI 53 - HC - Wealth-tax

Issues Involved:
1. Whether the Appellate Tribunal is justified in subjecting the Hindu undivided family (HUF) to assessment as a non-specified HUF based on a declaration by the wife relinquishing her status and rights.
2. Whether a wife can sever herself from the membership of a Hindu joint family by a unilateral declaration while retaining the marital tie.

Issue-wise Detailed Analysis:

1. Appellate Tribunal's Justification in Subjecting HUF to Non-Specified HUF Assessment:

The court examined whether the Appellate Tribunal was correct in assessing the HUF as a non-specified HUF based on a declaration made by the wife of the karta. The declaration dated April 5, 1971, stated that she relinquished her status and rights in the property as a member of the HUF. The Wealth-tax Officer initially treated the status of the assessee as a non-specified HUF, but later, the Commissioner of Wealth-tax directed the Wealth-tax Officer to treat the status as a specified HUF, resulting in a higher rate of taxation. The Income-tax Appellate Tribunal's decision was challenged, leading to this reference for the court's opinion.

2. Severance from Membership of HUF by Unilateral Declaration:

The court explored whether the wife could sever herself from the HUF by a unilateral declaration while retaining the marital tie. The court referenced the concept of "joint and undivided family" in Hindu law, emphasizing that there is always a presumption of union among members unless proven otherwise. The court cited Mayne's Treatise on Hindu Law and Usage and the Supreme Court's decision in Sunil Kumar v. Ram Parkash, highlighting that the relationship, not property, binds the members of a Hindu joint family. The court concluded that membership in an HUF cannot be terminated by a unilateral act unless there is a partition or family settlement.

The court also considered the Supreme Court's ruling in Vasant v. Dattu, which held that introducing a member into a joint family does not divest any person of their estate. The court noted that even if the wife executed a declaratory/release deed, it would not sever her from the HUF. The court emphasized that the joint family property retains its character despite any severance in status.

The court further analyzed the Wealth-tax Act, 1957, noting that the term "Hindu undivided family" is not defined in the Act but should be interpreted as understood in Hindu law. The court referenced the Supreme Court's decision in Surjit, Lal Chhabda v. CIT, which stated that the expression "Hindu undivided family" must be construed according to Hindu law.

The court concluded that the wife continued to be a member of the HUF despite the declaratory/release deed. The court emphasized that a release or relinquishment involves the transfer of property, and the document in question would be invalid under the Transfer of Property Act and the Indian Registration Act.

Conclusion:

The court declared that the wife could not sever herself from the HUF by a unilateral declaration while retaining the marital tie. The court answered the reference in favor of the Revenue and against the assessee, stating that the wife remained a member of the HUF.

 

 

 

 

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