1996 (8) TMI 85 - HC - Income Tax

Summary

Issues:
Interpretation of Hindu undivided family status after marriage.

Analysis:
The case involved a reference under section 256(1) of the Income-tax Act, 1961, regarding the status of the assessee after marriage, whether as a Hindu undivided family or an individual. The assessee, governed by the Mitakshara school of Hindu law, derived income from two firms. The Assessing Officer initially treated the income as individual income due to the absence of a second male member in the family. The Appellate Assistant Commissioner, however, allowed the appeal, considering the wife as a member of the Hindu undivided family. The Income-tax Appellate Tribunal later reversed this decision. The High Court remanded the case to the Tribunal to determine if there was a larger Hindu undivided family and if the share income was invested after partition. The Tribunal concluded that the share income was from a joint family consisting of the assessee and his wife.

The main contention revolved around whether a Hindu joint family could exist with a sole male member. The Revenue argued that without another coparcener, there could be no joint family. However, the assessee's counsel argued that a joint family could be formed with a single male member and some female members. The court referred to various precedents to establish that a Hindu undivided family could include a single male member and widows of deceased coparceners. The court emphasized that the property of a joint family does not cease to belong to the family even with a single coparcener representing it.

The court cited cases such as Gowli Buddanna v. CIT and N. V. Narendranath v. CWT to support the view that a Hindu undivided family could consist of a single male member and his wife and daughters. Additionally, the court referred to Ashok Kumar Ratanchand v. CIT and Bharath Kumar D. Bhatia v. CIT to highlight that the status of the unit of assessment after marriage is that of a Hindu undivided family. The court also reiterated that a coparcener does not have an unfettered right of disposal of property under the law.

Based on the discussions and legal precedents cited, the court concluded that the assessee, after marriage, could form a Hindu undivided family, and thus should be recognized as such for tax assessment purposes. Therefore, the court answered the question in favor of the assessee and against the Revenue, affirming the status of the assessee as a Hindu undivided family for tax assessment purposes.