1992 (9) TMI 14 - HC - Income Tax

Summary

Issues:
1. Interpretation of rental income from a house as assessable income of a Hindu undivided family.
2. Assessment of the value of a house and site under the Wealth-tax Act for a Hindu undivided family.

Interpretation of Rental Income:
The case involved a Hindu undivided family where a partition deed was executed in 1955, and a property was allotted to the assessee. The income from this property was not disclosed for tax purposes until 1971. The Revenue assessed the income and property value for various years. The Appellate Tribunal held that the income and property were rightly taxed. The assessee argued that a settlement in 1961 made the property joint family property, and thus, only a portion should be assessed. However, the Revenue contended that the partition in 1955 divided the family, and the property was not joint family property. The Tribunal found that the family ceased to exist after the partition deed, and the property belonged to the smaller Hindu undivided family of the assessee and his wife. The court agreed, stating that the property was rightly assessed in the hands of the smaller Hindu undivided family.

Assessment under Wealth-tax Act:
The Wealth-tax Officer assessed the capital value of the land and house for several years. The Appellate Assistant Commissioner allowed the appeal, but the Revenue appealed to the Tribunal, which upheld the assessment. The assessee argued that only one-fifth of the income and property value should be assessed. However, the Tribunal found that the property belonged to the smaller Hindu undivided family. The court agreed with the Tribunal's conclusion, stating that the property and income should be assessed in the hands of the smaller Hindu undivided family. Consequently, the questions were answered against the assessee and in favor of the Revenue, affirming the Tribunal's decision to tax the property and income in the hands of the smaller Hindu undivided family.

Conclusion:
The court upheld the Tribunal's decision to tax the rental income and property value in the hands of the smaller Hindu undivided family, rejecting the assessee's argument that only a portion should be assessed. The judgment clarified that the property belonged to the smaller Hindu undivided family, based on the facts and absence of evidence supporting the assessee's claims.