1993 (7) TMI 18 - HC - Income Tax

Summary

Issues:
1. Correct status of the assessee for the assessment year 1974-75.
2. Whether the status of Hindu undivided family was rightly taken by the Appellate Assistant Commissioner.
3. Application of section 64(1)(ii) of the Income-tax Act, 1961 for clubbing share income.

Analysis:
The judgment pertains to a reference under section 256(1) of the Income-tax Act, 1961, regarding the correct status of the assessee for the assessment year 1974-75. The primary issue raised was whether the Income-tax Appellate Tribunal was correct in law in holding that the assessee's status as a Hindu undivided family was rightly taken by the Appellate Assistant Commissioner. The Tribunal had confirmed the order of the Appellate Assistant Commissioner, which determined the status of the assessee as a Hindu undivided family for the relevant assessment year.

The case involved a partial partition of a bigger Hindu undivided family in a previous assessment year, resulting in the assessee becoming the karta of a smaller Hindu undivided family comprising himself, his wife, and unmarried daughter. Despite the Income-tax Officer initially considering the assessee as an individual for the assessment year in question, the Tribunal found that the status of the assessee had been consistently that of a Hindu undivided family in preceding assessment years.

The Tribunal's decision was based on the fact that the partial partition had led to the assessee, his wife, and daughter acquiring an undivided share, forming the nucleus of the smaller Hindu undivided family. Consequently, the Tribunal concluded that the correct status of the assessee was that of a Hindu undivided family, as claimed by him. The Tribunal also rejected the application of section 64(1)(ii) of the Income-tax Act, 1961, for clubbing the share income of the wife with that of the assessee.

Ultimately, the High Court upheld the Tribunal's decision, answering all three questions in the affirmative, against the Revenue and in favor of the assessee. The judgment disposed of the reference with no order as to costs, affirming the status of the assessee as a Hindu undivided family for the assessment year 1974-75.