1991 (4) TMI 112 - HC - Income Tax

Summary

Issues:
1. Characterization of property as individual or Hindu undivided family property
2. Taxability of income from property share

Analysis:
The judgment by the Delhi High Court involved a reference made by the Income-tax Appellate Tribunal regarding the characterization of property and taxability of income from the property share. The Tribunal had to decide whether the property share should be considered as belonging to the assessee individually or as part of a Hindu undivided family. The case revolved around the property at Prithvi Raj Road, New Delhi, and the income derived from it. The Income-tax Officer assessed the income as individual income for the assessment year 1971-72 based on a decision by the Bombay High Court. However, the Tribunal reversed this decision, leading to the reference.

Regarding the characterization of the property, the court considered whether the income from the property share, thrown into the common hotch-pot by the property owner, should be assessed as individual income or as income of the Hindu undivided family. The court highlighted that even with one male and one female member, a Hindu undivided family can be constituted. The court referred to the Supreme Court's decision in Surjit Lal Chhabda v. CIT, where it was held that the property owner could deal with the property as a full owner even after throwing it into the family hotch-pot until the birth of a son, making the income assessable as individual income.

Furthermore, the court discussed the decision of the Rajasthan High Court in S. K. Bohra v. CIT, which also supported the view that the property share remains individual property until the birth of a son. Based on these precedents, the court concluded that the Tribunal was not justified in excluding the income from the property share from the taxable income of the assessee. Therefore, the court answered question No. 2 in the negative, in favor of the Revenue and against the assessee.

Regarding question No. 1, the court noted that the assessments had become final, and the property's character was not changed by earlier assessments. The court emphasized that the property's character should be determined according to the personal law of the assessee, not based on previous Revenue treatment. The reference was answered accordingly, and the court directed the communication of its opinion to the Tribunal on the questions raised.