1984 (7) TMI 2 - HC - Income Tax

Agricultural Income, Income Of HUF, Individual Income, Jurisdiction Of Tribunal, Total Income

Issues Involved:
1. Status of the assessee for assessment under the Agricultural Income-tax Act.
2. Inclusion of income from lands settled on minor daughters in the assessment.
3. Applicability of section 9(2) of the Agricultural Income-tax Act.
4. Entitlement to the lands inherited from the grandmother.
5. Effect of the Commissioner's remit order and the theory of merger.

Detailed Analysis:

1. Status of the Assessee for Assessment:
The primary issue was whether the assessee should be assessed as an individual or as a Hindu Undivided Family (HUF). The Tribunal accepted the assessee's contention that the assessment should be made in the status of an HUF, not as an individual. This decision was based on the fact that the properties were originally ancestral and were partitioned among the assessee, his father, and his grandfather. The properties obtained by the assessee in the partition continued to have the ancestral character and were held by the assessee as the karta of the HUF consisting of himself, his wife, and his two minor daughters. The High Court upheld this view, citing precedents from the Supreme Court, which established that properties obtained in a partition by a coparcener retain their joint family nature.

2. Inclusion of Income from Lands Settled on Minor Daughters:
The Tribunal excluded the lands settled on the minor daughters from the assessment, stating that section 9(2) of the Agricultural Income-tax Act, which allows clubbing of minors' income with that of the parent, does not apply when the assessment is made on the father in the status of an HUF. The High Court agreed with this interpretation, referencing a Division Bench decision in State of Tamil Nadu v. Sadhanandam, which held that section 9(2) applies only when the assessment is made on the father in his individual capacity.

3. Applicability of Section 9(2) of the Agricultural Income-tax Act:
The Tribunal held that section 9(2) does not apply to the assessee's case since the assessment was to be made on the HUF and not on the individual. The High Court affirmed this view, stating that the clubbing provision under section 9(2) is inapplicable when the assessment is made in the status of an HUF.

4. Entitlement to the Lands Inherited from the Grandmother:
The Tribunal found that the assessee was entitled to only a 1/21 share of the lands inherited from his grandmother, and this share should be assessed in his individual capacity, not as part of the HUF. The High Court concurred with this finding, noting that the land inherited from the grandmother did not belong to the HUF but to the assessee individually.

5. Effect of the Commissioner's Remit Order and the Theory of Merger:
The Revenue argued that the Tribunal should not have reopened issues decided by the Commissioner in the remit order, invoking the theory of merger. However, the High Court rejected this argument, stating that the Tribunal, being an independent appellate authority, was not bound by the Commissioner's opinion. The High Court clarified that the theory of merger does not apply in this context, as the remit order and the subsequent assessment order are separate and distinct. The Tribunal, therefore, had the jurisdiction to independently assess the status of the assessee and the applicability of section 9(2).

Conclusion:
The High Court dismissed the tax revision cases, affirming the Tribunal's decision that the assessee should be assessed in the status of an HUF and excluding the lands settled on the minor daughters from the assessment. The High Court also upheld the Tribunal's decision regarding the lands inherited from the grandmother and rejected the Revenue's argument on the theory of merger.

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