1982 (4) TMI 42 - HC - Income Tax

Summary

Issues:
1. Wealth-tax assessments for the assessment years 1964-65 to 1968-69.
2. Dispute regarding income-tax assessments for the years 1970-71 and 1971-72.
3. Validity of gift deed made by the assessee in 1946.
4. Assessment of income from gifted property in the hands of the Hindu undivided family.

Wealth-tax Assessments (1964-65 to 1968-69):
The assessee claimed that properties gifted to his wife and children in 1946 should not be included in his wealth as they belonged to the donees. The Wealth Tax Officer (WTO) disagreed, stating the assessee was still part of an HUF and included the properties in his wealth. Appeals were made, but the Appellate Tribunal found that the gift was not intended to be acted upon, and the properties still belonged to the joint family. The Tribunal confirmed the assessments, leading to references to the High Court. The High Court held that the gift was invalid, as the assessee continued as a coparcener and could not make a valid gift of the joint family property.

Income-tax Assessments (1970-71 and 1971-72):
The assessee claimed his status was that of an individual, not an HUF, and the income from the gifted properties should not be assessed in his hands. However, the Income Tax Officer (ITO) included the income in the assessments. Appeals were unsuccessful, and the Tribunal agreed with the revenue authorities. The High Court found that the gift was illegal and did not confer any rights on the donees, as the properties remained coparcenary. The Court rejected the argument that the gift operated as a family arrangement.

Validity of Gift Deed and Assessment of Income:
The High Court rejected the submissions made on behalf of the assessee, stating that the gift was illegal as the assessee continued as a coparcener. The Court held that the gift deed did not operate as a family arrangement and that the income from the gifted properties belonged to the HUF. The Court emphasized that the Tribunal's findings were final and could not be challenged in a reference. The High Court answered the questions in favor of the Department and awarded costs to the Department.

This detailed analysis of the judgment highlights the key issues, arguments presented, and the High Court's findings on each issue, providing a comprehensive understanding of the legal aspects involved in the case.