1977 (11) TMI 18 - HC - Income Tax

Summary

Issues:
Interpretation of the status of the assessee as an HUF for share income from M/s. Central India Motors.

Analysis:
The judgment pertains to a reference under section 256(1) of the Income-tax Act, 1961, at the instance of the Addl. CIT, Madhya Pradesh, regarding the status of the assessee in relation to share income from M/s. Central India Motors. The Income-tax Appellate Tribunal had referred the question of law to the court for its opinion. The assessee, an individual, had initially contended that the income from the firm belonged to the HUF of which he was the karta, and should not be assessed in his individual capacity. The AAC had directed that the share income from M/s. Central India Motors be taxed at the hands of the HUF from the assessment year 1965-66 onwards. Subsequently, the Tribunal upheld this finding based on the revised return filed by the assessee and an affidavit affirming the income belonged to the HUF. The Tribunal also considered the intention of the assessee to impress the income with the character of joint family property.

The Tribunal's decision was based on the assessee's declarations and the intention to treat the income from M/s. Central India Motors as joint family property. The Tribunal found that the income was taxed at the hands of the HUF from the assessment year 1965-66, and therefore, the status of the assessee as an HUF for the share income was justified. Even if the property bequeathed to the assessee was considered self-acquired, the Tribunal held that the status of the assessee as an HUF for the share income was valid due to the clear expression of intention by the assessee to treat the property as joint family property. Consequently, the court concluded that the Tribunal was justified in holding the assessee's status as an HUF for the share income from M/s. Central India Motors, and answered the question accordingly.

In conclusion, the judgment clarifies the status of the assessee as an HUF for the share income from M/s. Central India Motors based on the intention of the assessee to treat the income as joint family property. The court upheld the Tribunal's decision, considering the declarations made by the assessee and the treatment of the income for taxation purposes.