1975 (9) TMI 17 - HC - Income Tax

Summary

Issues Involved:
1. Determination of the correct status of the assessee in respect of properties inherited from his father.
2. Applicability of Hindu law principles versus provisions of the Hindu Succession Act, 1956.

Summary:

Issue 1: Determination of the correct status of the assessee in respect of properties inherited from his father.

The primary question referred to the High Court was whether the properties inherited by the assessee from his deceased father should be assessed as representing his Hindu undivided family (HUF) or as an individual. The assessee contended that the interest income from the inherited properties should be assessed as income of the HUF. The Income-tax Officer, however, assessed it as the individual income of the assessee, relying on the decisions of the Allahabad High Court in *Commissioner of Income-tax v. Ram Rakshpal, Ashok Kumar* [1968] 67 ITR 164 (All) and the Mysore High Court in *Commissioner of Income-tax v. Smt. Nagarathnamma* [1970] 76 ITR 352 (Mys). The Appellate Assistant Commissioner upheld this view, but the Income-tax Appellate Tribunal reversed it, holding that the income should be assessed as representing the HUF.

Issue 2: Applicability of Hindu law principles versus provisions of the Hindu Succession Act, 1956.

The High Court examined the provisions of the Hindu Succession Act, particularly sections 6, 8, and 30, and their impact on the character of the property inherited by a son from his father. The court noted that the Act does not alter the principle of Hindu law that property inherited by a son from his father becomes ancestral property in the son's hands. The court disagreed with the Allahabad High Court's interpretation in *Ram Rakshpal* and held that the Hindu Succession Act does not affect the character of the property as ancestral in the hands of the son. The court also referred to *Commissioner of Wealth-tax v. Harshadlal Manilal* [1974] 97 ITR 86 (Guj), which supported the view that self-acquired property of the father, when inherited by the son, retains its character as joint family property.

Conclusion:

The High Court concluded that the correct status of the assessee in respect of the properties inherited from his father was as representing his Hindu undivided family and not as an individual. The question referred was answered accordingly, with no order as to costs.