1977 (12) TMI 37 - AT - Income Tax

Summary

Issues Involved:
1. Whether the income arising from properties received by the assessee on a partial partition of his joint Hindu family is assessable as his individual income or as the income of the joint family consisting of himself and his daughter.

Detailed Analysis:

1. Background and Facts:
The assessee, H, is the son of M by his second wife. The joint Hindu family consisted of H, his wife D, his daughter Miss A, and his son Master A. The family underwent four partial partitions on different dates, where properties were divided among the family members. The primary legal question is whether the income from these properties should be assessed as H's individual income or as the income of the joint family consisting of H and his daughter.

2. Department's Argument:
The Department, represented by Shri C.V. Kothari, argued that the income should be assessed as H's individual income. He cited various legal precedents and sections from Mulla's Hindu Law and Srinivasan's "Hindu Undivided Families." The Department emphasized that the property acquired by an unmarried male member on partition cannot constitute joint family property for income-tax purposes. The representative argued that H and his daughter do not constitute a joint family for income-tax purposes, as there is no legal basis to suggest that a daughter must be held to be joint with her father.

3. Assessee's Argument:
The assessee's counsel strongly relied on the order of the AAC and several Supreme Court decisions, including Hirday Narain vs. ITO and N.V. Narendranath vs. CWT. The counsel argued that the share obtained by H on partition should be considered as joint family property consisting of himself and his daughter. The counsel also pointed out that if the son had only a daughter, the share would have been accepted as joint family property, and the same principle should apply to H and his daughter.

4. Tribunal's Analysis and Decision:
The Tribunal carefully considered the facts and submissions from both parties. It concluded that the assessee's claim for the status of HUF in respect of the property falling to his share on partition was well-founded and rightly accepted by the AAC. The Tribunal classified the relevant legal precedents into three sets of cases:

- First Set: Cases where property received by a coparcener on partition of a larger HUF is considered joint family property. Relevant cases include Pratap Narayan vs. CIT, Gajanand Sutwala vs. CWT, and N.V. Narendranath vs. CWT.

- Second Set: Cases where the property of a joint Hindu family retains its character even when the family is reduced to a sole male member with other female members. Relevant cases include Gowli Buddana vs. CIT and P. Pavansa Sadar vs. CIT.

- Third Set: Cases where the character of a share in joint family property obtained by a coparcener is considered. The guiding principle is that property must be such that it constituted coparcenary property at some time, meaning there were at least two coparceners entitled to it.

The Tribunal referred to the case of N.V. Narendranath vs. CWT, where it was held that properties obtained by a coparcener on partition retain the character of joint family property. It also cited the case of Bajranglal vs. CIT, where the High Court found that the share obtained on partition should be assessed as joint family property.

5. Conclusion:
The Tribunal concluded that the income from the property falling to the shares of the assessee is assessable in the hands of an HUF consisting of himself and his daughter. Therefore, the income was rightly excluded from his individual assessment.

6. Final Judgment:
The appeal by the Department was dismissed.