1977 (12) TMI 38 - 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 in his hands as his individual income or in the hands of the joint family consisting of himself and his daughter.

Issue-wise Detailed Analysis:

1. Assessability of Income from Partitioned Properties:
The primary issue in this appeal is whether the income arising from properties received by the assessee, Mr. H.M., on a partial partition of his joint Hindu Family, should be assessed as his individual income or as the income of the Hindu Undivided Family (HUF) consisting of himself and his daughter. The assessee argued that the disputed income should be excluded from his individual income and assessed separately in the hands of the HUF. The Income Tax Officer (ITO) rejected this claim, but the Appellate Assistant Commissioner (AAC) accepted it, resulting in the deletion of the income of Rs. 1,24,622 from the assessee's individual assessment.

2. Department's Argument:
The Departmental Representative, Shri C.V. Kothari, contended that the cases referred to by the AAC, including decisions by the Chief Justice of India, were distinguishable on facts and did not support the assessee's case. He referred to various sections in Mulla's Hindu Law and emphasized that the property allotted to a coparcener on partition retains its character as separate property concerning the divided members but ancestral concerning his male issue. He argued that since the assessee acquired the share on partition as the sole male member, the property could not constitute joint family property. He further contended that a father and daughter could not constitute a joint family for income-tax purposes, as there is no legal basis to suggest that the daughter must be joint with the father.

3. Assessee's Argument:
The learned counsel for the assessee strongly relied on the order of the AAC and the cases referred to therein, particularly the decision of the Supreme Court in Hirday Narain vs. ITO, Parvati vs. Janabai, and Umayal Achi vs. Lakshmi Achi & Ors. The counsel argued that if the son had only a daughter, the share falling to his share on the partition would be accepted as joint Hindu family property. Therefore, the same principle should apply to the father, making the share obtained on partition the property of the joint family consisting of himself and his daughter.

4. Tribunal's Analysis:
Upon careful consideration of the facts and submissions, the Tribunal concluded that the assessee's claim for the status of HUF concerning the property falling to his share on the partition was well-founded and rightly accepted by the AAC. The Tribunal classified the decided authorities into three sets of cases:
- Cases where property received by a coparcener on partition would be the joint family property.
- Cases where the property of a joint Hindu family retains its character even if the family is reduced to a sole male member with other female members.
- Cases where the character of a share in the joint family property obtained by a coparcener is determined based on the division among all family members.

5. Relevant Case Laws:
The Tribunal referred to several case laws, including N.V. Narendranath vs. CWT, where it was held that properties obtained by a coparcener on partition continued to retain the character of joint family property. The Tribunal also noted that the decision in C.K. Krishna Prasad vs. CIT did not alter the principle that an individual who is the sole male member cannot constitute a joint family but was based on a different principle.

6. Supporting Case Laws:
The Tribunal found that the facts in the present case were similar to those in Hirday Narain vs. ITO, where the share obtained on partition was held to belong to a HUF consisting of the assessee and his wife. Similarly, in P. Pavanasa Nadar vs. CIT, the income from properties obtained on partition was assessed in the status of HUF. The Tribunal also referred to Bajranglal vs. CIT, where the High Court found that the assessee could constitute a family along with his widowed mother and unmarried daughter.

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