1997 (12) TMI 7 - SC - Income Tax

Whether the assessee was liable to be assessed in the status of Hindu undivided family - properties held by the assessee came from a lady relative in gift - since the source of the property was a gift it could not be treated as a joint family property

Summary

Issues:
Assessment of the assessee in the status of Hindu undivided family based on properties received from a lady relative, whether the properties constitute joint family property, and the tax status of the assessee for the assessment years 1968-69 and 1969-70.

Analysis:
The Supreme Court adjudicated on the dispute regarding the assessment status of the assessee as an individual or as a karta of a Hindu undivided family concerning income from properties and businesses acquired through funds from a lady relative. The Income-tax Officer and the Appellate Assistant Commissioner held that the properties obtained by the assessee could not be considered joint family property. However, the Income-tax Appellate Tribunal opined that a property received from a female member could constitute joint family property. The Tribunal referred the question of law to the High Court, which emphasized that property acquired with joint funds or for the joint benefit of the family constitutes coparcenary property regardless of its ancestral nature. The High Court considered the intention behind the gift and the arbitration decision, concluding that the funds provided by the lady relative were meant for the benefit of the entire family. The High Court observed that the funds were utilized for the family's benefit, and the properties were held jointly by the family members. The High Court affirmed that the funds were acquired as joint family property from the outset, leading to the assessee being taxed as an individual of the Hindu undivided family.

The Supreme Court upheld the High Court's findings, dismissing the appeals and making no order as to costs. The decision reaffirmed that the funds provided by the lady relative were intended for the benefit of the entire family, leading to the properties being treated as joint family property. The Court's ruling clarified that the assessee should be taxed in the status of an individual of the Hindu undivided family based on the properties received and held jointly by the family members.