1984 (1) TMI 105 - AT - Wealth-tax

Summary

Issues:
1. Inclusion of one-third share in the estate left by deceased in the net wealth of the assessee.
2. Determination of the Hindu Undivided Family (HUF) status of the assessee.

Detailed Analysis:
Issue 1:
The appeals by the assessee contested the inclusion of one-third share in the estate left by the late Balkrishanlal Poddar in the net wealth of the assessee, as determined by the Appellate Assistant Commissioner (AAC). The AAC upheld the decision based on the precedent set by the Mysore High Court in CIT v. Smt. Nagarathnamma [1970] 76 ITR 352. The assessee argued that the income from the property was not included in the total income, emphasizing the adoption of a son in accordance with the deceased husband's wishes. The departmental representative relied on Gurupad Khandappa Magdum v. Hirabai Khandappa Magdum [1981] 129 ITR 440, asserting that the Hindu Succession Act dictates the right of legal heirs to the property left by a coparcener as if a partition had taken place before the coparcener's death.

Issue 2:
The Tribunal deliberated on whether the status of the assessee should be considered as that of a Hindu Undivided Family (HUF). Referring to case law, including CWT v. Pannalal Rastogi [1974] 96 ITR 110 and Prem Kumar v. CIT [1980] 121 ITR 347, the Tribunal concluded that the property retained its joint family character even in the absence of additional male members. The Tribunal also cited the decision in CIT v. Rm. Ar. Ar. Veerappa Chettiar [1970] 76 ITR 467, emphasizing that the joint family could continue with widows of family members. The Tribunal distinguished the application of section 6 of the Hindu Succession Act, highlighting that it does not apply when a Hindu dies without leaving a coparcener.

In conclusion, the Tribunal ruled in favor of the assessee, determining that the properties left by the husband of the assessee were assessable as HUF properties for wealth tax purposes. The inclusion of one-third interest in the HUF Balkrishanlal Poddar in the net wealth of the assessee was deemed unjustified. Consequently, both appeals by the assessee were allowed, resulting in a successful outcome for the assessee in challenging the inclusion of the share in the estate left by the deceased.