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Issues:
1. Whether the Appellate Assistant Commissioner erred in allowing the status of HUF in respect of the properties inherited by Shri Rattan Lal Aggarwal based on the Will executed by his father late Shri Tilak Ram? Analysis: The appeal before the Appellate Tribunal ITAT Chandigarh involved a dispute regarding the status of HUF in relation to properties inherited by Shri Rattan Lal Aggarwal based on a Will executed by his father, late Shri Tilak Ram. The facts revealed that Shri Rattan Lal Aggarwal, the youngest son, inherited ancestral properties from his father, including land and deposits. The crucial document in question was the Will executed by late Tilak Ram on 29th March, 1971, wherein he bequeathed all his properties solely to Rattan Lal, excluding his other sons. This Will superseded an earlier Will that had distributed the properties among all three sons. The Income Tax Officer (ITO) initially treated the income as belonging to Shri Rattan Lal individually but raised a protective assessment in the status of HUF based on the filed return. The Appellate Assistant Commissioner (AAC) disagreed with the ITO, ruling that the income from ancestral properties should be taxed as HUF income, not individual income. The crux of the issue revolved around whether the properties inherited by Shri Rattan Lal could be considered as HUF property or individual property. The AAC's decision was based on the ancestral nature of the properties and the principle that income from ancestral properties should be taxed as HUF income. The AAC also noted that for a subsequent assessment year, both the ITO and the WTO had accepted the HUF status of the same properties. The revenue, citing legal precedents, argued that under Hindu law, testamentary disposal of ancestral property does not convert it into HUF property and should be taxed as individual income. However, the assessee's counsel contended that the Will was valid, as consent from other coparceners had been obtained, and only a portion of the property was disposed of, with the rest remaining as HUF property. In the deliberation, the Tribunal considered the conflicting legal interpretations regarding ancestral property and testamentary dispositions under Hindu law. The Tribunal observed that there was a divergence of opinions among different High Court judgments on this matter. Notably, the Tribunal highlighted the conflicting decisions of the Gujarat High Court and the Allahabad High Court on similar issues. Ultimately, the Tribunal upheld the AAC's order, emphasizing that the properties were ancestral and came to Shri Rattan Lal as part of the joint family. The Tribunal also noted that the revenue had previously accepted the HUF status for the same properties in a different assessment year. Consequently, the appeal by the revenue was dismissed, affirming the AAC's decision to tax the income from the inherited properties as HUF income.
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