1975 (10) TMI 1 - SC - Income Tax

Status of individual or Hindu undivided family for assessment - family hotchpot - Income from property (Kathoke Lodge) - Concept of a Hindu undivided family - Whether a single male can form a joint Hindu family with his wife and unmarried daughter - HELD THAT - Kathoke Lodge was not an asset of a pre-existing joint family of which the appellant was a member. It became an item of joint family property for the first time when the appellant threw what was his separate property into the family hotchpot. The appellant has no son. His wife and unmarried daughter were entitled to be maintained by him from out of the income of Kathoke Lodge while it was his separate property. Their rights in that property are not enlarged for the reason that the property was thrown into the family hotchpot. Not being coparceners of the appellant they have neither a right by birth in the property nor the right to demand its partition nor indeed the right to restrain the appellant from alienating the property for any purpose whatsoever. Their prior right to be maintained out of the income of Kathoke Lodge remains what it was even after the property was thrown into the family hotchpot the right of maintenance neither more nor less. Thus Kathoke Lodge may be usefully described as the property of the family after it was thrown into the common stock but it does not follow that in the eye of Hindu law it belongs to the family as it would have if the property were to devolve on the appellant as a sole surviving coparcener. The property which the appellant has put into the common stock may change its legal incidents on the birth of a son but until that event happens the property in the eye of Hindu law is really his. He can deal with it as a full owner unrestrained by considerations of legal necessity or benefit of the estate. He may sell it mortgage it or make a gift of it. Even a son born or adopted after the alienation shall have to take the family hotchpot as he finds it. A son born begotten or adopted after the alienation has no right to challenge the alienation. Since the personal law of the appellant regards him as the owner of Kathoke Lodge and the income therefrom as his income even after the property was thrown into the family hotchpot the income would be chargeable to income-tax as his individual income and not that of the family. Thus we dismiss the appeal but there will be no order as to costs. Appeal dismissed.

Issues Involved:
1. Whether a single male can form a joint Hindu family with his wife and unmarried daughter.
2. Whether the karta of such a family can impress his self-acquired property with the character of joint family property by throwing it into the family hotchpot.
3. Whether the income of such property can be assessed as the income of the joint family.

Detailed Analysis:

Issue 1: Formation of Joint Hindu Family by a Single Male
The appellant contended that a single male member could form a joint Hindu family with his wife and unmarried daughter. The department argued that it was contrary to the basic concept of a Hindu undivided family that a single male along with females could form such a family. The High Court assumed for argument's sake that a joint Hindu family could lawfully consist of a single male member, his wife, and unmarried daughter. The Supreme Court affirmed that a joint Hindu family could consist of a single male member, his wife, and unmarried daughter, referencing precedents like Gowli Buddanna v. Commissioner of Income-tax and N. V. Narendranath v. Commissioner of Wealth-tax. The court concluded that the appellant, his wife, and unmarried daughter formed a Hindu undivided family.

Issue 2: Impressing Self-Acquired Property with Joint Family Character
The appellant declared on January 26, 1956, that he had thrown Kathoke Lodge into the family hotchpot, intending to convert his self-acquired property into joint family property. The Tribunal accepted the genuineness of this declaration. The High Court also decided the reference on the footing that the property was thrown into the common stock. The Supreme Court noted that the appellant's wife and unmarried daughter became his sapindas by marriage and birth, respectively, forming a joint Hindu family. Thus, the declaration was effective in converting the property into joint family property.

Issue 3: Assessment of Income from Joint Family Property
The High Court, relying on Kalyanji Vithaldas v. Commissioner of Income-tax, held that the income from Kathoke Lodge should be assessed as the appellant's individual income. The Supreme Court examined the principles of Hindu law and the precedents to determine the correct approach. It distinguished between two classes of cases: those where property originally joint is received by the assessee and those where property already impressed with the character of joint family property comes into the hands of a single coparcener. The court concluded that since the appellant had no son, the property thrown into the family hotchpot remained his separate property for tax purposes. The income from Kathoke Lodge would be chargeable to income-tax as the appellant's individual income, not that of the family.

Conclusion:
The Supreme Court dismissed the appeal, holding that the income from Kathoke Lodge should be assessed in the hands of the appellant as an individual, not as the manager of a Hindu undivided family. The court emphasized that the property, while thrown into the family hotchpot, did not change its legal incidents until the birth of a son. The appeal was dismissed with no order as to costs.

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