1977 (8) TMI 4 - SC - Income Tax

HUF - female member - Whether a female member of a HUF can blend her absolute property with joint family property - The rights to blend was limited to coparceners. A female member cannot blend her separate property even though she was the absolute owner of it. Therefore, the income from such property cannot be assessed in the hands of the family

Issues Involved:
1. Whether a Hindu female who is a member of an undivided family can blend her separate property with joint family property.
2. Whether the transaction in the instant case can amount to a gift in favour of the undivided family.

Detailed Analysis:

1. Blending of Separate Property by a Hindu Female:
The primary issue in this appeal is whether a Hindu female who is a member of an undivided family can blend her separate property with joint family property. The appellant, a member of a joint Hindu family, declared her intention to treat her capital and share in a business as joint family property.

The Income-tax Officer and the Appellate Assistant Commissioner rejected the appellant's claim on the grounds that she was not a coparcener and thus could not blend her personal property with joint family property. The Income-tax Appellate Tribunal, however, accepted the appellant's contention, stating that there was no reason to discriminate against a Hindu female and that she could impress her separate property with the character of joint family property.

The High Court disagreed with the Tribunal, holding that the right of blending could only be exercised by a coparcener, and since the appellant was not a coparcener, she could not throw her separate property into the joint family stock. The High Court did grant a certificate allowing the appellant to appeal to the Supreme Court, recognizing the substantial question of law involved.

The Supreme Court examined the question in light of the precedent set by Mallesappa Bandeppa Desai v. Desai Mallappa [1961] 3 SCR 779, which held that the doctrine of blending could only be invoked by a coparcener. The Court reiterated that a Hindu female, not being a coparcener, could not blend her separate property with joint family property, regardless of whether the property was her absolute property or a limited estate.

The Court also considered other cases cited by the appellant but found that none of them dealt directly with the issue of a Hindu female blending her property with joint family property. The Court concluded that the doctrine of blending is inherently limited to coparceners and does not extend to female members of a joint Hindu family.

2. Gift in Favor of the Undivided Family:
The second issue was whether the appellant's declaration on September 1, 1961, could be considered a gift to the undivided family. The Tribunal had forwarded a supplementary statement to the Supreme Court, concluding that there was indeed a gift by the appellant in favor of the joint family and that the family had accepted it.

The Supreme Court, agreeing with the Tribunal's finding, confirmed that the appellant's declaration constituted a gift. Consequently, the income from the property gifted to the Hindu undivided family would be liable to tax in accordance with this finding.

Conclusion:
The Supreme Court held that a Hindu female, not being a coparcener, cannot blend her separate property with joint family property. However, the Court confirmed that the appellant's declaration constituted a gift to the undivided family. Thus, the appeal failed on the first issue but succeeded on the second, with no order as to costs.

← Previous Next →