1981 (11) TMI 94 - AT - Income Tax

Summary

Issues:
1. Determination of whether the properties inherited by the assessee belonged to him as an individual or as the head of the Hindu Undivided Family (HUF).

Comprehensive Analysis:
The judgment involves the case of an assessee who inherited properties from his father and claimed that the income derived from these properties should be assessed in the status of HUF. The assessee's father died intestate in 1969, and the conflict arose regarding the correct status of the assessee for tax assessment purposes. The assessee argued that the properties belonged to the HUF, while the revenue contended that the properties should be considered as individual assets. The assessee relied on the ruling of the Gujarat High Court, while the revenue cited decisions from the Allahabad, Madras, and Calcutta High Courts.

The Tribunal analyzed the conflicting decisions from various High Courts. The Allahabad High Court held that under the Hindu Succession Act, the property devolved on the son in his individual capacity and not as the karta of the family. The Madras High Court also supported this view in several cases, dissenting from the Gujarat High Court's decision. The Calcutta High Court further emphasized that the rule of survivorship was abrogated in cases of succession under the Act.

The Tribunal rejected the assessee's argument based on the Gujarat High Court's ruling. It noted that under the Hindu Succession Act, the son or grandson had no automatic right by birth in the inherited properties. Section 8 of the Act abrogated the right by birth, and the properties inherited by the son were considered individual property, not ancestral. Therefore, the Tribunal aligned with the decisions of the Allahabad, Madras, and Calcutta High Courts, concluding that the properties were inherited as individual assets.

Regarding the alternative contention raised by the assessee, the Tribunal admitted the claim for consideration. The assessee had declared in wealth-tax returns that the properties belonged to the HUF, even though they were treated as individual assets for tax assessment. The Tribunal directed the assessing officer to examine this contention, considering the materials available and deciding the claim on its merits and in accordance with the law.

In conclusion, the Tribunal partially allowed the appeal, emphasizing that the properties inherited by the assessee were to be considered as individual assets for tax assessment purposes. The alternative contention regarding the HUF status of the properties was admitted for further examination by the assessing officer to ensure justice and compliance with the law.