1987 (1) TMI 183 - AT - Income Tax

Summary

Issues:
1. Whether a smaller HUF can exist within a larger HUF and hold property exclusively.
2. Whether self-acquired property can be thrown into a joint family hotchpotch.
3. Whether property acquired by gift from a female can be considered HUF property.
4. Whether joint family can be formed by two Spindas who are already members of a bigger HUF.
5. Whether partial partition in Hindu Law can result in the formation of multiple HUFs.

Analysis:
1. The appeal involved the issue of whether a smaller HUF could exist within a larger HUF and hold property exclusively. The assessee contended that a smaller HUF could be formed within a larger HUF, but the Tribunal disagreed. It was held that a joint Hindu family consists of specific members based on the genealogical tree, and a family cannot be created solely by the act of parties. The Tribunal emphasized that joint family status arises from ties of Sapindaships by birth, marriage, or adoption, and not by mere desire of individuals to form a joint family. The Tribunal dismissed the appeal, stating that the fundamental principle of a joint family is not met by the scenario presented by the assessee.

2. The issue of whether self-acquired property can be thrown into a joint family hotchpotch was raised during the appeal. The assessee argued that self-acquired property could be included in the joint family property without the pre-existence of a nucleus of joint family property. However, the Tribunal rejected this argument, citing precedents that emphasized the traditional principles of joint family formation in Hindu Law. The Tribunal held that the mere intention of one coparcener to disrupt the family was sufficient to prevent the formation of a joint family with self-acquired property. The Tribunal concluded that the cases of partial partition in Hindu Law were essentially cases of assumed partition and re-union, highlighting the strict requirements for forming a joint Hindu family.

3. Another issue raised was whether property acquired by gift from a female could be considered as HUF property. The assessee relied on authorities to support this proposition. However, the Tribunal found no merit in this argument. It reiterated that the formation of a joint Hindu family is based on specific relationships and cannot be established by individuals holding property jointly, especially when they are already members of a larger HUF.

4. The Tribunal also addressed the question of whether a joint family can be formed by two Spindas who are already members of a bigger HUF. It clarified that under Hindu Law, joint families typically consist of a father and his children. The Tribunal emphasized that a joint family is not formed by two brothers who are already members of a joint family with their father. The Tribunal highlighted that the Hindu Law does not recognize the formation of multiple HUFs through partial partitions, reinforcing the traditional principles governing joint family structures.

5. Lastly, the issue of whether partial partition in Hindu Law can result in the formation of multiple HUFs was discussed. The Tribunal explained that partial partitions were essentially cases of assumed separation and subsequent re-union, rather than the creation of distinct joint families. It emphasized that the intention of coparceners to disrupt the family was sufficient to prevent the formation of a joint family. The Tribunal concluded that the assessment in the present case was made on a protective basis, and the question of adding the income earned by the assessee in the hands of individual members would be settled separately. Consequently, the appeal was dismissed on this basis.