1966 (9) TMI 12 - HC - Wealth-tax

Whether the assessee could impress the character of a joint family property on the property separately owned by him only for the benefit of himself and his sons constituting a separate HUF to the exclusion of his father notwithstanding the fact that the HUF consisted of the assessee his father and his sons - held yes

Summary

Issues:
1. Impressing the character of a joint family property on separately owned property for the benefit of a separate Hindu undivided family.
2. Rejection of the assessee's claim regarding the individual property being impressed with the character of joint family property.

Analysis:

Issue 1: Impressing the character of a joint family property on separately owned property for the benefit of a separate Hindu undivided family.
The case involved the question of whether the assessee could impress the character of a joint family property on property separately owned by him, exclusively for himself and his sons, to the exclusion of his father, despite the joint family consisting of the assessee, his father, and his sons. The court examined the legal position and cited precedents to establish that a smaller Hindu joint family within a larger family can hold property independently, with separate property of coparceners being able to be impressed with the character of joint family property. The court emphasized that no formalities are necessary for such impression, and an unequivocal expression of intention suffices. The judgment favored the assessee on this issue.

Issue 2: Rejection of the assessee's claim regarding the individual property being impressed with the character of joint family property.
Regarding the second issue, the court upheld the Tribunal's decision. The assessee claimed that a property gifted to him by his grandfather in 1949 was treated as joint family property from that year onwards. However, the court found that the only evidence supporting this claim was the assessee's income-tax and wealth-tax returns filed in 1958, followed by a letter in 1959. The court deemed these as declarations of intention but insufficient to prove the property was treated as joint family property by the valuation date in 1957. Consequently, the court ruled in favor of the department on this issue.

In conclusion, the court answered the first question affirmatively in favor of the assessee and the second question affirmatively in favor of the department. As both parties had equal success, each was directed to bear their own costs, with an advocate's fee specified.