1965 (12) TMI 17 - HC - Income Tax

Sole coparcener in respect of the property that fell to his share after partition - status of the petitioner - individual/HUF

Summary

Issues:
1. Determination of the status of the petitioner as Hindu joint family for income-tax and wealth-tax assessment purposes.

Analysis:
The case involved a question referred to the High Court by the Wealth-tax Tribunal regarding the status of the petitioner as a Hindu joint family for taxation purposes. The petitioner had obtained his share from ancestral property after partition, becoming the sole coparcener with his wife. The central issue was whether he should be assessed as an individual or as a Hindu undivided family for income-tax and wealth-tax purposes.

The Tribunal relied on the Privy Council decision in Kalyanji's case and subsequent decisions, concluding that the petitioner should be assessed as an individual. However, the Orissa High Court, in Rukmini Bai Rathor v. Commissioner of Wealth-tax, held that ancestral property in the hands of a sole surviving coparcener should be considered as the property of a Hindu undivided family due to the potentiality of another coparcener coming into existence. The judgment emphasized analyzing the nature of rights of existing and potential members to determine the property's status.

Contrary decisions from the Rajasthan and Madras High Courts, following Kalyanji's case, assessed the property in the hands of a sole surviving coparcener as individual property. The Mysore High Court, in Commissioner of Wealth-tax v. Lt. Col. D. C. Basappa, took a view consistent with the Orissa High Court's judgment, relying on the Ceylon case mentioned earlier.

The High Court emphasized that the potentiality of a coparcener coming into existence, either by law or nature, should determine the property's status. As long as this potentiality exists, the property must be considered that of a Hindu undivided family. The judgment highlighted the complexity that could arise if the property's status fluctuated based on the coparcener's presence, advocating for a consistent approach based on the potentiality of coparcenary.

Ultimately, the High Court answered the question in the affirmative, determining the petitioner's status as a Hindu joint family for assessment purposes. The judgment underscored the importance of considering the potentiality of coparceners and upheld the Orissa High Court's reasoning. Justice S. N. P. Singh concurred with the decision, affirming the assessment of the petitioner as a Hindu joint family.