1990 (3) TMI 130 - AT - Income Tax

Summary

Issues Involved:
1. Ownership status of the house property in Tiruchengode.
2. Treatment of the property as Hindu undivided family (HUF) property or individual property.
3. The impact of blending on the property status.
4. The effect of estate duty proceedings on the property status.
5. Validity of the affidavit submitted by Meenakshi Ammal.

Issue-wise Detailed Analysis:

1. Ownership Status of the House Property in Tiruchengode:
The primary issue is whether Krishnappa Chetty inherited the house property in Tiruchengode in his individual capacity or whether it was inherited by his Hindu undivided family (HUF). The property was originally gifted to Parvathammal by her father Annamalai Chettiar in 1904 as her stridhana. Parvathammal died intestate in 1966, and the property was inherited by her son, Krishnappa Chetty. The Tribunal held that the gift deed did not indicate that the property was gifted to Parvathammal's sons and grandsons, but solely to her. Under Section 14 of the Hindu Succession Act, her limited rights were enlarged into absolute rights, making her the absolute owner of the property. Upon her death, the property devolved upon her son Krishnappa Chetty in his individual capacity under Section 15(1)(a) of the Hindu Succession Act.

2. Treatment of the Property as HUF Property or Individual Property:
The assessee contended that Krishnappa Chetty treated the property as belonging to the HUF and blended it with HUF properties. However, the Tribunal found no positive acts by Krishnappa Chetty to indicate his intention to blend the property with HUF assets. The Tribunal emphasized that blending must be proved by positive acts and not by mere omissions. The fact that Krishnappa Chetty did not declare the property in his wealth-tax returns or income-tax returns was not sufficient to prove blending. The Tribunal concluded that the property remained individual property, not HUF property.

3. The Impact of Blending on the Property Status:
The Tribunal referred to Mulla's Hindu Law, which states that property originally separate can become joint family property if voluntarily thrown into the common stock with the intention of abandoning all separate claims. The Tribunal found no evidence of such intention from Krishnappa Chetty. The Tribunal stated that mere enjoyment of the property income by all family members or failure to maintain separate accounts does not constitute blending. Therefore, the property did not assume the character of HUF property through blending.

4. The Effect of Estate Duty Proceedings on the Property Status:
The Tribunal examined the estate duty proceedings after Krishnappa Chetty's death, where the property was shown as part of HUF properties in which he had a 1/3rd share. However, the Tribunal noted that the estate duty account filed before the Assistant Controller of Estate Duty was not produced. The Tribunal found that the estate duty assessment order did not conclusively prove that the property was HUF property. The Tribunal held that the estate duty proceedings did not change the status of the property from individual to HUF property.

5. Validity of the Affidavit Submitted by Meenakshi Ammal:
The Tribunal considered an affidavit from Meenakshi Ammal, mother of Venkatachalam and Gopalakrishnan, which stated that Krishnappa Chetty treated the property as ancestral and intended it to go to his male heirs. However, the Tribunal found the affidavit to be from an interested person and not corroborated by any material evidence. The Tribunal noted that the affidavit did not show any positive act of blending by Krishnappa Chetty. The Tribunal concluded that the affidavit did not establish that the property was HUF property.

Conclusion:
The Tribunal upheld the orders of the lower authorities, affirming that the house property in Tiruchengode was inherited by Krishnappa Chetty in his individual capacity and not as HUF property. Consequently, Venkatachalam and Gopalakrishnan inherited the property in their individual capacities after Krishnappa Chetty's death. The appeal of the assessee was dismissed.