1980 (2) TMI 145 - AT - Income Tax

Summary

Issues Involved:
1. Whether the income should be assessed in the status of a Hindu Undivided Family (HUF).
2. Whether the income from the share in the firm of M/s Prince & Co., Madras, should be assessed as the property of the HUF.
3. Whether the assessee and his wife constitute a HUF for the purpose of income tax assessment.

Issue-Wise Detailed Analysis:

1. Whether the income should be assessed in the status of a Hindu Undivided Family (HUF):
The assessee claimed that the income should be assessed in the status of a HUF. The facts of the case reveal that the income assessed included share income from various firms and an annuity deposit refund. Initially, the assessee filed returns as an individual, but later filed returns in the status of a HUF for certain incomes. The Income Tax Officer (ITO) assessed all incomes in the status of an individual, and the assessee's appeal against this assessment was unsuccessful.

2. Whether the income from the share in the firm of M/s Prince & Co., Madras, should be assessed as the property of the HUF:
The assessee contended that a particular asset, namely the right to share profits in M/s Prince & Co., Madras, was omitted from the partition and remained the property of the HUF. The Tribunal rejected this argument, stating that the right to share profits in a firm is the property of the individual partner, not the HUF. The Tribunal noted that the income earned by the individual partner was treated as that of the family before the partition due to the detriment of family funds. However, post-partition, the capital was allotted to the individual, making the income his own. Therefore, the income from the firm was correctly assessed as the individual's income.

3. Whether the assessee and his wife constitute a HUF for the purpose of income tax assessment:
The assessee argued that the income should be assessed in the status of a HUF consisting of himself and his wife, as the property was ancestral and came to his share on partition. The Tribunal considered various legal precedents and the codification of Hindu Law. It was noted that a HUF under the Income Tax Act, 1961, is not defined, but its meaning is derived from Hindu personal law. The Tribunal referred to several Supreme Court decisions and concluded that a sole coparcener and his wife do not form a HUF within the meaning of the Income Tax Act. The Tribunal emphasized that after the codification of Hindu Law, the sole coparcener's ownership of the property is absolute, and the wife has no interest in the property or income therefrom. Therefore, the income from the property received on partition was rightly assessed in the hands of the coparcener in the status of an individual.

Conclusion:
The Tribunal dismissed the appeal, confirming that the income should be assessed in the status of an individual, not as a HUF. The orders of the lower authorities were upheld, and the appeal was dismissed.