2000 (3) TMI 188 - AT - Income Tax

Summary

Issues Involved:
1. Status of the assessee for tax assessment: Individual vs. Hindu Undivided Family (HUF)
2. Application of relevant case laws and judicial precedents

Issue-wise Detailed Analysis:

1. Status of the Assessee for Tax Assessment: Individual vs. Hindu Undivided Family (HUF)

The primary issue in this case is whether the income from properties received by the assessee on partition of the HUF should be assessed in the status of an individual or as a Hindu Undivided Family (HUF). The assessee, an individual, was involved in a partition with his father in 1960 and got married in 1984. For the assessment year 1985-86, the assessee returned the income from these properties in the status of HUF. However, the assessing officer assessed the income in the status of an individual.

The CIT (Appeals) held that the assessee should be assessed in the status of HUF, following his earlier order in a similar case. The Revenue contested this decision, arguing that unless a son is born to the assessee, he cannot constitute an HUF, citing the Supreme Court decision in Surjit Lal Chhabda v. CIT [1975] 101 ITR 776.

2. Application of Relevant Case Laws and Judicial Precedents

Revenue's Argument:
The Revenue argued that the CIT (Appeals) did not apply the decision of the Madhya Pradesh High Court in CIT v. Vishnukumar Bhaiya [1986] 142 ITR 357, which states that the assessee cannot constitute an HUF without a son. They relied on the Supreme Court's decision in Surjit Lal Chhabda, where it was held that property impressed with the character of joint family property remains individual property unless a son is born.

Assessee's Argument:
The assessee's representative cited various decisions, including:
- Mysore High Court in C Krishna Prasad v. CIT [1970] 75 ITR 526, approved by the Supreme Court, which held that a male member receiving property on partition should be assessed as HUF even if his family consists only of himself, his wife, and daughters.
- Allahabad High Court in Premkumar v. CIT [1980] 121 ITR 347, which held that property received by a single coparcener on partition retains its character as joint family property, and upon marriage, the joint Hindu family comes into existence.

Judicial Members' Opinions:
- Accountant Member (G.E. Veerabhadrappa): Supported the view that the assessee should be assessed in the status of HUF, relying on the decisions favoring the assessee, including the Allahabad High Court's decision in Premkumar.
- Judicial Member (Abdul Razack): Disagreed, asserting that the facts align with the Supreme Court's decision in Surjit Lal Chhabda, which mandates assessment as an individual unless a son is born. He also referred to the Madhya Pradesh High Court's decision in Vishnukumar Bhaiya.

Third Member's Decision:
The Third Member was appointed due to the difference of opinion. After considering the arguments and relevant case laws, including the decision of the Madras High Court in H.P.A.R. Rajagopalan v. CWT [1999] 154 CTR (Mad.) 558, which supports assessment in the status of HUF upon marriage, the Third Member agreed with the Accountant Member. The Third Member concluded that the assessee should be assessed in the status of HUF.

Final Judgment:
In conformity with the majority view, the appeal by the Revenue was dismissed, and the assessee was confirmed to be assessable in the status of HUF for the income from house property and capital gains.