1980 (12) TMI 107 - AT - Wealth-tax

Summary

Issues:
- Assessment of wealth-tax on assets of Hindu Undivided Family (HUF) after the death of Karta.
- Inclusion of assets in the wealth-tax returns of family members.
- Claim of continuation of HUF as coparcenary property.
- Dispute regarding inclusion of assets in the hands of HUF or individual family members.
- Argument against the admission of additional grounds by the Departmental Representative.
- Interpretation of partition under the Wealth Tax Act and Hindu Succession Act.

Analysis:
The judgment involves two appeals concerning the assessment of wealth-tax on assets of a Hindu Undivided Family (HUF) following the death of the Karta, Shri G.R. Varadarajulu. The appeals were filed by two family members against the orders of the Assistant Appellate Commissioner for the assessment year 1974-75, as the appeals raised common issues related to the inclusion of assets in their wealth-tax returns.

The main contention raised by the appellants was that the larger HUF continued as coparcenary property even after the death of the Karta, as he had a son. They argued that the assets were part of the family assessment and no order had been passed regarding any partition within the meaning of the Wealth Tax Act. Additionally, they claimed that individual shares, if any, were under the executorship of the son and should be directly assessed in his hands under the Act.

The Departmental Representative opposed the admission of additional grounds, asserting that the inclusion was based on the appellants' rights under the Hindu Succession Act. It was argued that one of the appellants, being a married daughter, was not a member of the family, and her share should be assessed individually. The Representative contended that the concept of executorship was not applicable in this case.

Upon careful consideration of the facts and arguments, the Tribunal found that the appellants had a share in the family assets of the larger HUF. It was noted that the entire assets of the HUF had already been offered for assessment, and assessments had been made accordingly. The Tribunal emphasized that there had been no physical partition of the assets, as required by the Wealth Tax Act, despite the legal position under the Hindu Succession Act. The Tribunal held that the authorities cannot assess the same wealth both in the hands of the family and the individual members without a proper partition by metes and bounds as per Section 20 of the Act.

In conclusion, the appeals were allowed, indicating that the wealth-tax assessments on the appellants' shares in the HUF assets were not valid due to the absence of a formal partition as required by the law.