1968 (8) TMI 23 - HC - Income Tax

Property of HUF - even where an assessee has only a wife or unmarried daughter and no son the property received by him in respect of his share in the joint family properties on partition belongs to the Hindu undivided family consisting of himself and his wife or unmarried daughter and is liable to be assessed as property of the Hindu undivided family and not as his individual property

Summary

Issues Involved:
1. Whether the assessee held 2/3rds share in the estate owned by the erstwhile Hindu undivided family in his personal capacity.
2. Whether properties received by an assessee on partition should be assessed as properties of a Hindu undivided family or as individual properties.

Issue-wise Detailed Analysis:

1. Whether the assessee held 2/3rds share in the estate owned by the erstwhile Hindu undivided family in his personal capacity:

The court examined the status of the properties after the death of Shantaben. Initially, the properties were assessed as the income of the Hindu undivided family (HUF) consisting of Chinubhai, his wife Shantaben, his son (the assessee), and his two unmarried daughters. Upon Chinubhai's death, his undivided share devolved on Shantaben, and the HUF continued with the assessee, Shantaben, and the two unmarried sisters as members. The revenue argued that upon Shantaben's death, her undivided half share devolved by succession on her children equally, making the assessee the absolute owner of his two-thirds share, thus liable to be assessed as his individual income. The court, however, disagreed, stating that the properties continued to belong to the HUF even after Shantaben's death, and the income from these properties should be assessed as the income of the HUF, not as the individual income of the assessee. The court emphasized that the existence of a single coparcener does not dissolve the HUF, and the properties retain their character as HUF properties.

2. Whether properties received by an assessee on partition should be assessed as properties of a Hindu undivided family or as individual properties:

In Wealth-tax Reference No. 5 of 1967, the court addressed whether properties received by the assessee on partition should be assessed as properties of a Hindu undivided family. The assessee, who was married but had no son, argued that the properties received on partition were HUF properties. The revenue, relying on the Privy Council decision in Kalyanji Vithaldas's case, contended that the properties should be treated as individual properties since the family consisted only of the assessee and his wife. The court, however, distinguished between two classes of cases: one where property not originally joint family property is received by the assessee, and the other where property already impressed with the character of joint family property comes into the hands of a single coparcener. The court held that properties received on partition, which were originally joint family properties, retain their character as HUF properties even if held by a single coparcener with a wife or daughter. The court relied on the Supreme Court's decision in Gowli Buddanna's case, which established that property of a joint family does not cease to belong to the family merely because it is represented by a single coparcener. The court concluded that the properties in question were HUF properties and should be assessed as such, not as individual properties.

Conclusion:

The court answered both references in favor of the assessee, holding that the properties in question continued to belong to the Hindu undivided family and should be assessed accordingly. The Commissioner was ordered to pay the costs of the references to the assessee.