1968 (5) TMI 4 - HC - Income Tax

Whether the Tribunal was right in holding that the house properties possessed jointly by the members of the HUF governed by the Dayabhaga school of Hindu law were assessable to wealth-tax jointly in the status of a HUF - Held, no

Summary

Issues:
Interpretation of Wealth-tax Act regarding assessment of house properties in the hands of Hindu undivided family governed by Dayabhaga school of Hindu law.

Analysis:
The case involved the assessment of a Hindu undivided family governed by the Dayabhaga school of Hindu law for wealth-tax purposes. The Appellate Assistant Commissioner initially held that under the Dayabhaga school of Hindu law, house properties could not vest in the Hindu undivided family for assessment. However, a difference of opinion arose between the Accountant Member and the judicial Member of the Tribunal. The matter was then referred to the President of the Tribunal to decide whether the house properties and bustee lands held jointly by a Hindu undivided family under the Dayabhaga school of Hindu law were assessable to wealth-tax. The President of the Tribunal, concurring with the judicial Member, allowed the departmental appeal.

The assessee then appealed to the High Court, questioning whether the Tribunal was correct in holding that the house properties jointly possessed by the members of the Hindu undivided family governed by the Dayabhaga school of Hindu law were assessable to wealth-tax jointly in the status of a Hindu undivided family. The High Court referred to previous judgments and observed that when property is owned by individuals governed by the Dayabhaga school of Hindu law with definite and ascertainable shares, the tax should be assessed based on individual shares of income, not as a Hindu undivided family. The Court held that even though the property was possessed jointly, each member was entitled to a definite share, indicating individual ownership rather than joint family ownership.

In conclusion, the High Court answered the reference question in the negative and in favor of the assessee, stating that the house properties jointly possessed by members of the Hindu undivided family governed by the Dayabhaga school of Hindu law should be assessed individually for wealth-tax purposes based on their definite and ascertainable shares. The judgment was delivered by B. N. Banerjee J., with K. L. Roy J. concurring.