1968 (12) TMI 4 - HC - Income Tax

Assessee was allotted shares of limited companies on partition of his HUF - After the partition, he married an Australian lady who has a Christian - He was originally assessed to income tax and wealth tax in the status on an individual - Whether, the assessee and his son constituted a HUF for purposes of assessment under the Income-tax, Wealth-tax and Expenditure-tax Acts - Held, yes

Issues Involved:
1. Whether the assessee and his son constituted a Hindu undivided family (HUF) for purposes of assessment under the Income-tax, Wealth-tax, and Expenditure-tax Acts.

Detailed Analysis:

1. Status of Hindu Undivided Family (HUF):
- The primary issue was whether the assessee and his son, Nicolas Sundaram, constituted a Hindu undivided family (HUF) for tax assessment purposes.
- The Tribunal had sustained the assessment of the assessee as an individual, rejecting the claim of HUF status.

2. Background and Contentions:
- The assessee, late R. Sridharan, was initially part of an HUF with his father and brothers. Upon partition, he received a block of shares.
- He married an Austrian lady under the Special Marriage Act, 1954, and had a son, Nicolas Sundaram.
- The assessee claimed HUF status for the assessment years 1960-61 and 1961-62, arguing that his son was a Hindu and the property was ancestral.
- The revenue contended that section 21 of the Special Marriage Act did not recognize Nicolas Sundaram as a Hindu, thus rejecting the HUF status.

3. Legal Framework and Analysis:
- The court examined the historic development of the joint family system under Mitakshara law and its evolution.
- It was noted that the institution of a joint Hindu family includes lineal male descendants and their wives and unmarried daughters.
- The court considered the statutory definitions of "Hindu" under various enactments like the Hindu Succession Act, 1956, and the Hindu Adoptions and Maintenance Act, 1956.

4. Status of Nicolas Sundaram:
- The court held that Nicolas Sundaram, being the legitimate son of the assessee, was a Hindu and a member of the HUF.
- It was emphasized that a Hindu father could treat his properties as joint family properties by an overt act of including his son in the family fold.
- The court rejected the revenue's argument that section 21 of the Special Marriage Act barred Nicolas Sundaram from being considered a Hindu.

5. Property Characterization:
- The court referred to Supreme Court rulings, particularly Gowli Buddanna v. Commissioner of Income-tax, which stated that property of a joint family does not cease to belong to the family even if represented by a single coparcener.
- The court clarified that a Hindu undivided family could consist of a single male member and widows of deceased male members.
- The court concluded that the property in the hands of the assessee, acquired at partition, retained its character as joint family property upon the birth of his son.

6. Conclusion:
- The court held that the assessee and his son, Nicolas Sundaram, constituted a Hindu undivided family.
- It was determined that the property should be assessed as HUF property under the Income-tax, Wealth-tax, and Expenditure-tax Acts.
- The Tribunal's decision was overturned, and the question was answered in the affirmative, favoring the assessee.

Summary:
The court concluded that the assessee and his son, Nicolas Sundaram, constituted a Hindu undivided family for tax assessment purposes. The court held that the property retained its character as joint family property and should be assessed as such under the relevant tax laws. The Tribunal's decision to treat the assessee as an individual was overturned.

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