1970 (4) TMI 57 - HC - Income Tax

U.P. Agricultural Income Tax Act, 1948 - lands were held on tenancy by the members of the family - Whether the finding of the Revision Board that income from the holdings recorded in the name of the wife and son of Maharaj Kumar was the income of the assessee s family is legally sustainable - Held, no

Summary

Issues:
1. Whether the income from holdings recorded in the names of the wife and son of the karta accrued to the Hindu undivided family?
2. Whether the finding that the income from the said holdings was the income of the assessee's family is legally sustainable?

Analysis:
The case involved a Hindu undivided family where the Sub-Divisional Officer included the income from villages recorded in the names of the son and wife of the karta in the total income of the Hindu undivided family for assessment purposes. The Agricultural Income-tax Commissioner later allowed the family's appeal, stating that the wife and son's land should not be considered part of the family property. However, the Revision Board, upon revision application by the State of U.P., set aside the Commissioner's order and restored the Sub-Divisional Officer's decision. The court was asked to determine if the income from these holdings belonged to the Hindu undivided family and if the Revision Board's finding was legally sustainable.

The court found that the income from the wife and son's holdings did not accrue to the Hindu undivided family. The wife's land was acquired under a registered lease deed, and the son's land was leased to him by the Raja Saheb. The court highlighted that Section 10 of the Act, which deals with taxing Hindu undivided families, should not be used to include income from separate properties of family members. The Revision Board's decision was deemed flawed as it failed to appreciate this legal position.

Additionally, the court rejected arguments based on Section 3 and Section 4A of the Act, emphasizing that these provisions did not justify including the wife and son's income in the family's total income. The court also noted that the Revision Board did not consider the presumption in Hindu law that property in a family member's name is family property if acquired using family funds. However, since no funds were required for acquiring the properties in question, this presumption was deemed inapplicable.

Ultimately, the court concluded that there was no legal basis for the Revision Board's decision, and both questions were answered in the negative in favor of the assessee. The assessee was awarded costs, including counsel fees, assessed at Rs. 200.