1973 (3) TMI 14 - HC - Income Tax

HUF - Sole surviving coparcener - assessee was being assessed as an individual as he was the sole surviving coparcener - Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the share income of Sri Gajanand Sutwala from the partnership firm of M/s. Ganesh Prasad Dalal for the assessment years 1962-63 and 1963-64 was assessable as the income of the assessee-Hindu undivided family ?

Summary

Issues:
- Assessment of share income from a partnership firm as the income of the Hindu undivided family.

Analysis:
The judgment delivered by the High Court of Allahabad pertained to the assessment of share income from a partnership firm as the income of the Hindu undivided family. The case involved Sri Gajanand Sutwala, who was initially assessed as an individual but later his status was accepted as that of a Hindu undivided family after adopting a son in 1961. Sri Gajanand Sutwala was a partner in a reconstituted firm, M/s. Ganesh Prasad Dalal, where the share income was not declared in the returns for the assessment years 1962-63 and 1963-64, claiming it belonged exclusively to him. However, the Income-tax Officer, Appellate Assistant Commissioner, and Income-tax Appellate Tribunal upheld that the share income belonged to the Hindu undivided family.

The Tribunal emphasized that the share in the partnership business was considered joint family ancestral property, and there was no family arrangement or partition justifying the exclusive enjoyment of profits by the karta. The Tribunal held that regardless of the language in the partnership deed, the beneficial ownership remained with the Hindu undivided family. The deed indicated that the family's capital remained in the firm, and the family received interest on those funds. Since Sri Gajanand Sutwala did not contribute any personal capital and the income was derived from family assets, it was deemed to belong to the joint Hindu family based on the principle established in the case of Raj Kumar Singh Hukam Chandji v. Commissioner of Income-tax.

In conclusion, the High Court answered the referred question in the affirmative, favoring the department and ruling against the assessee. The court ordered the assessee to pay costs and assessed the counsel's fee accordingly. The judgment reaffirmed that the share income from the partnership firm was rightfully assessable as the income of the Hindu undivided family based on the facts and circumstances of the case.