1973 (11) TMI 12 - HC - Wealth-tax

Assessee received properties on partition of HUF, whether it can be assessed in his individual hands - Whether, on the facts and circumstances of the case, the correct status of the assessee is that of a Hindu undivided family ? held that assessment has to be made on the assessee in the capacity of HUF

Issues Involved:
1. Determination of the correct status of the assessee under the Wealth-tax Act, 1957.
2. Applicability of the concept of Hindu undivided family (HUF) in the context of wealth received on partition.
3. Interpretation of relevant case laws and their applicability to the current case.

Detailed Analysis:

1. Determination of the Correct Status of the Assessee:
The primary issue in this case was whether the assessee's status should be considered as a Hindu undivided family (HUF) or as an individual under section 3 of the Wealth-tax Act, 1957. The facts revealed that the assessee received properties on partition from his erstwhile joint family, which constituted his wealth for wealth-tax purposes. At the time of partition and assessment, the family comprised the assessee and his wife with no children.

2. Applicability of the Concept of Hindu Undivided Family (HUF):
The Tribunal had followed a previous decision of the same court in Panna Lal Rastogi v. Commissioner of Income-tax, which held that even if the family consisted only of the assessee and his wife, the assessment must be in respect of the ancestral property in the status of a Hindu undivided family. The court reiterated that a joint Hindu family could exist even without a male coparcener, as long as there was a possibility of adding a male member in the future.

The court referred to the definition of a joint Hindu family as described in Mulla's Hindu Law, which includes all persons lineally descended from a common ancestor and their wives and unmarried daughters. This definition was adopted in several Supreme Court decisions, including Gowli Buddanna v. Commissioner of Income-tax and N. V. Narendranath v. Commissioner of Wealth-tax. The court emphasized that the concept of a joint Hindu family is broader than that of a coparcenary, which is a narrower unit.

3. Interpretation of Relevant Case Laws:
The learned standing counsel for the revenue argued that the Bench decision was contrary to the Supreme Court decisions in T. S. Srinivasan v. Commissioner of Income-tax and N. V. Narendranath v. Commissioner of Wealth-tax. However, the court found that the decision in Panna Lal Rastogi v. Commissioner of Income-tax was binding and had to be followed.

The court discussed various decisions, including the Judicial Committee's view in Attorney-General of Ceylon v. Ar. Arunachalam Chettiar (No. 2), which reiterated that a Hindu family could not be brought to an end while it was possible to add a male member.

In T. S. Srinivasan's case, the Supreme Court held that income and profits belonged to the assessee as no Hindu undivided family was in existence at that time. However, this case was distinguished by Ramaswami J. in N. V. Narendranath, where it was held that a family consisting of a husband, wife, and daughters at the time of partition was a Hindu undivided family for taxation purposes.

The court also referred to the decision in Gowli Buddanna's case, where the Supreme Court affirmed that a sole male surviving coparcener and his female relatives constituted a Hindu undivided family. This principle was applied to partition cases as well.

The court concluded that the Bench decision in Panna Lal Rastogi v. Commissioner of Income-tax was correct and binding. It held that the status of the assessee was that of a Hindu undivided family for the assessment year in question.

Conclusion:
The court answered the question in the affirmative, in favor of the assessee and against the department, holding that the correct status of the assessee was that of a Hindu undivided family for the assessment year 1961-62 under section 3 of the Wealth-tax Act, 1957. There was no order as to costs.

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