1973 (8) TMI 29 - HC - Income Tax

Whether Appellate Tribunal was right in excluding the income from property from the total income from the income-tax assessment for the assessment year 1962-63 and the value of this property for wealth-tax purposes for the assessment years 1962-63 and 1963- 64 respectively ? - Whether individual property can be converted into that of joint family by a declaration in will - If the assessee s intention was to treat his individual property as joint family property in future, it has to be given effect to and the property must be treated as having being merged with the joint family property - Question answered in the affirmative

Summary

Issues:
1. Whether the Tribunal was right in excluding the income from property from the total income for the assessment year 1962-63 under the Income-tax Act and the value of the property for wealth-tax purposes for the assessment years 1962-63 and 1963-64.

Analysis:
The case involved a dispute regarding the ownership of a house property under the Wealth-tax Act and the Income-tax Act for the assessment years 1962-63 and 1963-64. The assessee executed a will expressing his desire for the property to belong to the Hindu undivided family after his death. However, the assessing authorities considered the property as belonging to the assessee individually. The Tribunal disagreed with the department's view, stating that the intention expressed in the will by the assessee should be given effect, treating the property as joint family property. The Tribunal emphasized that the intention of the assessee, as evident from the will, should prevail, regardless of when the will comes into effect. The Tribunal held that the statements in the will have legal significance and cannot be disregarded solely based on the timing of the will's operation.

The revenue contended that the will's effect would only be post the assessee's death and that the property should not be considered joint family property during the assessment year. However, the court upheld the Tribunal's decision, emphasizing that the intention expressed in the will by the assessee to treat the property as joint family property should be honored. The court highlighted that the subsequent clauses in the will, such as the right of residence for the wife, did not contradict the assessee's intention to treat the property as joint family property. Referring to legal precedent, the court emphasized that the clear and unequivocal declaration by the assessee in the will should be upheld, even if the will had not yet come into effect.

In conclusion, the court answered the question in the affirmative, supporting the Tribunal's decision to exclude the income from the property from the total income and consider the property as joint family property for wealth-tax purposes. The revenue was directed to pay the costs, and the counsel's fee was set at Rs. 250.