714/CBDT. - Income Tax - 714/CBDT

INSTRUCTION NO. 714/CBDT Dated : July 8, 1974 Section(s) Referred: 2(31) of Income Tax Act Statute: Wealth Tax Act, 1957 Attention is invited to the instructions contained in Board's letter F.No.16/7/69-WT. dated 23rd May, 1969 (Instruction No.51) regarding the status to be adopted for IT WT assessment in the case of Hindu Undivided Families consisting of a single male coparcener. 2. In a recent case, the advice of Ministry of Law was sought about whether the status of an assessee could be taken as that of H.U.F. when:- (i) the assessee on partition takes a share from the joint property of the erstwhile HUF and has only a wife and no issue as on the valuation date; (ii) the assessee takes a share on partition from the joint property of the erstwhile HUF and is an unmarried individual; (iii) the assessee takes a share in the joint property on partition of the earlier HUF and is widower. 3.(a) Hindu Undivided Family or joint family is something different from a coparcenery. There can be a Hindu undivided family without there being coparcenery. If the property in question is ancestral property or is joint family property or would be capable of becoming joint family property on another coparcenery coming into being, it can be regarded as the property of a Hindu undivided family even if there is only one male member. After reviewing their earlier decisions on the point, the Supreme court has observed in L.Hirday Narain vs.I.T.O (78 I.T.R. p.26) " Under the Income-tax Act, it is not predicated of a Hindu undivided family as a taxable entity that it must consist of two or more male members". (b) From this, it follows that if there is one male member and a female member who would be entitled to an interest in the property whether by way of a claim for maintenance and the like, the property if it is ancestral property or has been obtained on partition would belong to the HUF. Thus, in the case mentioned in question 2(i) above where the assessee has taken property on partition and has a wife but no children, the property should be regarded as belonging to the Hindu undivided family on the valuation date. As authority for this proposition, reference might be made to the judgment of the Allahabad High Court in Ramji Mehrotra's case (92 I.T.R.p.470) and to the judgment of the Gujarat High Court in Bharat Kumar Chinubhai vs. CIT. (71 ITR.p.1). The Supreme Court's judgment in Narender Nath's case (74 ITR p.190) would also support this conclusion (though in that case the assessee had daughter's for nothing turns on this point). (c) The case referred to in 2(ii) and 2(iii) above can be considered together. In both the cases the assessee has acquired joint family property on partition. In one case he is unmarried and in another he is a widower. This is a case where there is only a single member of what can be claimed to be a Hindu undivided family. In this connection, it may be mentioned that in Godwli Buddanna's case (60 ITR.p.293) the Supreme Court expressly left open the question whether a HUF may for the purposes of the IT Act be treated as taxable entity when it consists of a single member, male or female. However, there have been decisions of the High Courts on this subject and the earliest decision which is directly material is that of the Madras High Court in Ramachandra Rao's case (48 ITR p.959). Therein, a Division Bench of that court held that in the absence of persons entitled to claim on the estate of sole surviving coparcener does not constitute a HUF for purposes of assessment to Wealth-tax. The judgment of the Allahabad High Court in Ramji Mehrotra's case (92 ITR p.470) clearly suggests that in order to constitute a Hindu joint family there must be more than one member. To the same effect is the judgment of the Mysore High Court in Krishna Prasad's case (75 ITR p.526). The return 'family' necessarily connotes the existence of a group, and one individual can hardly be said to constitute a group. Consequently, although the matter is not directly covered by authority, the better view would appear to be that a single individual cannot constitute a HUF. Thus, an unmarried individual or a widower children who takes joint family property on partition would not constitute a HUF. However, it may be possible for an individual and his sisters to constitute a HUF under certain circumstances. 4. Attention of the ITO s and Wealth-tax Officers may please be drawn to the contents of these instruction for their future guidance.