9911796707
TMI Blog1987 (8) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 7. Mr. T. N. Soundararajan 20,000 8. Mr. T. N. Kumar 20,000 -------- 2,00,000 -------- On the next day, i.e., 10-9-1980, an agreement of partition was executed by which the said total amount of Rs. 2 lakhs was divided equally among the eight coparceners, each getting Rs. 25,000. 3. In the assessments made for the assessment year 1982-83 for each of these coparceners in his individual capacity the IAC added the income attributable to the share received on partition u/s 64(2) of the Income-tax Act, 1961. This was confirmed on appeal by the CIT (A). 4. In these appeals it was pointed out on behalf of the assessees that upon partition the divided share belongs to the smaller joint families of each coparcener and the income therefrom could not, therefore, be assessed in the hands of the coparceners in his individual capacity. It was argued that section 64 which provides for an addition of the income from the converted property could have application only up to the time of partition and, thereafter only if any income from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mily members including the coparcener's wife and minor children as there is no direct or indirect transfer by the coparcener to the wife and minor children, nor a transfer by him for the benefit of the wife or minor children. See CIT v. M. K. Stremann [1965] 56 ITR 62 (SC). 6. In this state of the law, sub-section (2) was introduced in section 64 to the effect that if an individual has converted his individual property into property belonging to the family through the act of impressing such separate property with the character of property belonging to the family or throwing it into the common stock of the family, then the family shall be deemed to have transferred the converted property through the family to the members of the family for being held by them jointly. The income derived from the converted property insofar as it is applicable to the interest of the individual shall be deemed to arise to the individual and not to the family and the income derived from the converted property insofar as it is attributable to the interest of the spouse or minor child and if a partition has taken place, the income from such converted property as is received by the spouse or minor child sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al property into joint family property from the provisions of section 64 which was applicable to assets transferred directly or indirectly to the spouse or minor children was that such conversion and subsequent partition did not amount to a transfer. Consequently, the object of the amendment as well as its effect is to treat the conversion and subsequent partition as a transfer and hence its scope is only to trace and add back the income that could arise to any property which is held by or on behalf of the spouse or minor children by applying the provisions of sub-section (1) to the converted property and the income arising therefrom. That is the reason why sub-clause (b) provides for deeming the income from the converted property as long as it is held by the family to be that of the individual and once the partition has taken place the deeming provision applies only insofar as the income arises to the spouse or minor children. Thus it is clear from a reading of the section as well as from the legislative history and the objects of the legislation that the intention of these provisions in sub-section (2) is only to add such income as may be received by the spouse or the minor child ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hindu Law and particularly the provisions of the Hindu Succession Act was that the property which developed on a Hindu on the death of this father intestate did not constitute HUF property consisting of his own branch including his sons. The result will be a slow annihilation of the joint families because the properties will be gradually inherited by succession and not by survivorship and the existing joint families will dwindle away. It is in this context that we must consider the action of the assessees in pooling their individual property and creating a nucleus of the joint family consisting of the father and the eight sons. It has been held that in considering the provisions of section 64, the relevant deed also should be strictly construed - Rameshwarlal Lohariwalla v. CIT [1980] 126 ITR 209 (Cal.). The present documents indicate that the object of the parties was only to create the nucleus and thereby create smaller Hindu undivided families in respect of each coparcener with a nucleus of its own. It may be that the ultimate object was to see that this smaller HUF unit would be an independent taxable entity. But the primary object was the creation of the smaller HUFs as oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, T. N. Kothandapani and T. N. Sridharan, each of their families, admittedly, consists of the coparcener and another male member thus constituting a joint family in each case. Therefore, the income arising from the share allotted to these coparceners would be the income of the respective joint families and could not be assessed in the hands of the coparcener in his individual capacity. It is stated that T. N. Kumar was a bachelor at the relevant time. In his case obviously he being a sole coparcener the income has to be assessed only in his individual hands as there is no HUF to which he can attribute the income. Therefore, in his case even though the addition cannot be sustained u/s. 64, the assessment of the income in his individual capacity as his own income has to be upheld. 15. In the case of T. N. K. Iyengar, his family consists of himself and his wife. In the case of T. N. S. Soundararajan the family consists of himself and his wife and daughter. In these cases it is argued on behalf of the assessee that even if there is no male member the income was that of a joint family and could not be assessed as the income of the individual. Our attention was drawn to the observati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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