9911796707
TMI Blog2001 (5) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... ses and children constituted a Hindu undivided family (in short "the HUF") known as M. M. Mohan and Sons. On December 22, 1970, the assessee threw his separate properties comprising shares in two companies into the common hotchpot of the Hindu undivided family. For the assessment years 1972-73 and 1973-74, the value of the shares representing the interest of the assessee, his wife and minor daughters were included in his wealth under section 4(IA) of the Act and income therefrom was included in the income. On March 30, 1974, there was a partition of M. M. Mohan and Sons and the assessee received certain shares of one of the companies. The assessee's claim was that the value of these shares received on partition cannot be included in his wealth, as they belonged to the smaller-HUF consisting of himself, his wife and minor daughters Accordingly, the value of the, these shares should be included in the wealth of the smaller-HUF. Similar was the claim in the income-tax proceedings so far as income is concerted. The assessee's stand was that on partial partition the convened properties ceased to be ancestral and became part of the smaller-HUF in view of clauses (a) and (b) of section 4( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at the relevant point of time, pre-supposes a case of partition as otherwise, the language used could not have been "the convened property or any part thereof". According to him, the question of part of the converted property would arise only when there is a partition. According to learned counsel for the assessee, the case is covered by section 64(2)(c) and not by other clauses of ejection 64(2) or section 4(lA). In order to appreciate the rival submissions, it is necessary to take note of the provisions of section 64(2) and section 4(lA) as they stood at different points of time. Section 64 as per the Taxation Laws (Amendment) Act, 1970, with effect from. 1-4-1971 : "(2) Where, in the case of an individual being a member of a Hindu undivided family, any property having been the separate property of the individual has, at any time after the 31st day of December, 1969, been converted by the individual 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 (such property being hereinafter referred to as the convened property), then, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al is to be assessed under sub-section (2)." After amendment by the Taxation Laws (Amendment) Act, 1975 with effect from 1-4-1976, the provision read as follows: "(b) the income derived from the converted property or any part thereof shall be deemed to arise to the individual and not to the family ; (c) where the converted property has been the subject-matter of a partition (whether partial or total) amongst the members of the family, the income derived from such converted property as is received by the spouse or minor child on partition shall be deemed to arise to the spouse or minor child from assets transferred indirectly by the individual to the spouse or minor child and the provisions of sub-section (1) shall, so far as may be, apply accordingly : Provided that the income referred to in clause (b) or clause (c) shall, on being included in the total income of the individual, be excluded from the total income of the family or, as the case may be, the spouse or minor child of the individual. Explanation.-For the purposes of sub-section (2), 'Property' includes any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f computing the net wealth of the individual under this Act for any assessment year commencing on or after the: 1st day of April, 1972, (a) the individual shall be deemed to have transferred the convened property, through the family, to the members of the family for being held by them jointly : (b) the converted property or any part thereof, in so far as it is attributable to the interest of the individual in the property of the family, shall be deemed to be assets belonging to the individual and not to the family ; (c) any part of the convened property in so far as it is attributable to the interest of the spouse or any minor child of the individual in the property of the family and where there is a partition (partial or total) amongst the members of the family, the converter property or any part thereof which is received by the spouse or minor child on such partition shall be deemed to be assets transferred indirectly by the individual to the spouse or minor child and the provisions of sub-section (1) shall, so far as may be, apply accordingly : Provided that the property referred to in clause (b) or clause (c) shall, on being included in the net wealth of the individual, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... einafter referred to as the concerted property), then, notwithstanding anything contained in any other provision of this Act or in any other law for the time being in force, for the purpose of computing the net wealth of the individual under this Act for any assessment year commencing on or after the 1st day of April, 1972, (a) the individual shall be deemed to have transferred the convened property, through the family, to the members of the family for being held by them jointly ; (b) the convened property or any part thereof shall be deemed to be assets belonging to the individual and not to the family ; (c) where the convened property has been the subject-matter, of a partition (whether partial or total) amongst the members of the family. the convened property or any part thereof which is received by the spouse or minor child of the individual on such partition shall be deemed to be assets transferred indirectly by the individual to the spouse or minor child and the provisions of sub-section (1) shall, so far as may be, apply accordingly : Provided that the property referred to in clause (b) or clause (c) shall, on being included in the net wealth of the individual, be excl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mon stock of the family or been transferred by the individual, directly or indirectly to the family otherwise than for adequate consideration (the property so converted or transferred being hereinafter referred to as the converted property), then, notwithstanding anything contained in any other provision of this Act or in any other law for the time being in force, for the purpose of computing the net wealth of the individual under this Act for any assessment year commencing on or after the 1st day of April, 1972, (a) the individual shall be deemed to have transferred the converted property, through the family, to the members of the family for being held by them jointly; (b) the converted property or any part thereof shall be deemed to be assets belonging to the individual and not to the family ; (c) where the converted property has been the subject-matter of a partition (whether partial or total) amongst the members of the family, the converted property or any part thereof which is received by the spouse or minor child of the individual on such partition shall be deemed to be assets transferred indirectly by the individual to the spouse or minor child and the provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be deemed to arise to the individual and not to the family. We do not agree with the stand of learned counsel for the Revenue that the expression "or any part thereof" brings in the concept of partition of the property. On a plain reading of the provisions, it means that income derived from the whole of the converted property or any part thereof has to be treated as the individual's income and not that of the family. The expression "or any part thereof" cannot be construed to mean that there must be a partition. Income may have been derived from whole of the property or any part thereof and this meaning is attributable to the provisions and any other meaning would bring absurd result. Next comes the crucial provisions, i.e., clause (c) which deals with the convened property, meaning the property which was the separate property of an individual and has been impressed with the character of property belonging to the family or has been thrown to the common stock of the family. The said property is described as convened property. When the convened property is the subject-matter of partition, be it partial or total, amongst members of the family, any income which is derived from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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