9911796707
TMI Blog1999 (7) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... Lalwani, who was a partner in the partnership firm, Vapson Products along with his two sons, Indru Ramchand Lalwani and Gul Ramchand Lalwani. Ramchand Lalwani died intestate on September 7, 1967. As per the new partnership deed dated September 8, 1967, the share of profits of the late Ramchand Lalwani till the date of his death along with the credit balance in his capital account was to be paid to his legal heirs. By the said partnership deed, the assessee, Smt. Jasotiben, widow of Shri Ramchand was also admitted as a partner in the said firm with effect from September 8, 1967. The balance of Rs. 42,080, standing to the credit of the late Ramchand Lalwani in the capital account at the time of his death was transferred to her account. After about one and half years of entering into partnership, on February 1, 1969, Smt. Jasotiben made a declaration that she was a partner in the said firm on behalf of the joint family comprising herself and her sons. On the basis of this declaration, she claimed that her share income from the said firm should be assessed in the hands of a Hindu undivided family comprising of herself and her two sons and not in her hands in her individual capacity. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al capacity and the amount standing to the credit of the deceased Ramchand Lalwani in his capital account in the firm was transferred to her account. According to him, the property which devolved on the heirs of Ramchand Lalwani never acquired the character of Hindu undivided family property. We have carefully considered the above submission. It is true that the decisions of the Gujarat High Court cited above and the decision of the Special Bench of the Tribunal in ITO v. Shri S. R. Kirloskar (HUF) [1984] 8 ITD 288 (Pune) are no more good law after the decision of the Supreme Court in CWT v. Chander Sen [1986] 161 ITR 370. It is now well settled by the decision of the Supreme Court in CWT v. Chander Sen [1986] 161 ITR 370, that after the coming into force of the Hindu Succession Act, 1956, under section 8 of that Act, the property which devolves on the heirs mentioned in Class I devolves on them in their individual capacity. It would not be a Hindu undivided family property in their bands. In view of the above legal position, it is clear that in the present case, on the death of Ramchand Lalwani intestate on September 7, 1967, the amount standing to his credit, devolved in equal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... family. Mr. Jhaveri, learned counsel for the assessee, submits that even in view of the provisions of section 8 of the Hindu Succession Act and the decision of the Supreme Court in CWT v. Chander Sen [1986] 161 ITR 370, on the death of Ramchand Lalwani his property devolved on his two sons and the assessee, who was his widow, in their individual capacity, in view of the declaration made by her on February 1, 1969, that she was a partner in the firm on behalf of the Hindu undivided family consisting of herself and her sons, Indru and Gul, the share income from the said firm should be assessed in the hands of the Hindu undivided family and not in her individual capacity. According to learned counsel, the declaration in question should be treated as a declaration converting her separate property into joint family property which was permissible till January 1, 1970. We have considered the above submission and perused the effect of the declaration dated February 1, 1969. The above declaration is merely a declaration by the assessee that she was a partner in the firm, Vapson Products, on behalf of the joint family consisting of herself and her sons, Indru and Gul. The question is wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he partner in the said firm of Vapson Products for and on behalf of the said joint family and that all profits and losses, rights, claims, obligations, liabilities, etc., that accrue from and attach to the said partnership do belong fully and absolutely to the said joint family and that I have absolutely no individual interest whatsoever in the said partnership. What is stated above is true to the best of my knowledge and belief." We have carefully considered the above submission. We do not find from the statement of case or the declaration set out above that the assessee, who was the absolute owner of 1/3rd share of the said property received by her on the death of her husband, had blended her share with the joint family property. She merely declared that she was the karta of the joint family of her late husband consisting of herself and her sons and that she had entered into partnership for and on behalf of the said Hindu undivided family and signed the deed of partnership in the capacity of the manager/karta of the joint family. On the other hand, it is clear from the above declaration that it is intended to declare the legal position in regard to the property which devolved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber of the joint family could not blend her separate property, even if she was the absolute owner thereof, to the joint family property and that, therefore, the income from the share of the firm was not assessable in the hands of the Hindu undivided family on the basis that the assessee had blended the property with the joint family property. It was further held that to blend is to share along with others and not to surrender one's interest in favour of others. It was further held that the expression "blending" is inapposite in the case of a Hindu female who puts her separate property, be it her absolute property or limited estate, in the joint family stock. It was observed : "The theory of blending under the Hindu law involves the process of a wider sharing of one's own properties by permitting the members of one's joint family the privilege of common ownership and common enjoyment of such properties. But while introducing new shares in one's exclusive property, one does not by the process of blending efface oneself by renouncing one's own interest in favour of others. To blend is to share along with others and not to surrender one's interest in favour of others to the exclusio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the assessee merely purported to declare that she was a partner in the firm as she was the manager/karta of the joint family. This declaration, in our opinion, is absolutely irrelevant. Moreover, even assuming that the declaration is a gift of her share in the firm to the Hindu undivided family, there is nothing to show that on that day any Hindu undivided family did, in fact, exist or and even if it was so existing, the gift was accepted by it. We have also perused the decision of the Supreme Court in CIT v. K. Satyendra Kumar [1998] 232 ITR 360. In that case, the controversy was whether the fund received by the assessee as a gift from his mother with a clear indication that the fund so gifted were to be utilised only for the benefit of the family was liable to be assessed in the status of the Hindu undivided family. The admitted position in that case was that while making the gift the mother of the assessee clearly indicated that the funds were to be utilised only for the benefit of the family, It is in that context that the Supreme Court refused to interfere with the decision of the High Court that the assessee was taxable in the status of the Hindu undivided family. Eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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