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TMI Blog1996 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 48,000 assessed under section 64(2) of the Income-tax Act, for the years 1973-74 and 1974-75 and Rs. 4,00,000 assessed under section 4(1A) of the Wealth-tax Act, 1957, for the years 1972-73 and 1973-74?" The assessee is an individual deriving income from the proprietary business called C. B. Muthusamy Chettiar and Co. The assessee claimed that he had by a declaration, dated September 30, 1969, impressed a sum of rupees four lakhs with the character of the joint family property. In the income-tax proceedings, the Income-tax Officer came to the conclusion that the declaration, dated September 30, 1969, should not be accepted as valid in the absence of corresponding and contemporaneous entries in the books of account and since the entries in the books of account, transferring a sum of rupees four lakhs to the credit of the Hindu undivided family were made only on March 30, 1970, and, therefore, the blending took place only on that date. Accordingly, the Income-tax Officer was of the opinion that the provisions of section 64(2) of the Income-tax Act, 1961, were attracted and added back a sum of Rs. 48,000 which he estimated as the income that could have been earned by the Hindu un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... September 30, 1969, it was contended that the interest of the assessee in the sum of rupees four lakhs was transferred to the Hindu undivided family on that date and, therefore, the provisions of section 64(2) of the Income-tax Act and section 4(1A) of the Wealth-tax Act are not applicable to the facts of this case. The Department contended that the declaration made by the assessee on September 30, 1969, should not be accepted because the assessee did not have enough liquid cash as on that date and the relevant entries in the account books were made only on March 30, 1970. Therefore, the authorities below were correct in rejecting the claim made by the assessee that he imposed the character of rupees four lakhs with that of a joint family property. However, the assessee pointed out that the assessee was having capital in his proprietary business to the extent of Rs. 8,58,679.79 as on September 30, 1969, in the name of the assessee and the Hindu undivided family had owed to the individual assessee a sum of Rs. 3,28,941.57. In the matter of blending individual property with that of the joint family property, it was submitted that it did not require any transfer of actual funds. Consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry in the account books later. This would go to show that when the individual property was impressed with the character of the joint family property, the entries in the account books were not made immediately. Therefore, it cannot be said that the individual property was impressed with the character of the joint family property as on the date of declaration, viz., September 30, 1969, inasmuch as the entries in the account books were made only on March 30, 1970. In order to support his contention, learned standing counsel for the Department relied upon the decision of this court reported in R. Subramania Iyer v. CIT [1955] 28 ITR 352 wherein it was held that where there is a declaration by the father that a certain property is joint family property, the inference that the character of joint family property is impressed upon the separate property follows, unless the words are incapable of that construction or they represent merely a future intention not yet given effect to. According to learned standing counsel, in the present case, what happened was only the expression of the future intention of the assessee in the matter of impressing the individual property with the character ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it is stated that a sum of rupees four lakhs was impressed with the character of joint family property and the entries to that effect would be made in the account books. On that score, it cannot be said that the declaration and the entries in the account books should be made simultaneously so as to consider that the individual property has been impressed with the character of joint family property. Therefore, according to learned counsel for the assessee, a mere declaration by a member of the joint family stating that he is impressing his individual property with the joint family property by putting the same in the common hotchpot of the joint family, would be sufficient for completing the transaction in the matter of impressing the individual property with the character of the joint family. Further entries made in the account books is only an evidence to show that such an impressing was made earlier. Therefore, according to learned counsel appearing for the assessee, the Tribunal was correct in excluding the sum of Rs. 48,000 from the income-tax assessment of the assessee and so also excluding a sum of rupees four lakhs while ascertaining the net wealth of the assessee in the we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... September 30, 1969, and the entries to be made in the account books is only a subsequent event, which is unconnected with the declaration made expressing his intention to impress the character of the individual property with that of the joint family property. Under the law, a mere declaration by a member of the joint family with regard to his individual property that it belongs to the joint family property is itself sufficient to impress the individual property with the character of the joint family property. That was done in the present case. We need not further probe into the matter as to what had happened to the individual property after the same was impressed with the character of the joint family property, and whether it would go to reduce the liability of the joint family in paying the debt due by the joint family to the individual, etc. In the decision reported in R. Subramania Iyer v. CIT [1955] 28 ITR 352 (Mad), it was pointed out that a future intention, which was not yet given effect to for impressing the individual property with that of the joint family property cannot constitute a declaration at present for impressing an individual property with the character of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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