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TMI Blog1997 (5) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... Hindu undivided family and was being assessed to income-tax as such. On the last date of the previous year relevant to the assessment year 1976-77, partial partition in the family took place. The capital standing in the name of the Hindu undivided family was partitioned amongst the members of the family, namely the assessee, his two sons, Suresh Prasad Agarwal and Ganesh Prasad Agarwal, and wife, Smt. Sita Devi Agarwal. The assessee claimed that he should be assessed in the status of the Hindu undivided family because even after partition he had a legal obligation to maintain his wife and he along with his wife constituted the Hindu undivided family. The Income-tax Officer took the view that since the capital of the Hindu undivided family had been partitioned and the wife had also got share and there was none to claim any share in the property which had come into the hands of the assessee, his status would be that of individual. The Appellate Assistant Commissioner on appeal by the assessee reversed the finding of the Income-tax Officer. He held, following the decision of the Supreme Court in N. V. Narendranath v. CWT [1969] 74 ITR 190, that the assessee along with his wife continu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derived from the assets received on partial partition was, therefore, liable to be assessed in the hands of the assessees in the status of Hindu undivided family and not individual. The Tribunal, in coming to the conclusions, followed N. V. Narendranath's case [1969] 74 ITR 190 (SC). It also referred to the cases of L. Hirday Narain v. ITO [1970] 78 ITR 26 (SC) and Tolaram Bijoy Kumar v. CIT [1978] 112 ITR 750 (SC). The main order was passed in the case of Baijnath Prasad. In the case of Jainath Prasad, the Tribunal merely followed the said order. On an application by the Department, however, it referred the following questions for opinion by this court : " (1) Whether, on the facts and the circumstances of the case, the Appellate Tribunal was correct in law in holding that income from assets received on partial partition was liable to assessment in the hands of Sri Jainath Prasad/Sri Baijnath Prasad in the status of a Hindu undivided family consisting of himself and his wife and not in the capacity of an individual? (2) Whether, on the facts and in the circumstances of the case, an individual can form a Hindu undivided family with his wife in respect of the shares received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court. But as is often said, each case is to be decided on its own facts. Since the Appellate Tribunal has heavily relied on N. V. Narendranath's case [1969] 74 ITR 190 (SC) which, as a matter of fact, is the foundation of its decision, it would be only appropriate to know the ratio decidendi of that case. The Supreme Court in N. V. Narendranath's case [1969] 74 ITR 190 observed that the expression " Hindu undivided family " in the Wealth-tax Act is used in the same sense in which a Hindu joint family is understood in the personal law of Hindus. Under the Hindu system of law a joint family may consist of a single male member and his wife and daughters and there is nothing in the scheme of the Wealth-tax Act to suggest that a Hindu undivided family as an assessable unit must consist of at least two male members. (The term " Hindu undivided family " is not defined under the Income-tax Act and, therefore, must have the same incidents and meaning as the one given to it in the context of the Wealth-tax Act). Having said so the court observed : " The next question is whether the assets which came to the share of the appellant on partition ceased to bear the character of joint fam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the coparcener belongs to the Hindu undivided family of himself, his wife and minor daughters and cannot be assessed as his individual property. The decision in N. V. Narendranath's case [1969] 74 ITR 190 (SC) does, at the first instance, seem to support the case of the assessees. There is, however, one salient fact which turns the tables against them. It is that in N. V. Narendranath's case [1969] 74 ITR 190 (SC) no separate share had been allotted to the wife while in these cases, as noticed above, separate shares were allotted to the wives, besides the children. This is evident from the statement of fact at page 198 of the Report (in N. V. Narendranath's case [1969] 74 ITR 190 (SC)) to the effect that " it is no doubt true that there was a partition between the assessee, his wife and minor daughters on the one hand and his father and brothers on the other hand. " It is clear that the Supreme Court was dealing with an entirely different case. The Appellate Tribunal appears to have been swayed by certain observations made in the judgment in N. V. Narendranath's case [1969] 74 ITR 190 (SC) to the effect, for example, that to constitute a Hindu undivided family it is not nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (8th edition) in these words--- " The share in the ancestral estate which a coparcener gets on partition with his co-sharers is his separate property as against the coparceners from whom he separates, though as against his own male issue who are born after partition or who were born before but who do not get themselves separated from him the property has still the character of ancestral property in which they take an interest by birth. " It is evident from the above statements of law that on the date partition is effected between the assessee and his father and/or brothers or even the son, the property coming into his hands is deemed to be a separate property though liable to become a joint family property when a son is born subsequently or an adoption is made. It may also have the trappings of a joint family property on account of a right to maintenance available to female members of the family. Such is not the case here. In both Tax Case No. 9 of 1982 and Tax Cases Nos. 61 and 62 of 1982, not only the children but the wives also had got separate shares on partition. No son was subsequently born or adopted. The wives having already been allotted shares, they could not claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. CIT [1974] 97 ITR 493, wherein their Lordships while considering the case of a single individual claiming the status of a Hindu undivided family for the purposes of taxation observed : " In view of the above, it cannot be denied that the appellant at present is the absolute owner of the property which fell to his share as a result of partition and that he can deal with it as he wishes. There is admittedly no female member in existence who is entitled to maintenance from the above-mentioned property or who is capable of adopting a son to a deceased coparcener. Even if the assessee-appellant in future introduces a new member into the family by adoption or otherwise, his present full ownership of the property cannot be affected. " In view of what has been stated above, it is unnecessary to deal with the cases cited by Mr. Rastogi. More so, because the facts of those cases were different. In fairness to counsel, however, I would very briefly refer to them. In Surjit Lal Chhabda [1975] 101 ITR 776 (SC) (heavy reliance was placed on this case), the assessee had a wife and one unmarried daughter and no son. His wife and unmarried daughter were entitled to be maintained by him fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the property was the individual property of the assessee and could not be taxed in the status of Hindu undivided family. Chander Sen [1986] 161 ITR 370 (SC) was the case of a father dying intestate after partition between himself and the son. The property devolving on the son on his death was held to be his individual property and not the property of the Hindu undivided family. The case of P. L. Karuppan Chettiar [1992] 197 ITR 646 (SC) falls in the same class of cases. In Shankar Lal Budhia [1987] 165 ITR 380 (Patna) [FB], the assessee had acquired some shares in a company on a partial partition of the Hindu undivided family. Later he acquired some immovable property and filed returns in the status of the individual for a number of years and was assessed as such. On marriage, he claimed the status. of a Hindu undivided family. On these facts, the Full Bench of this court held that the status of an individual assessee governed by Hindu law would not automatically change to that of a Hindu undivided family under the Income-tax Act. In R. S. Chidambaram [1994] 209 ITR 531 (Ker) the assessee along with son obtained property on partition of the bigger Hindu undivided family. Su ..... 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