9911796707
TMI Blog1994 (12) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... family property consisting of himself, his father and mother. During the assessment proceedings, the assessee claimed that the foreign dividends were not taxable in his hands because they were not received by him. The Income-tax Officer did not accept this contention on the ground that the foreign dividends were taxable in the hands of the assessee on accrual basis even though remittance to India was not allowed by the foreign country. The assessee appealed to the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner, the assessee contested the addition of the foreign dividends to his income on an altogether different ground.This time, the contention of the assessee was that the foreign shares which were formerly the individual property of the assessee were converted by him by a declaration dated March 28, 1970, into property of the joint family consisting of himself, his father and mother. As in the past, the Income-tax Officer added one-third of the income arising from the said shares in the individual income of the assessee in the assessment year 1975-76 by applying the provisions of sub-section (2) of section 64 of the Income-tax Act, 1961 (for short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en were made taxable in the hands of the individual and not gifts to father or mother. Secondly, it was urged that in the event of a partition of the larger Hindu undivided family to which the property was transferred, a share thereof will be allotted to the assessee as karta of his smaller Hindu undivided family and not to him individually. Hence, it was urged that it could not be his individual property. Thirdly, referring to section 64(2)(b) and section 64(2)(c), it was urged that the entire section referred to a joint family consisting of the individual and his spouse and children and not a family consisting of the assessee and his parents or brothers. On the other hand, the contention of the Revenue was that section 64(2) of the Act being clear and unambiguous, there was no legal justification to limit the meaning of the expression " Hindu undivided family " appearing therein to a particular type of Hindu undivided family. The contention of the assessee did not find favour with the Tribunal. The Tribunal considered the provisions of section 64(2) of the Act, as it stood before the amendment and also as it stood after the amendment and held that there was no authority for restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mily, any property having been the separate property of the individual has, at any time a er the 31st May 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 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 computation of the total income of the individual under this Act for any assessment year commencing on or after the 1st day of April, 1971,--- (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 income derived from 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 arise to the individual and not to the family ; (c) the income derived from the converted property or any part thereof, in so far a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individual to the spouse or minor child and the provisions of sub-section (1) shall, so far as may be, apply accordingly. " (iii) In the proviso, the word " son " was substituted by " child " ; (iv) Clause (2) of the Explanation was omitted. As a result of the above amendment, from the assessment year 1976-77 onwards, the entire income from the converted property became taxable as the income of the individual as against part of the income from the converted property proportionate to that member's interest in the joint family property. Clause (c) is intended to foil the attempt of an individual to avoid the clubbing of the income of the spouse or minor child from assets transferred by the individual to such spouse or minor child with his own income under sub-section (1) of section 64 of the Act by adopting the device of first converting his separate property into property belonging to a Hindu undivided family comprising himself, his spouse and minor child and then to partition the same with a view to transferring part of such property to his spouse or minor child. It provides that in such an event, income derived from the converted property as is received by the spouse or min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the contention of the assessee that for the purposes of applicability of section 64(2) of the Act, this expression should be given a restricted meaning so as to include only those "Hindu undivided families" which comprise the individual, his wife and minor child is wholly erroneous and misconceived and cannot be accepted. We have also considered the submission of learned counsel for the assessee that looking at the intent and purpose of enacting section 64 of the Act, the expression " Hindu undivided family " appearing in section 64(2) should not be given its ordinary meaning. We do not find any merit in this submission mainly for two reasons. First, no such legislative intent is discernible from sub-section (2) of section 64 of the Act or the object and purpose of incorporating the same. Second, the language of section 64(2) being clear and unambiguous and the meaning of the expression " Hindu undivided family " used therein being well-known and well-understood, we cannot detract from the same unless reading the statute as a whole, the context so requires. In the instant case, there is nothing in the context or in the circumstances to warrant such deviation with a view to g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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