9911796707
TMI Blog1993 (4) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... Hindu undivided family, during the assessment years 1971-72, 1972-73 and 1973-74, 4,500 shares had been sold or gifted. Thus during the assessment year 1974-75, only 19,250 shares were left in its hands. Against these shares, the Hindu undivided family was awarded 19,250 bonus shares thereby totalling the holding at 38,500 shares. These entire shares Were sold during the present assessment year for a sum of Rs. 90,000. But the assessee did not show any income by way of capital gains in the return of income filed by it. The Income-tax Officer while making the assessment computed the capital gains in the hands of the assessee-Hindu undivided family by taking the cost of the shares to the assessee to be the same for which these shares had been acquired by the said Ashok Kumar Jalan and spreading the said cost being Rs. 1.76 per share over the entire holding, worked out the cost of each share at 88 paise in the hands of the assessee. On appeal to the Appellate Assistant Commissioner, the view of the Income-tax Officer was upheld on the reasoning that throwing of the shares in the common stock of the Hindu undivided family amounts to gift within the meaning of section 49(1) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... family property if it is voluntarily thrown by him into the common stock with the intention of abandoning his separate claim therein. The separate property of a Hindu ceases to be separate property and acquires the characteristics of joint family or ancestral property not by any physical mixing with his joint family or his ancestral property but by his own volition and intention by his waiving and surrendering his separate rights in it as separate property. The act by which the coparcener throws his separate property in the common stock is a unilateral act. There is no question of either the family rejecting or accepting it. By his individual volition he renounces his individual right in that property and treats it as a property of the family. No longer he declares his intention to treat his self-acquired property as that of the joint family property, the property assumes the character of joint family property.. The doctrine of throwing into the common stock is a doctrine peculiar to the Mitakshara school of Hindu law. When a coparcener throws his separate property into the common stock, he makes no gift under Chapter VII of the Transfer of Property Act. In such a case there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, admittedly the shares in question have been impressed with the character of joint family property on December 31, 1.969, and, therefore, on a plain reading, this clause is of no consequence to the transaction involved in the present case. Now, it is to be examined whether the throwing of property in the common stock of the family can be said to be falling under any of the first three clauses of section 49(1) of the Act. Clause (i) deals with the situation of partition of a Hindu undivided family which is not the case here. Clause (ii) takes into account the transfer under a gift or a will. This is also not applicable. Clause (iii) provides for passing of property by succession, inheritance or devolution. Reading these three words ejusdem generis, this can only mean passing of properties in the event of death of the owner. But since some divergent views have been expressed in the various pronouncements of the different High Courts, it is necessary to discuss this aspect at greater length. In the case of Addl. CIT v. Madan Lal Jain and Sons [1983] 140 ITR 200 (Delhi), the karta of the assessee-Hindu undivided family had acquired 40 shares in a company out of his own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as well as the depreciation, the basic factor being the cost of acquisition of the asset. The Madras High Court in the case of CIT v. S. Krishnamurthy [1985] 152 ITR 669, while dealing with a similar question has taken the view that the cost in the hands of the family would be the same as in the hands of the coparcener throwing the property in the common hotchpot. The reason ascribed for taking this view is that the word "devolution" as used in section 49(1)(iii)(a) of the Act does not denote merely succession on death but includes also a change of ownership between living beings or bodies to another. Therefore, according to the learned judges, the fiction created by the Legislature in the said provision will have its application in the case of throwing of the properties into common hotchpot of the family. I may indicate here that the court while taking this view does not seem to have taken into consideration the reasons assigned by the same High Court in the case of CIT v. N. S. Krishna Rao [1983] 144 ITR 347. On the contrary, the Bombay High Court in the case of CIT v. Trikamlal Maneklal (HUF) [1987] 168 ITR 733, has held that where a coparcener throws his capital assets in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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