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TMI Blog1984 (7) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... osed of by this common order. The assessee was assessed to wealth-tax on the value of his movables and immovables. On March 15, 1971, certain immovable properties owned by the assessee, as separate properties, were thrown into the family hotchpot by means of a declaration. Those properties consisted of buildings, factory, vacant sites and certain agricultural lands. The Hindu undivided family ('HUF') of which the assessee was the manager comprised of his wife and two minor sons. It was contended before the WTO that the value of the properties thrown into the common stock of the joint family should not be assessed in the hands of the assessee. The WTO rejected that contention placing reliance on s. 4(1A) of the W.T. Act. He held that the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividual has, at any time after the 31st day 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 computing the net wealth of the individual under this Act for any assessment year commencing on or after the 1st day of April, 1972, (a) the individual shall be deemed to have transferred the converted property, through the family, to the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the valuation date of the family relevant to the assessment year for which the individual is to be assessed under sub-section (1A)" This section was inserted by Finance (No. 2), Act, 1971, with effect from April 1, 1972, against the backdrop of the following two decisions of the Supreme Court. In Goli Eswariah v. CGT [1970] 76 ITR 675, the Supreme Court observed that if a member of a HUF converts his separate property into joint family property by impressing it with the character of property belonging to the family or throwing it into the common stock of family then that would not amount to a transfer. In CIT v. Keshavlal Lallubhai Patel [1965] 55 ITR 637, the Supreme Court held that the partition of a joint Hindu family property cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orkable. He urged that by reason of the deeming provisions under s. 4(1A)(a) of the W.T. Act, 1957, what has been considered as not a transfer of the converted property has been held to be a transfer to the members of the family and if it is a transfer to the members of the family, then, clause (b) would be unworkable since it refers to the interest of the individual in the property of the family. We do not think that we could accept these contentions. No statute, to our knowledge, is free from gibberish. We must first understand the intelligible purpose of the statute and then try to honour the purpose so found. Professor Reed Dickerson in his book " The Interpretation and Application of Statutes ' (1975 edition), at page 97, states: "On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operties of the family as contended by Sri Prasad. The partition referred to in the Explanation having regard to the other provisions of s. 4(1A) appears to be a partition contemplated for the purpose of determining only the interest of the individual in the converted property. That was also the view taken by the Gujarat High Court in Kalyanbhai Trikamlal Shaw v. CWT [1982] 135 ITR 750 and the Madras High Court in CIT v. Ayyaswamy Iyer [1981] 132 ITR 97, on the analogous provision of section 64(2) of the I.T. Act, 1961. As to the next contention of Mr. Prasad that the notional share attributable to the individual in the converted property should be clubbed and assessed in the hands of the smaller family consisting of the individual and hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the converted property is plainly inappropriate since the case arises under the W.T. Act. The question, therefore, may he recast as follows: " On the facts and in the circumstances of the assessee's case, when the assessee has thrown his self-acquired property into the common hotchpot of the Hindu undivided family consisting of himself, his wife and minor children, whether the Tribunal was right in law in holding that the value of the converted property falling to the share of the assessee on notional partition is assessable in the hands of the assessee in his status as individual and not as Hindu undivided family consisting of the assessee and his wife ? " For the reasons stated, we answer the question in the affirmative and against t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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