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TMI Blog1978 (12) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ued love and affection between them as brothers, they continued to live together. The assessee in the present case is one of the sons of the deceased, Rajagopal Naidu and we are concerned with the assessment years 1963-64 and 1964-65. With reference to these assessment years, the assessee originally filed his return in his status as individual, as he had been doing from the assessment year 1948-49 onwards. However, subsequently on March 17, 1966, he filed revised returns showing his status as an HUF. The question which had to be considered by the ITO was whether the status of the assessee was " individual " or " HUF ". The assessee claimed that he should be assessed in the status of " HUF " because the properties with reference to which the income was returned were the properties allotted to the assessee at a partition that took place on July 29, 1958, between all the heirs of Rangiah Naidu and Rajagopal Naidu, numbering 13. The ITO did not accept this claim and assessed the assessee only, in his status as individual. The appeal preferred by the assessee to the AAC proved, unsuccessful. When the assessee took up the matter further in appeal to the Tribunal the Tribunal reversed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned, though it mentioned as a settlement, it is not really a settlement in the sense in which it is generally understood and, if at all, it can be described only as a family arrangement. The document itself is styled as a " family settlement " and has been executed on July 29, 1958, more than two years after the death of Rajagopal Naidu. As we have mentioned already, all the heirs of Rajagopal Naidu and Rangiah Naidu have executed the said document. The heirs of Rangiah Naidu were his widow Pushpammal, his son, Jayaraman, his another son, Raja Krishnan, his third son, Parasuram, and his daughter, Mrs. Sarmista, wife of A. Balasubramaniam Naidu, and his another daughter, Smt. Narmada, wife of Krishnamurthy Naidu. The heirs of Rajagopal Naidu were the widow, Thayarammal, his son, M. R. Pratap (the assessee herein), his another son, M. R. Jayaraj, and his daughters, Smt. Vitto Bai, wife of B. N. Surendra, Kumari Shyamala, Kumari Vimala and Kumari Saraswathi alias Sarasu. The document recited the facts to which we have already drawn attention, namely, that the two brothers did not inherit any ancestral property that Rajagopal Naidu after working in M/s. Simpson and Co. Ltd., and as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' C hereto." It is unnecessary to refer to the other provisions in the document except to mention the fact that three items of properties with which we are concerned in this reference find a place in sch. 'A' as well as in sch.'B' in the name of the assessee. Schedule 'A' contains the heading: "Statement showing properties and assets of late M. R. Rajagopal Naidu and M. R. Rangiah Naidu and standing in the names of one or the other of the members of their family." Item 32 of this schedule reads as follows: " M. R. Pratap 32. 600 equity shares of Rs. 100 each in the Rayala Corpn. (M) Pvt. Ltd.-Rs. 60,000." Item 48 of this schedule reads as follows: " Pratap 48. 4 as share in partnership concern, Sri Venkateswara Bus Union (M. R. Pratap)." Item 55 reads as follows: " 55. Share in Commercial Financing Corporation (M. R. Pratap) Rs. 20,000." These three items are found in sch. 'B' against the name of, M. R. Pratap and the heading of sch. 'B' is: "Properties and assets already given away or allotted to and taken away by the parties." It is the income from these items of properties which are the subject matter of dispute in the present case as regards th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put together in partition; and (4) that since the assets were not derived by the assessee in a joint family partition and since his son has not acquired a right by birth the assessee can be assessed in the status of an individual and not as an HUF. The Tribunal disagreed with the views of the ITO and the AAC and upheld the opinion of the assessee for three reasons mentioned by it. The first reason was that the very fact that the properties acquired by the two brothers in the names of the members of the family were brought into the common stock as evidenced by the 'A' schedule and the division effected of all the 'A' schedule properties among the sons, daughters and the wives of the two brothers was an unmistakable indication of the intention to throw the properties acquired in the names of the two brothers into the common stock and to waive all separate rights in respect thereof, as result of which they had become joint family properties with all their usual incidents, and that since the property which came into the hands of the assessee under the settlement deed was thus impressed with the character of joint family property, his minor son, Ranjit, acquired a right by birth i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unequivocal declaration of his intention to impress the property with the character of joint family property, it can be said to have been done only on March 17, 1966, and hence it can have no effect whatever on the assessment for the two years with which we are concerned, namely, 1963-64 and 1964-65. On this simple ground, the third reason has to fail, and we are not expressing any opinion as to the correctness or otherwise of the decision of the Andhra Pradesh High Court relied on by the Tribunal. As far as the other two reasons given by the Tribunal are concerned, they are directly opposed to the recitals in the document, namely, the family settlement entered into between the parties on July 29, 1958. The recitals in the document to which we have already drawn attention make it indisputably clear that Rajagopal Naidu and Rangiah Naidu did not have any joint family property to be divided as between them. In fact, the recitals are to the contrary showing that they did not inherit any ancestral property, that they had their own independent earnings and kept their earnings separately and that they acquired properties in their individual names and enjoyed them as their separate pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 1948-49, the assessee had been declaring his status only as an individual and was being assessed, only in that status. As far as the document itself is concerned we have extracted the three clauses on which the parties agreed, namely, cls. (a), (b) and (c). Clause (a) merely refers to the properties included in sch. 'A' which in effect merely tabulates the properties as to which properties stood in whose name at the time when the document was entered into. The operative clauses, if any, are only cls. (b) and (c). Even cl. (b) does not make any allotment of property and it refers to the allotment that had already been made. In fact, the difference in language between cl. (b) and cl. (c) in this behalf is clear, because cl. (b) uses the word de already ", while cl. (c) uses the word " now ". The three items of properties with which we are concerned are admittedly covered by cl. (b). The result is, those three items of properties have not been allotted to the assessee under the terms of the document dated July 29, 1958, but they were already given away or allotted to and taken over by him and as such they belonged to him already. Mr. Ramamani sought to contend that the effe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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