9911796707
TMI Blog1978 (1) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... and not to the Hindu undivided family and, therefore, is to be assessed as individual in his wealth-tax assessment for the assessment year 1968-69 ? " The necessary facts to understand the implications of these questions may be stated very briefly. The assessee had been a racegoer for over a quarter of a century. On the 25th of February, 1968, he had been the happy recipient of a large, we would call it a huge sum of money, namely, Rs. 3,35,881, in what is called the jackpot in horse racing parlance. Soon after, there was a partition deed on March 6, 1968 (which is at page 31 of the typed set of papers) entered into among the assessee, his five sons and his wife. This partition deed dealt with, among other things, a house in which they were all living, a printing press and the sum of Rs. 3,35,881 which the assessee won at the races. The relevant paragraphs in the preamble dealing with these properties are important and we shall extract them as under : " Whereas the parties hereto constitute members of a joint Hindu family of which the party of the first part is the manager and karta ; Whereas they own and possess the house and ground and premises No. 37/1, Irusappa Graman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... really gifts by the assessee to the sons or whether it represented the value of the property which belonged to the HUF, divided among the members of the undivided family. Similarly, the question regarding the wealth-tax for the year 1968-69 relating to the sum of Rs. 1,50,000, turns on the point whether the sum of Rs.20,000 allotted to each of the five sons totalling Rs. 1,00,000 and the sum of Rs. 50,000 given to the wife of the assessee really represented the property of the HUF or the property of the assessee which he gifted to them to the credit of Rs. 20,000 to each of his five sons and Rs. 50,000 to his wife. In other words, the question is whether the sum of Rs. 3,35,881 was really joint family property or was of the assessee's individual property. Going back to the preamble of the document dated March 6, 1968, there could be little doubt as is seen from the statement in para. 3 of the preamble of the document which we have extracted already that all the members of the family including the assessee treated the entire amount of Rs. 3,35,881 as the property belonging to the HUF and they divided the entire property by that document and by the document of August 8, 1968, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he family and we have already rejected that contention. However, in view of the declaration in the wealth-tax and income-tax returns for the assessment year 1968-69 that the status is Hindu undivided family and that the printing press income is the family income, we are of the view that this declaration in the wealth-tax and income-tax returns can be understood as the assessee impressing this item of printing press as Hindu undivided family property. As regards the sum of Rs. 3,35,881, which represented the race winnings, though the assessee has declared in the wealth-tax return that a sum of Rs. 1,53,016 would be Hindu undivided family fund, so far as the income-tax return is concerned, the assessee has not declared the interest from the deposits in various banks relating to the sum of Rs. 1,55,881 (not divided and deposited in the bank) which is stated to be deposited in the Indian Bank Ltd., as noticed from the memorandum of family arrangement dated 6th March, 1968. We further find that the assessee himself is not clear as to the correct state of his action as we have already indicated he has assumed for the first time in the arrangement that the jackpot ticket was bought for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A perusal of the document of August 8, 1968, indicates that no interest on the amount of Rs. 1,65,881 was available for division in August, 1968. The total of the amount dealt with therein only amounted to Rs. 1,65,880.73 which when rounded off comes to Rs. 1,65,881. Apparently there was no interest. Whatever that be, even if there had been any interest, a wrongful omission to show it as an income is too slender a ground to negative a categorical expression of intention in the declaration contained in the return. The Tribunal has not said that this declaration is wanting in any aspect. We would also like to say that unless the interest amount exceeded a certain limit, it would not be taxable at all and there is no need to file a return regarding the same. Harping upon the interest to negative the effect of the declaration would be an unjust procedure which cannot be sustained. No other reason has been stated by the Tribunal. We think that the question whether the amount of Rs. 3,35,881 has been treated as the Hindu joint family fund or not has to be answered with reference not only to what is stated in the document of March 6, 1968, but by reference to what is stated in the doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion referred to us. Whether the sum of Rs. 1,50,000 in the year 1968-69 and the sum of Rs.1,05,000 in the year 1969-70 represented the amounts granted by the assessee to the other members of the HUF or not would depend entirely on the question whether the sum of Rs. 3,35,881 out of which these amounts came belonged to the joint family or not. We have no doubt at all that at all relevant times, the sum of Rs. 3,35,881 has been treated only as the HUF funds. The income-tax authorities are not entitled to question such treatment and they cannot question the motive behind that nor can they change the character or nature of the fund by saying that reasons which prompted for so treating the amount did not exist or that they are not valid reasons for so treating. We are, therefore, obliged to answer the question referred to us in T.C. No. 176 of 1974 in the negative, that is, in favour of the assessee and against the revenue. We do so. In the light of what we have discussed it is clear that every part of the sum of Rs.3,35,881 was property which belonged to the HUF and, therefore, represented the wealth of the HUF and that no portion of that wealth or for that matter the specific s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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