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TMI Blog1973 (4) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... d from those firms. The assessee appealed to the Appellate Assistant Commissioner who accepted the contention of the assessee and held that the income from the two firms, mentioned above, belonged to the Hindu undivided family and could not be included in the income of the assessee as individual. Consequently, the appeals were accepted to that extent. The revenue went up in appeal to the Income-tax Appellate Tribunal, but all the appeals were dismissed on the ground that a transaction of throwing any self-acquired property into common hotch-pot was a valid transaction and, after the throwing, the property belonged to the ownership of the family. Reliance was placed on the judgment of the Supreme Court in N. V Narendranath v. Commissioner of Wealth-tax. Similar view was taken in the wealth-tax case. The revenue, feeling dissatisfied, applied for a reference of the question of law arising in these income-tax references and the Tribunal has referred the following question of law for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the share incomes from Sovereign Knit Works and Sunrise Woollen and Silk Mills belonged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losses were to be shared as follows : 1. Sh. G. S. Uppal 12% 2, Sh. Iqbal Singh 22% 3. Sh. Inder Singh 22% 4. Sh. Harkishan Singh 22% 5. Sh. Manmohan Singh 22% Sh. Iqbal Singh, Manmohan Singh, Inder Singh and Harkishan Singh Uppal have been declared as representing their Hindu undivided families which were created by each of the four persons and their wives throwing into a common pool their self-acquired funds and declaring that the pool was the nucleus of the Hindu undivided family. On the date on which these Hindu undivided families were created, i.e., 30th July, 1962, Sh. Inder Singh Uppal had a daughter only and Sh. Harkishan Singh Uppal had no issue. A son was born Sh. Harkishan Singh in December, 1962. Since Sh. Inder Singh Uppal did not have a son even at the close of the accounting year, he is treated as not representing the Hindu undivided family but representing his own interest only." The Appellate Assistant Commissioner, while accepting the contention of the assessee, made the following observation : "I have considered the various submissions made before me very carefully. No doubt previously there was a difference of opinion regarding the status ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gala Estate" in the Krishna District in the State of Andhra Pradesh. This estate was abolished under the Madras Estates (Abolition and Conversion into Ryotwari) Act, 1948, and compensation under section 45 of the Act was paid severally to the appellant, his father and his brothers. Other properties belonging to the joint family of the appellant, his father and brothers were also partitioned between them from time to time. The assets forming the subject of reference to the High Court consisted of investments made from the compensation amount received by the appellant in securities, shares, etc., and also other assets such as deposits in banks. The appellant filed returns for the assessment years 1957-58, 1958-59 and 1959-60 in the status of a Hindu undivided family. The appellant's family during the material time consisted of himself, his wife and his two minor daughters and there was no other male member. The appellant claimed to be assessed in the status of a 'Hindu undivided family' inasmuch as the wealth returned consisted of ancestral property received or deemed to have been received by him on partition with his father and brothers. The Wealth-tax Officer did not accept the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n it was held that : "Property of a joint family, therefore, does not cease to belong to the family merely because the family is represented by a single coparcener who possesses rights which an owner of property may possess. In the case in hand the property which yielded the income originally belonged to a Hindu undivided family. On the death of Buddanna, the family which included a widow and females born in the family was represented by Buddanna alone, but the property still continued to belong to that undivided family and income received therefrom was taxable as income of the Hindu undivided family." On the basis of that judgment it was held : "It is clear that the present case falls within the ratio of the decision of this court in Gowli Buddanna's case. The Appellate Tribunal was right in holding that the status of the respondent was that of a Hindu undivided family and not that of an individual." The principle of law settled was that a joint family can consist of one male member along with other female members and it is not necessary that there must be two male members and that the property once belonging to the Hindu undivided family continues to bear that charact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee would fall squarely within the principle enunciated by the Privy Council in Kalyanji's case and hence the income in the hands of the assessee was liable to be assessed as his individual income." In that case the Appellate Assistant Commissioner had observed that no doubt the assessee had made a declaration but it had to be seen whether it was actually acted upon and that there must be some evidence to show that after the declaration the property was differently dealt with from the date on which it was alleged there was a change in the character of the property and held that there was no such evidence forthcoming. On the other hand, he pointed out that the assessee continued to deal with the income from the property, in exactly the same manner as he dealt with that income when it was separate property. This finding of fact arrived at by the Appellate Asistant Commissioner was accepted by the Income tax Appellate Tribunal and this fact distinguishes that case from the present case. In the present case the Appellate Assistant Commissioner accepted the plea of the assessee that be had impressed his self-acquired property with the character of joint family property. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coparcenary is absolutely necessary before a coparcener can throw into the common stock his self-acquired properties. The separate property of a member of a joint Hindu family may be impressed with the character of joint 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 sooner he declares his intention to treat his self-acquired property as that of joint family property, the property assumes the character of joint family property. The doctrine of throwing into the common stock is a doctr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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