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SUPREME COURT OF INDIA
K. SUBBA RAO, J.C. SHAH AND S.M. SIKRI, JJ.
Gowli Buddanna, Appellant
Versus
Commissioner of Income-tax, Mysore, Respondent.
Biharilal Kanaiyalal, Intervener.
Civil Appeal No. 328 of 1965.
Advocates appeared
M/s, K. Srinivasan and R. Gopalakrishnan Advocates, for Appellant; 1525 Mr. A. V.Viswanatha Sastri, Senior Advocate, (M/s. R. Ganapathy Iyer and R. N. Sachthey, Advocates, with him), for Respondent; Mr. S.T. Desai, Senior Advocate (Mr. R. P. Kapur, Advocate for Mr. I. N. Shroff, Advocate, with him), for Intervener.
INCOME TAX - Hindu undivided family - Sole surviving male member - Whether constitutes a Hindu undivided family - Income received by him - Whether taxable as income of Hindu undivided family.
Fact of the Case:
Buddappa, his wife, two unmarried sons, and adopted son Buddanna were members of a Hindu undivided family. Buddappa died in 1952. For the assessment year 1951-52, Buddanna was assessed as a Hindu undivided family. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal confirmed the assessment. The High Court of Mysore answered questions referred to it in the affirmative, holding that the sole surviving male member of a Hindu undivided family, his widowed mother, and sisters constitute a Hindu undivided family and that the assessment of income in the hands of the Hindu undivided family was correct.
Finding of the Court:
The Supreme Court held that a Hindu undivided family 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 instant case, the property which yielded the income originally belonged to a Hindu undivided family. On the death of Buddappa, 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.
Issues: 1. Whether the sole surviving male member of a Hindu joint family, his widowed mother and sisters constitute a Hindu undivided family within the meaning of the Income-tax Act? 2. Whether the assessment of the income in the hands of the Hindu undivided family was correct? 3. Whether the Appellate Assistant Commissioner was entitled to correct the status?
Ratio Decidendi: 1. A Hindu undivided family is a taxable entity under the Income-tax Act. 2. A Hindu undivided family may consist of a single male member and widows of deceased coparceners. 3. The income received from property belonging to a Hindu undivided family is taxable as income of the Hindu undivided family, even if the family is represented by a single coparcener.
Final Decision: The appeal was dismissed with costs.
Judgement
SHAH, J.: One Buddappa, his wife, his two unmarried and his adopted son Buddanna were members of a Hindu undivided family, Buddappa died on July 9, 1952. In respect of the business dealings of the family, Buddappa was assessed during his life-time in the status of a manager of the Hindu undivided family. For the assessment year 1951-52 the Additional Income-tax Officer, Raichur assessed Buddanna in respect of the income of the previous year which ended on November 8, 1950, as a Hindu undivided family under the title "Sri Gowli Buddappa (deceased) represented by his legal successor Sri. Gowli Buddanna. Oil Mills Owner, Raichur." The order of assessment was confirmed in appeal by the Appellate Assistant Commissioner was made under the title "Buddanna-a Hindu undivided family". The Income-tax Appellante Tribunal confirmed the order of the Appellate Assistant Commissioner.
2. The Tribunal then referred the following questions of law to the High Court of Mysore for opinion under S. 66 (1) of the Indian Income-tax Act:
"(i) Whether the sole male surviving coparcener of the Hindu joint family, his widowed mother and sisters constitute a Hindu undivided family within the meaning of the Income-tax Act?
(ii) Whether the assessment of the income in the hands of the Hindu undivided family was correct?
(iii) Whether the Appellate Assistant Commissioner was entitled to correct the status?"
The High Court recorded answers in the affirmative on all the questions. With certificate granted by the High Court under S. 66-A of the Indian Income-tax Act, Buddanna has appealed to this Court.
3. Before the Appellate Assistant Commissioner it was contended by Buddanna that he could in law have only been assessed as an individual and that the Income-tax Officer was precluded by virtue of the proviso to S. 26 (2) to pass the order for assessment for the year 1951-52 against him. The Appellate Assistant Commissioner and the Appellate Tribunal rejected that contention.
4. Buddappa was a resident of and carried on business at Raichur which before January 26, 1950, formed part of the territory of H. E. H. the Nizam. The joint family of Buddappa and Buddanna was governed by the Mitakshara School of Hindu law, and there was at the material time no legislation in force in the territory by which on the death of a male member in a joint Hindu family interest in the family estate devolved upon his widow. Such a widow had therefore only a right to receive maintenance from the estate.
5. Counsel for the appellant urged that the expression "Hindu undivided family" used in S. 3 of the Income-tax Act means a Hindu coparcenary and when on the death of one out of two coparceners the entire property devolves upon a single coparcener, assessment cannot be made on the surviving coparcener in the status of a Hindu undivided family. Alternatively, it was contended that even if the entity Hindu undivided family in the charging section of the Income-tax Act is intended to mean a Hindu joint family, there must be at least two male members in the family, and where there are not two such members the sole surviving male member of the family, even if there be widows entitled to maintenance out of the estate, may be assessed in the status of an individual, and not of a Hindu undivided family, unless the widows of deceased male members are entitled to the benefit of the Hindu Women s Rights to Property Act, 1937, or the Hindu Succession Act. 1956.
6. The first contention is plainly unsustainable. Under S. 3 of the Income-tax Act not a Hindu coparcenary but a Hindu undivided family is one of the assessable entities. A Hindu joint family consists of all persons lineally descended from a common ancestor, and includes their wives and unmarried daughters. A Hindu coparcenary is a much narrower body then the joint family: it includes only those persons who acquire by birth an interest in the joint or coparcenary property, these being the sons, grandsons, and great-grandsons of the holder o
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