Judgment

CHANDRACHUD, J. - Two questions arise for consideration in this appeal one of them being subsidiary to the other. The main question is whether a Hindu female who is a member of an undivided family can blend her separate property with joint family property.

2. The appellant, Pushpa Devi, is a member of a joint Hindu family consisting of herself, her husband, her father-in-law, her mother-in-law, her minor son and three daughters. On June 19, 1958 the appellant, in her individual capacity and with the aid of her personal assets entered into a partnership with her father-in-law, Gur Narain Khanna, in the name and style of Gur Narain Jagat Narain & Co. Her minor son, Ravi Narain Khanna, was admitted to the benefits of that partnership. Each of the three partners had a one-third share in the profits of the partnership, while the appellant and her father-in-law had an equal share in the losses.

3. The firm owned two cinema houses: Nishat Talkies, Kanpur and Novelty Talkies, Lucknow. Separate accounts were maintained in respect of the two businesses and separate profit and loss accounts used to be drawn up. On August 31, 1961 a sum of Rs.67,284.57 stood to the credit of the appellant in the books of Nishat Talkies. That amount consisted of a sum of Rs.16,666.67 in the capital amount and Rs.50,617.90 in the current account.

4. On September 1, 1961 the appellant made a sworn declaration stating that she was the sole and absolute owner of the amounts standing to her credit in the books of Nishat Talkies and of her share in that business and declaring unequivocally her intention to treat both her capital and her share in the business of Nishat Talkies as the joint family property of the Hindu undivided family of which she was a member. By Clause (6) of the declaration, the appellant stated that she had abandoned forever her separate interest and ownership over the capital investment of Rs.67,284.57, her one-third share in the net profits and one-half share in the net losses in the business of Nishat Talkies in favour of the joint Hindu family to be wholly and exclusively enjoyed and possessed by it.

5. We are concerned in this appeal with the assessment year 1963-64, for which the previous accounting year ended on August 31, 1962. A sum of Rs.20,865, being one-third share of the income from the business of Nishat Talkies for the year in question, was credited to the account of the joint Hindu family in the books of the firm. That income would have originally fallen to the share of the appellant in the business of Nishat Talkies, but it was credited to the account of the joint Hindu family in consequence of the declaration made by the appellant on September 1, 1961. The Hindu undivided family paid advance tax on the amount and filed its return in respect of that income. The appellant, on the other hand did not include that income in her return for the year. She appended a note at the end of the return saying: "Share of income from Nishat Talkies, Kanpur Rs.20,865/-. Please see note on back page of computation of assessable income". In the note on the back page of the return, the appellant referred to the declaration of September 1, 1961 and stated that her one-third share in the income of Nishat Talkies was assessable in the hands of the Hindu undivided family since the income had ceased to be hers by reason of the declaration.

6. The Income-tax Officer rejected the appellants contention on the ground that throwing the capital amount into the family stock was of no avail as the "sine qua non" of the matter was that "the Karta should become a partner in consequence of investment". The Appellate Assistant Commissioner affirmed the order of the I. T. O. on the ground that since the appellant, though a member of the joint family, was not a coparcener, it was not open to her to impress her personal property with the character of joint family property. The second ground on which the appellants claim was rejected by the A. A. C. was that the