Judgement

JUDGMENT :- The dispute in this case was whether the assessee was liable to be assessed in the status of Hindu Undivided family. The properties held by the assessee came from a lady relative. The assessment years involved are 1968-69 and 1969-70. The assessee is the son of the Appa Rao and Shyamlambal is the mother of the said Appa Rao and the paternal grant mother of the assessee. The said Shyamlambal had certain funds of her own and she gave these funds to Appa Rao and it was alleged that her intention in doing so was that the funds should be used for the benefit of the entire family. With those funds Appa Rao did business and entered into other various transactions. In the course of time Appa Rao acquired properties in his name utilising the money derived from the business and from the properties acquired therefrom. As disputes arose regarding the said properties and the businesses, the disputes were referred to Arbitration two members of the Madras bar named as Joint Arbitrators. Under the arbitration award the properties were divided by metes and bounds and allotted to the members of the family. The assessee got 60 acres of land in Kollur village, Ponneri taluk and a plot of vacant land in the city of Madras at Vepary.

2. During the assessment proceedings for the assessment years 1968-69 and 1969-70, question arose as to whether the assessee was to be assessed in the status of an individual or as a Karta of a Hindu undivided family in respect of the income from the properties and his businesses. The Income-tax Officer was of the view that although the assessee got properties on partition effected by the Arbitrators, under the aforesaid award, these properties could not be held to be joint family property.

3. The Appellate Assistant Commissioner affirmed the order of the Income-tax Officer. On further appeal by the assessee, the Income- tax Appellate Tribunal took the view that a property which belonged to a female member cannot be considered as capable of providing any nucleus for properties to become properties of a Hindu Undivided Family. The Tribunal held that the acquisition by way of gift could not be treated as joint family property.

4. The following question of law was referred by the Tribunal to the High Court :

"Whether on the facts and in the circumstances of the case the status of the assessee was rightly determined as individual for the assessment years 1968-69 and 1969-70."

5. The High Court relied upon the following proposition :

"Property may be joint property without having been ancestral. Where the members of a joint family acquire property by or with the assistance of joint funds or by their joint labour or in their joint business or by a gift or a grant made to them as a joint family."

6. The High Court took into account as to the nature of the gift and referred for the arbitration decision. The High Court noted that the decree was ultimately passed in terms of the above.

The High Court ultimately observed :

"There is clear evidence that Srimathis K. Shyamalambal wife of K. Satyanarayana had funds of her own and with the clear intention of benefiting the family as a whole she provided funds to K. Appa Rao and with the assistance of the money so advanced and keeping the said money as a nucleus K. Appa Rao did business and also under the law. It is enough that the coparcener concerned disclaims his separate dominion over his self acquired property. No doubt, the present case is not one where what was initially the separate property of a member. Subsequently got clothed with the character of joint family property either by a declaration or by appropriate conduct on the members part. For here is a case where ab initio at the very moment the property was acquired, it was so acquired as joint family property. Appa Rao was merely the hand which received the funds, but Shyamalambal also provided the funds made it perfectly clear that those funds were to be utilised only for the benefit of the family."

7. The dis