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Andhra Pradesh High Court
Judges : SARDAR ALI KHAN, V.SIVARAMAN NAIR
Ashok Kumar Ratanchand - Appellant
Versus
Commissioner of Income Tax - Respondent
Decided On : 08-27-90
HINDU UNDIVIDED FAMILY - STATUS - PROPERTY RECEIVED BY COPARCENER ON PARTITION - WHETHER BECOMES JOINT FAMILY PROPERTY ON MARRIAGE - INCOME FROM SUCH PROPERTY - WHETHER INCOME OF HINDU UNDIVIDED FAMILY - HINDU ADOPTIONS AND MAINTENANCE ACT, 1956, SECTION 18 - TRANSFER OF PROPERTY ACT, 1882, SECTION 39.
Fact of the Case:
The petitioner, a member of a Hindu undivided family, received two gifts of rupees five thousand each from his grandparents in May, 1965. He invested those amounts as deposits in the joint family business and was receiving interest on those deposits. On 9/11/1969, there was a partial partition of the Hindu undivided family resulting in each one of the coparceners being allotted Rs. 17,352. The petitioner deposited that amount also in the family business. He was receiving interest on that deposit as well. In addition thereto, he was also receiving salaries from the above business. These three items of income were subject to assessment as the individual income of the petitioner. He married on 30/04/1980. According to him, a Hindu undivided family consisting of himself as karta and his wife as member came into being on that day.
Finding of the Court:
The court held that the property which a coparcener obtains on partition does not become for all times his individual and separate property. If he has a wife or daughters depending on him, the property will be charged by the obligation to maintain them. If he marries later, his property - ancestral or self-acquired - will be burdened by an obligation to maintain his wife. If he begets a son, that son becomes entitle to a share in the property which thereby revives the character of joint family property. If he begets only daughters, the obligation to maintain them will be fastened on the property. It is not as if fan unmarried Hindu male obtaining a share of ancestral property on partition retains that property as his absolute property even after marriage unencumbered by any obligation to maintain his wife or other dependants. In that absolute sense, it may not be his absolute property after he marries. It sheds the character of separate property and revives its character as joint property of the smaller unit consisting of himself and his wife. In that limited sense, the income therefrom may be the income of the Hindu undivided family consisting of himself and his wife.
Issues: Whether the property received by a coparcener on partition becomes joint family property on his marriage.
Ratio Decidendi: The court held that the property which a coparcener obtains on partition does not become for all times his individual and separate property. If he has a wife or daughters depending on him, the property will be charged by the obligation to maintain them. If he marries later, his property - ancestral or self-acquired - will be burdened by an obligation to maintain his wife. If he begets a son, that son becomes entitle to a share in the property which thereby revives the character of joint family property. If he begets only daughters, the obligation to maintain them will be fastened on the property. It is not as if fan unmarried Hindu male obtaining a share of ancestral property on partition retains that property as his absolute property even after marriage unencumbered by any obligation to maintain his wife or other dependants. In that absolute sense, it may not be his absolute property after he marries. It sheds the character of separate property and revives its character as joint property of the smaller unit consisting of himself and his wife. In that limited sense, the income therefrom may be the income of the Hindu undivided family consisting of himself and his wife.
Final Decision: The court quashed the impugned orders of assessment for the assessment years 1981-82, 1982-83 and 1983-84, assigning the petitioner the status of an "individual" and the order of the Commissioner of Income-tax affirming the same. The respondents will be free to complete the assessment treating the disputed income as that of the Hindu undivided family.
( 1 ) THE petitioner was a member of a Hindu undivided family consisting of his father and brothers. He had received two gifts of rupees five thousand each from his grandparents in May, 1965. He invested those amounts as deposits in the joint family business and was receiving interest on those deposits. On 9/11/1969, there was a partial partition of the Hindu undivided family resulting in each one of the coparceners being allotted Rs. 17,352. The petitioner deposited that amount also in the family business. He was receiving interest on that deposit as well. In addition thereto, he was also receiving salaries from the above business. These three items of income were subject to assessment as the individual income of the petitioner. He married on 30/04/1980. According to him, a Hindu undivided family consisting of himself as karta and his wife as member came into being on that day. For the assessment years 1981-82, 1982-83 and 1983-84, he filed two sets of returns initially. The first set claimed the status as an individual in respect of his salary income and interest on the gift amount which he had deposited in the firm and the other claimed the status of a Hindu undivided family in respect of the interest income from the share which he obtained in partial partition. During the course of assessment, he filed revised returns on 25/10/1982, claiming the status of individual in respect of all the three items of income as mentioned above. He appeared before the Income-tax Officer on 16/08/1983 and filed a letter consenting to be assessed in the status of an individual, in respect of the income earned on the three items. The income-tax Officer assessed the petitioner in the status of an individual in respect of the above three items for three years in his order dated 14/11/1983. The petitioner had second thoughts and claimed the status of a Hindu undivided family consisting of himself and his wife in so far as interest income from the firm was concerned. He, therefore, filed an application under Section 154 of the Income-tax Act on 3/05/1984, requesting for cancellation of the assessment order made on 14/11/1983 and to pass two separate orders of assessment for each of the three years - one in the status of an "individual" and the other in the status of a "hindu undivided family". The second respondent rejected the application. On 21/03/1985, he filed an application under Section 264 of the Income-tax Act, 1961, before the first respondent-commissioner seeking cancellation of the orders of assessment in respect of the three assessment years and a direction to the second respondent-Income-tax Officer to make two sets of orders of assessment in accordance with the returns which he had initially filed. The Commissioner of Income-tax rejected that application and affirmed the assessments which were made on the basis of the consent letters which the petitioner had filed before the second respondent during the course of the assessment. The Commissioner also found that the petitioner could not claim the status of a Hindu undivided family in respect of his divided share in the larger Hindu undivided family because what he got at the time of partition when he was unmarried as his separate property could not transform itself into Hindu undivided family property merely by reason of his subsequent marriage. The Commissioner of Income-tax referred to the decision in CIT v. Vishnukumar Bhaiya [1983] 142 ITR 357 (MP) in preference to the decision of the Allahabad High Court in Prem Kumar v. CIT [1980] 121 ITR 347. The commissioner also relied on a decision of the Gujarat High Court in Anilkumar B. Laskari v. CIT [1983] 142 ITR 831 and CIT v. Admiralty Flats Motel [1982] 133 ITR 895 of the Madras High Court. Those three orders of the Commissioner are under challenge in these three writ petitions.
( 2 ) SRI Man Mohan, counsel for the petitioner, submitted that, for the period relevant to the assessment years in question, the pet
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