Female heirs of a Hindu governed by the Dayabhaga school of Hindu law dying intestate can form a joint Hindu family by agreement and impress upon their inherited property the character of joint family property.

S.K.Homchaudhuri, J.

1. In this case, pursuant to the direction of this court under Sec. 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the learned Income-tax Appellate Tribunal (Patna Bench), Patna, referred the following questions, framed by this court, for opinion :

"(i) Whether, on the facts and in the circumstances of the case, the female heirs of a Hindu governed by the Dayabhaga school of Hindu law dying intestate could form a joint Hindu family by means of agreement ?

(ii) Whether the female heirs of a Hindu governed by the Dayabhaga school of Hindu law dying intestate could impress upon their inherited property the character of joint family property ?

(iii) Whether, on the facts and in the circumstances of the case, one-third of the properties inherited from her husband was assessable in the hands of the assessee in the status of an individual ?"

2. For answering the questions referred for opinion, it is necessary to state the material facts in brief leading to making the reference.

3. One Har Govind Dutta, a Hindu governed by the Dayabhaga school of Hindu law, died intestate on June 19, 1972, leaving behind his widow, Smt. Sandhya Rani Dutta (the assessee), and two daughters, Kumari Priya Dutta and Kumari Keya Dutta. The widow and the two daughters inherited the entire self-acquired properties of the late Har Govind Dutta in equal shares. The properties left by Har Govind Dutta consisted of residential house at P.N. Bose Compound, Ranchi, a house at Jharia and 50 per cent. interest in another house at Amla Para, Jharia. The assessee, Smt. Sandhya Rani Dutta, while filing the returns in respect of the assessment year 1974-75 and of subsequent years, did not disclose the income from the one-third share in the aforesaid properties inherited by her, on the ground that those properties did not belong to the assessee alone in the status of an individual inasmuch as, after the death of her husband, by a deed of agreement executed on July 26, 1972, she and her daughters formed a Hindu undivided family (hereinafter to be referred to as "HUF") and the properties left by the late Har Govind Dutta were held by the Hindu undivided family consisting of herself and her two daughters.

4. The Income-tax Officer, Ranchi, rejected the assessees contention holding that the properties in question having been owned and held by the late Har Govind Dutta, governed by the Dayabhaga school of Hindu law as an individual, the assessee and her two daughters inherited properties left by him as tenants-in-common, each with a one-third separate ascertained share thereof. As such, the properties left by the late Har Govind Dutta and inherited by the assessee and her two daughters could not be treated as properties held by the Hindu undivided family. The Income-tax Officer, accordingly, assessed the income of the assessee, Sandhya Rani Dutta, including one-third of the income from the properties left by the late Har Govind Dutta, as earned in her individual capacity.

5. The assessee preferred an appeal before the Appellate Assistant Commissioner impugning the assessment order passed by the Income-tax Officer. But the Appellate Assistant Commissioner dismissed the appeal and upheld the decision of the Income-tax Officer. The assessee, thereafter, preferred an appeal before the Income-tax Appellate Tribunal, Patna Bench, Patna, and the Tribunal by its order dated May 5, 1979, allowed the appeal holding that by virtue of the agreement executed on July 26, 1972, between the assessee and her two daughters, the properties of the late Har Govind Dutta inherited by them were held by the Hindu undivided family constituted by the assessee and her two daughters and, as such, the income from the properties left by Har Govind Dutta was not assessable in the hands of the assessee in the status of an individual and the whole income from the properties left by Har Govind Dutta was assessable in the hands of the Hindu undivided fam