Per I.C. Sudhir, JM - The Income-tax Department has filed this appeal aggrieved by the order of the Deputy Commissioner of Income-tax (Appeals) (DCIT(A) for short) dated 8th March, 1994. This grievance of the Department is so raised on the issue of status of the assessee with reference to the provisions of Income-tax Act, 1961 (hereinafter referred to as the Act).

2. The Department in its ground of appeal have claimed that the proper status of the assessee should have been individual because, he was adopted by the widow of the deceased karta of Hindu Undivided Family (HUF for short) only after his death. This claim is also based on the plea that consequent to the death of the karta leaving only his wife behind the HUF has been disrupted and the properties vested by law on the widow by rule of survivorship.

3. The issue that is raised in the present appeal is a unique one and rarely this issue had come up under the Direct Taxes related proceeding. Considering the rarity of the issue and the interest it had created at the time of hearing, we have deliberated upon the issues as raised before us by both the parties. Before we proceed to deal with the legal issues as raised in this appeal, we shall state briefly the facts of the case.

4. Mr. Ganeshmal, karta of his HUF, had himself and his wife as the members of the HUF. Karta dies in 1957 with no male issues. His widow Mrs. Kusum Bai adopted the assessee, the respondent in the instant appeal in 1959 at which time he was a minor. Mrs. Kusum Bai died in 1972 and on her death the assessee received all the properties that included both immovable and movable properties, which hitherto was the pro-perty of the HUF of Mr. Ganeshmal. The assessee filed his return of income in the status of HUF at Rs. 12,870 showing incomes under the head income from business of potato as commission agent and from interest.

Assessing Officer refused to accept the claim of the assessee as regards the status of HUF but concluded the assessment in the status of individual. The standpoint of Assessing Officer for refusing the claim of HUF was that according to the provisions of Hindu Succession Act, 1956, when a Hindu dies leaving behind only his wife and with no other male member or son, the widow receives the properties of the HUF by rule of survivorship and becomes its absolute owner.

His other standpoint of Assessing Officer was that because the adoption took place after the introduction of Hindu Adoption and Maintenance Act, 1956, the adoption could not relate back to the period prior to the death of the karta of HUF and further could not divest the widow of the rights on the properties that she had acquired from the time of death of karta. For framing this conclusion he placed heavy reliance on the decision of Madras High Court in Smt. R. Rajathy Ammal v. CWT [1987] 164 ITR 605¹.

5. In appeal before DCIT(A) the assessee raised the issue of status with reference to the book ‘Mayne’s Hindu Law and Usage, 13th Edition’ and that according to the Explanation to section 14(1) of the Hindu Succession Act, 1956 the widow had received possession of the properties of the HUF but was not vested on her by ‘will’ or ‘operation of law’. The decision of the Madras High Court (supra) on which Assessing Officer had relied heavily was distinguished on facts and that in the said case the High Court had presumed that the widow of late ‘R’ was his sole heir, which could happen or is possible by a ‘will’ or by ‘operation of law’. DCIT(A) accordingly upheld the claim of the assessee on the status. Department is aggrieved and has come up in appeal before us.

6. The issue that is raised before us is with reference to the status in which the assessment under the Act is to be framed on the assessee. The Department contends that the status of the assessee is individual for the reasons noted by Assessing Officer. The assessee contends that the status is HUF because the adopted son succeeds to the interest of his father as a coparcene