High Court Of Delhi
CIT vs. Virender Kumar
Asst. Year 1975-76
Arijit Pasayat, C.J. & D.K. Jain, J.
IT Ref. No. 276 of 1983
16th July, 2001
Sanjiv Khanna with Mrs. Prem Lata Bansal, for the Petitioner : None, for the Respondent
ARIJIT PASAYAT, C.J. :
Heard. At the instance of Revenue, following question has been referred for opinion of this Court by the Income- tax Appellate Tribunal, Delhi Bench âBâ (in short âthe Tribunalâ) under s. 256(1) of the IT Act, 1961 (in short âthe Actâ) : “Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in confirming the order of the AAC directing the ITO to take the status of the assessee as that of âHUFâ instead of âindividualâ taken by the ITO ? Dispute relates to asst. yr. 1975-76.
2. Factual position is almost undisputed and is essentially as follows : Assessee received a sum of Rs. 55,400 as 1/4th share out of the estate of his father by inheritance in August, 1974. He filed a return of his income in the status of Hindu Undivided Family (in short âthe HUFâ) declaring an income of Rs. 4,280 as interest on this amount. The AO was of the view that as the estate left by the deceased was his self-acquired property, the amount inherited by the assessee became his individual property and accordingly any income therefrom was taxable in the hands of the individual and not in the hands of HUF. Assessee preferred an appeal before the Appellate Assistant Commissioner (in short âthe AACâ). Said authority placed reliance on the decision of the Gujarat High Court in CIT vs. Babubhai Mansukhbhai 1975 CTR (Guj) 104 : (1977) 108 ITR 417 (Guj) and held that the status was to be taken as HUF. In further appeal before the Tribunal by the Revenue, the view was affirmed. On behalf moved for reference, question as set out above has been referred for opinion of this Court.
3. We have heard learned counsel for the Revenue. There is no appearance on behalf of assessee in spite of notice. Learned counsel for the Revenue submitted that by operation of the Hindu Succession Act, 1956 (in short âthe Succession Actâ), the property that devolved on the assessee was to be taxed as âindividualâ and not as that of âHUFâ. The apex Court had occasion to deal with an identical issue in CWT vs. Chander Sen (1986) 58 CTR (SC) 119 : (1986) 161 ITR 370 (SC) : TC 65R.433. It was held that : “It is clear that under the Hindu law, the moment a son is born, he gets a share in the fatherâs property and becomes part of the coparcenary. His right accrues to him not on the death of the father or inheritance from the father but with the very fact of his birth. Normally, therefore, whenever the father gets a property from whatever sources from the grandfather or from any other source, be it separate property or not, his son should have a share in that and it will become part of the joint Hindu family of his son and grandson and other members who form joint Hindu family with him. But the question is : is the position affected by s. 8 of the Hindu Succession Act, 1956, and, if so, how ? The basic argument is that s. 8 indicates the heirs in respect of certain property and Class I of the heirs includes the son but not the grandson. It includes, however, the son of a predeceased son. It is this position which has mainly induced the Allahabad High Court in the two judgments we have noticed to take the view that the income from the assets inherited by a son from his father from whom he was separated by partition can be assessed as income of the son individually. Under s. 8 of the Hindu Succession Act, 1956, the property of the father who dies intestate devolves on his son in hisindividual capacity and not as Karta of his own family.” The apex Court took note of the decision of the Gujarat High Court relied upon by the AAC and held that the view expressed in the said case was not correct exposition of law. This view was again reiterated by the apex Court in CIT vs. P.L. Karuppan Chettiar (1992) 109 CTR (SC) 317 : (1992) 197 ITR 646 (SC) : TC 37R.421.
4. Above being the position, we answer the question in the negative, in favour of Revenue and against theassessee. The reference stands disposed of.
[Citation : 252 ITR 539]