Decided on April 14,1982



T.D. Sugla President - (1.) THIS appeal involves an interesting and somewhat intricate issue. The Division Bench, which heard the appeal originally, referred the matter to the President for constituting a Special Bench which was constituted under Section 255(3) of the Income-tax Act, 1961 ("the Act"). That is how this appeal has come up for hearing before the Special Bench.
(2.) Late Ramcshchandra Chokshi died some time in 1947 leaving behind his widow and the only son Bhai Rajen as heirs. Late Rameshchandra Chokshi died intestate and left his separate and self-acquired property only. In or about January 1955 the widow relinquished her interest in the property left by her deceased husband as she decided to marry Shri Arvindbhai M. Shah willingly and started living with him. Income from the property inherited in the abovesaid manner was being assessed in the status of individual up to and including the assessment year 1974-75 and the income therefrom is being assessed as the income of HUF comprising of Bhai Rajen, his wife and their son with effect from assessment year 1977-78 as Bhai Rajen married on 12-5-1974 and was blessed with a son on 29-1-1977. The dispute relates to the period of 12-5-1974 to 29-1-1977, i.e., for the assessment years 1975-76 and 1976-77. In other words, the dispute is whether after Bhai Rajen's marriage and before he was blessed with a son, the income from the said property is liable to be assessed as income of the HUF, consisting of Bhai Rajen and his wife, or in the status of individual.
(3.) IT must be stated in fairness to both Shri Shah, learned counsel for the assessee, and Shri Mittal, the senior departmental representative, that they have briefly but succinctly put forward their rival arguments. Shri Shah's case is that the property in question is "ancestral property" in the hands of Bhai Rajen and that the assessee and his wife living together after marriage constituted a joint Hindu family irrespective of the fact that such a joint Hindu family holds or does not hold any property. According to him, the moment there is joint Hindu family with a potentiality to bring a coparcener into it and there is ancestral property, the status vis-a-vis, the income from such a property cannot but be that of HUF. Alternatively, he argues that the widow mother and the son were living together after the death of the late Rameshchandra Chokshi from 1947 to 1955 without partition and they naturally constituted a HUF. Once there is a past history of HUF qua the property, Shri Shah submitted that, the ratio of the Supreme Court's decisions in the cases of Gowli Buddanna v. CIT [1966] 60 ITR 293 and N.V. Narendranath v. CWT [1969] 74 ITR 190 would clearly apply.;

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