P.K.Mehta, - (1.) THIS is an appeal of the revenue for the assessment year 1981-82. It was argued in common with a similar appeal in the connected case of Smt. Shukla Rani, [IT Appeal No. 363 (Asr.) of 1983]. It was the accepted position that the facts involved were similar in both the appeals and the issue involved was the same. The decision in this appeal will, therefore, govern the disposal of the other appeal of the revenue in IT Appeal No. 363 (Asr.) of 1983.
(2.) The facts may now be briefly stated as these are neither clearly brought out in the assessment order nor in the order of the AAC. The assessee's husband, Shri Kanwal Kishore, took four anticipated policies, as the assessee has described them, of Rs. 20,000 each from the LIC as provided in Section 6 of the Married Women's Property Act, 1874. The total premium payable on these four policies amounted to Rs. 5,272.40 per annum. These were taken in the year 1963-64 and excepting two payments out of total premium paid amounting to Rs. 68,541, the balance amount of over Rs. 62,000 was, in fact, paid from the funds of the HUF of the husband. The trustees, however, got the policies paid up in 1976 and paid the amount received to the assessee. The dispute in these appeals is in respect of interest income of Rs. 6,275 earned by the assessee on investing these funds. From the statement of income included in the assessee's paper book, the interest was received to the extent of Rs. 5,926 from the HUF of the husband and Rs. 349 from the husband in his individual capacity. In the case of Smt. Shukla Rani (supra) similar four policies of Rs. 20,000 each were taken by her husband, Shri Valayati Ram, under Section 6 of the Married Women's Property Act and the annual premia payable amounted to Rs, 5,497.20. These policies were also got paid-up by the trustees in 1976 and out of the total premium payment of Rs. 71,464, a sum of Rs. 65,967 was paid from the funds of the HUF of Shri Valayati Ram. The trustees paid the amount to Smt. Shukla Rani, who invested these with Valayati Ram-HUF and earned an interest of Rs, 6,025, which is the subject-matter of the departmental appeal in her case. In both the cases, the stand of the assessee was that the amount received by the two ladies, in fact, belonged to the HUFs of their husbands and the interest earned by them was to be accountable in the assessments of those HUFs and not in the hands of the ladies. It was pointed out that the assessments in the earlier years of the interest income had been made by the ITO on the same basis and the same view should be taken for the year now in appeal. Attention was also invited to an extract from a publication of the LIC by the name Tax Laws and Life Insurance (revised edition 1982) from page 55. A decision of the Tribunal, which was cited before the AAC was also cited before me. The decision was in the case of Liladhar Jajoo in [WT Appeal No. 81 (Asr.) of 1979, order dated 19-8-1980.]
(3.) THE stand of the revenue against the order of the AAC is contained in ground No. 2, which is quoted below : 2. THE learned AAC failed to note that Section 64 is not applicable in the case of a HUF and does not require or permit the inclusion of the income of the wife of the karta in computing the total income of the HUF. THE learned AAC failed to appreciate that as also stated in her order the premium for the insurance policy taken under the Married Women's Property Act were paid by the HUF and not by the assessee's husband as individual, Section 64 had no applicability in the facts and in the circumstances of the case. THE learned AAC also failed to note that the ITAT's decision in the case of Shri Leeladhar Jajoo, which has been relied upon by the assessee, was in the case of an 'individual' and not that of HUF and that, therefore, it had no application to the facts of the case of the assessee. THE departmental representative argued that the ITO was correct in view of the provisions of Section 6 of the Married Women's Property Act that the amount belonged to the lady and will not form the part of the estate of her husband and the income therefrom was correctly taxable in her hands. Attention was also invited to Section 14 of the Hindu Succession Act, 1956, which made the personal property of a Hindu lady to be her absolute property. It was further submitted that the AAC had failed to understand the position on facts and in law and also the decision of the Tribunal cited before her. It was explained that that was a case of an individual financing the policies and not of a HUF financing the policies and here the provisions of Section 64 of the Income-tax Act, 1961 ('the Act') will not be attracted and the position as per Section 6 of the Married Women's Property Act would prevail.;