GOVINDAN NAIR, J. - (1.) THIS is an IT reference under S. 256(1) of the IT Act, 1961. This case was heard by a Division Bench of this Court and the learned judges referred the question to a Full Bench in view of the conflicting opinions expressed by the Assam and the Allahabad High Courts, with which view this Court concurred on the one hand and the Gujarat High Court on the other. We shall presently refer to this conflict. But before that, we shall extract the question which has been referred to us for our opinion, which is as follows : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the properties inherited by Karuppan Chettiar from his divided father constituted his separate and individual properties and not the properties of the joint family consisting of himself, his wife, sons and daughters and hence the income therefrom is not assessable in the hands of the assessee - HUF ?"
(2.) THE essential facts in his case have been stated in the order of reference thus : There was one Palaniappa Chettiar who along with his wife, Anandavalli Achi, their son, Karuppan Chettiar, and their daughter -in -law, constituted an HUF. There was a partition in this family on 22nd March, 1954, by and under which Palaniappa Chettiar was allotted certain properties as and for his share and he got separated. This partition was recognised by the IT Department under s. 25A of the Indian IT Act, 1922. Thereafter, Karuppan Chettiar, son of Palaniappa Chettiar, and his wife and their subsequently born sons and daughter constituted an HUF which is the assessee in the present reference and has been assessed in that status. Palaniappa Chettiar, the father, died on 9th Sept., 1963, leaving behind his widow, Anandavalli Achi and Karuppan Chettiar, his son, who is also the Karta of the assessee -HUF, as his legal heirs. These two persons succeeded to the properties left by Palaniappa Chettiar under S. 8 of the Hindu Succession Act and divided the same between themselves. In the assessments made on the assessee -HUF for asst. yrs. 1966 -67 to 1970 -71, the ITO included in the computation of the total income, the income received from the properties inherited by Karuppan Chettiar from his father, Palaniappa Chettiar. The assessee -family appealed to the AAC contending that the said properties did not belong to the HUF as such but only to Karuppan Chettiar as an individual and consequently the income derived therefrom could not be assessed as the income of the assessee - HUF. The AAC rejected this submission and thereafter the matter was taken on appeal to the Tribunal. The Tribunal, following a decision of the Allahabad High Court in CIT vs. Ram Rakshpal Ashok Kumar (1968) 67 ITR 164 (All) : TC37R.281, held that the properties did not form part of joint family properties so that the income therefrom could be assessed as the income in the hands of the family consisting of Karuppan Chettiar and his sons and other members. It is this order of the Tribunal which is sought to be challenged by the CIT by raising the question set out already.
(3.) THERE is a direct authority on the question arising from the above facts of this Court in Tax Case No. 276 of 1972 [Addl. CIT vs. V.R.A. Manicka Mudaliar (Decd) -(1978) 114 ITR 521 (Mad) : TC37R.410] which would enable us to answer the question in the affirmative. This decision followed the view expressed by the Allahabad High Court in the decision in CIT vs. Ram Rakshpal Ashok Kumar (supra) and the Assam High Court in Ghasiram Agarwalla vs. CGT (1968) 69 ITR 235 (Assam). The decision of the Allahabad High Court was earlier to the decision of the Assam High Court, but the latter decision did not refer to the Allahabad decision. Since then the Gujarat High Court had to deal with this matter in CWT vs. Harshadlal Manilal (1974) 97 ITR 86 (Guj) when the question arose under the WT Act and the same Court again dealt with the question under the IT Act in CIT vs. Babubhai Mansukhbhai (1977) 108 ITR 417 (Guj) : TC37R.289.;