Decided on September 28,1992



Syed Shah Mohammed Quadri, J. - (1.)IN Referred Case No. 78 of 1986, which arises under the INcome-tax Act, the following question of law is referred to this court for opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the rental income from the house in question is assessable as income of the smaller Hindu undivided family consisting of the assessee and his wife ?"

(2.)IN Referred Case No. 45 of 1987, which arises under the Wealth-tax Act, the following question of law is referred to this court for opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the value of the house and the site in question is assessable entirely as the property of the smaller Hindu undivided family consisting of the assessee and his wife ?"

As the abovesaid questions of law arose out of the same facts relating to the property in question, both the cases were heard together and are being disposed of by this common judgment.

The assessee was the karta of a Hindu undivided family which consisted of himself and his four sons. The family effected a partition and a partition deed was executed on June 26, 1955. An application under section 25A of the Indian Income-tax Act, 1922, was filed for recognition of the partition. The same was allowed. Pursuant to the said partition, the assessee got moneylending capital and one house situated on the G. N. T. Road, Eluru. In the year 1971, the Wealth-tax Officer came to know that neither the rental income from the house nor the capital value of the house was disclosed by the assessee for income-tax and wealth-tax purposes from the years 1956-57 till 1970-71. Therefore, a show-cause notice was issued to the assessee in the year 1972. In his reply dated March 28, 1972, the assessee stated that the house was allotted to him on the understanding that it would be used for charitable purposes, but the same could not be used as such. Therefore, on the demand made by his sons, he settled the dispute and executed a declaration on April 14, 1961, throwing the said house into the common hotchpot of the family and thereafter the said house was being enjoyed by the assessee and his four sons as the Hindu undivided family. It is also contended that the said partition effected on June 26, 1955, was only a partial partition and that an extent of ac. 50-00 of land was also kept undivided as per the partition deed. He filed a copy of the order of the Assistant Settlement Officer, Eluru, dated May 12. 1959, granting patta in respect of ac. 15.90 cents out of the said extent of land situated at Gopannapalle village on the ground that the same was in the possession of the assessee's father. The Wealth-tax Officer, not being satisfied with the explanation given by the assessee, passed orders assessing the capital value of the land as well as the house for the assessment year 1964-65 and also for subsequent years 1965-66 to 1971-72. Similarly, the Income-tax Officer also assessed the income from the said house for the years 1964-65 to 1972-73. On appeal, the Appellate Assistant Commissioner allowed the appeal. The Revenue carried the matter in appeal before the Appellate Tribunal. The Tribunal allowed the appeal of the Revenue and held that the income and the property were rightly brought to tax under the Income-tax Act as well as under the Wealth-tax Act.

(3.)LEARNED senior counsel, Sri A. Venkataramana, appearing for the assessee, contends that on April 14, 1961, a settlement was arrived at, by which, the property was again brought to the common hotchpot of the family and, therefore, it became joint family property and, as such, the assessee alone could not have been assessed to tax either in respect of the income from the property or in respect of its capital value. He alternatively contends that the property should be deemed to have been held jointly by the father and his four sons and, therefore, only one-fifth of the income and capital value could have been assessed in respect of the assessee.
Sri S. R. Ashok, learned standing counsel for the Revenue, on the other hand, contends that when partition was effected in April, 1955, the family got divided and, therefore, there was no joint family as such. to have a common hotchpot in which the property could be thrown by the assessee in the year 1961. In so far as the land is concerned, learned standing counsel submits that after the partition of the properties by the family, the land which remained undivided can only be said to be held by the erstwhile coparceners as joint property and the remaining property cannot be treated as joint family property.


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