COMMISSIONER OF INCOME TAX Vs. MAHARAJA CHINTAMANI SARAN NATH SAHDEO

JUDGEMENT

(1.) THE Tribunal has referred to this court under Section 256(1) of the Income-tax Act, 1961 (hereinafter to be referred to as "the Act") the following questions of law arising out of the order of the Tribunal in respect of assessment years 1970-71 and 1971-72 :

(2.) THE assessee succeeded late Maharaja Pratap 'Uday Nath Sahdeo of Chotanagpur, who was the holder of an impartible estate, on his death on 7th March, 1950. THE late Maharaja was being assessed in the status of an individual. After the enforcement of the Hindu Succession Act, 1956, the assessee claimed to be assessed in the status of an HUF. According to the assessee, by the enforcement of the said Act, the rule of primogeniture, relating to succession to an impartible estate, had been rendered ineffective and was not saved by any provision of the said Act. THE assessee, therefore, claimed the status of an HUF from the assessment year 1965-66 onwards. THE ITO, however, rejected the assessee's claim and reiterated the status of individual for making the assessment on the assessee. THE AAC, however, on appeal, accepted the assessee's claim to be assessed in the status of an HUF, from the year from which such claim had been made, namely, from the assessment years 1965-66 to 1969-70. THEre were appeals by the department before the Income-tax Appellate Tribunal against the orders of the AAC, which failed. THE Tribunal also accepted the assessee's claim to be assessed in the status of an HUF after the change brought about by the enforcement of the Hindu Succession Act, 1956. For the assessment year in question, namely, for the assessment years 1970-71 and 1971-72, the assessee declared in the returns of income his status as an HUF, but since up to this time the Tribunal had not yet decided the departmental appeals against the assessment made for the assessment years 1965-66 to 1969-70, the ITO once again adopted the assessee's status to be that of an individual. On appeal, the AAC, relying upon his orders passed for the past assessment years 1965-66 to 1969-70, accepted the assessee's claim to be assessed in the status of an HUF for the assessment years in question. THE department then preferred appeals to the Income-tax Appellate Tribunal. By this time, the Tribunal had disposed of the departmental appeals for the assessment years 1965-66 and 1966-67 and had accepted the assessee's plea of being assessed in the status of an HUF, particularly, in view of the changed circumstances, by the enforcement of the Hindu Succession Act. With regard to the income from house property, however, the Tribunal held that by virtue of the fiction created by the I.T. Act for treating the income from house property as the individual income of the holder of the estate, only that income according to the Tribunal, was assessable in the hands of the assessee in the status of an individual.

(3.) THE third question is common for both the assessment years 1970-71 and 1971-72. THE facts in this respect are few :