COMMISSIONER OF INCOME TAX MADRAS Vs. K SATYENDRAKUMAR

JUDGEMENT

(1.) The dispute in this case was whether the assessee was liable to be assessed in the status of Hindu Undivided family. The properties held by the assessee came from a lady relative. The assessment years involved are 1968-69 and 1969-70. The assessee is the son of the Appa Rao and Shyamlambal is the mother of the said Appa Rao and the paternal grant mother of the assessee. The said Shyamlambal had certain funds of her own and she gave these funds to Appa Rao and it was alleged that her intention in doing so was that the funds should be used for the benefit of the entire family. With those funds Appa Rao did business and entered into other various transactions. In the course of time Appa Rao acquired properties in his name utilising the money derived from the business and from the properties acquired therefrom. As disputes arose regarding the said properties and the businesses, the disputes were referred to Arbitration two members of the Madras bar named as Joint Arbitrators. Under the arbitration award the properties were divided by metes and bounds and allotted to the members of the family. The assessee got 60 acres of land in Kollur village, Ponneri taluk and a plot of vacant land in the city of Madras at Vepary.

(2.) During the assessment proceedings for the assessment years 1968-69 and 1969-70, question arose as to whether the assessee was to be assessed in the status of an individual or as a Karta of a Hindu undivided family in respect of the income from the properties and his businesses. The Income-tax Officer was of the view that although the assessee got properties on partition effected by the Arbitrators, under the aforesaid award, these properties could not be held to be joint family property.

(3.) The Appellate Assistant Commissioner affirmed the order of the Income-tax Officer. On further appeal by the assessee, the Income- tax Appellate Tribunal took the view that a property which belonged to a female member cannot be considered as capable of providing any nucleus for properties to become properties of a Hindu Undivided Family. The Tribunal held that the acquisition by way of gift could not be treated as joint family property.