S PERIANNAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN these tax cases, at the instance of the assessee, the following question of law is referred to this court under section 256(1) of the INcome-tax Act, 1961 (hereinafter referred to as "the Act"), for its opinion."Whether, on the facts and in the circumstances of the case, the property 'Grove Estate' belongs to the assessee-Hindu undivided family and, consequently, the income arising therefrom should be considered as the income of the Hindu undivided family for the assessment years 1975-76 and 1976-77 ?" * The assessee is a Hindu undivided family of which the karta is S. Periannan.

(2.) THE said Periannan is the son of one Sathappa Chettiar. On April 13, 1955, there was a partition in the Hindu undivided family of Sathappa Chettiar and his sons, Narayanan and Periannan. At that time, his sons Narayanan and Periannan were both minors, aged 12 and 1, respectively. An application was made on September 14, 1955, for the recognition of the partition under section 25A of the Indian Income-tax Act, 1922. THE Income-tax Officer declined to recognise the partition by his order dated March 29, 1956. Sathappa Chettiar preferred 1. T. A. No. 214 of 1956-57 before the Appellate Assistant Commissioner, Tiruchi, who, by his order dated January 21, 1957, accepted the claim of partition and directed the Income-tax Officer to make an assessment on that basis. As a result of the partition dated April 13, 1955, the father, Sathappa Chettiar, became liable to pay to Periannan a certain sum of money. As Periannan was not married, he was being assessed in the status of an individual in respect of the income derived by him from the properties allotted to him on the partition. Periannan got married on June 9, 1974. Before his marriage, Periannan, along with his brother Narayanan, purchased a coffee estate known as "Grove Estate" under a sale deed dated June 20, 1973, for a sum of Rs. 5, 23, 000. Out of the said sum of Rs. 5, 23, 000, Rs. 1, 00, 000 was paid as advance on May 15, 1973, and the balance of Rs. 4, 23, 000 was paid by draft on the Bank of Madurai at the time of registration. THE purchase was joint purchase by the two brothers, both making equal contributions. For the assessment year 1975-76, Periannan claimed that the income derived from the "Grove Estate" which amounted to Rs. 45, 148 should not be considered as the income of the assessee-Hindu undivided family on the ground that the said estate was the individual property of Periannan, having been purchased with his separate funds. Periannan claimed that the consideration for the purchase of the estate was met by borrowing moneys from his father and the Bank of Madurai.

(3.) THAT will be so, notwithstanding the fact that the karta or the coparcener renders some service. On the other hand, if it is essentially for the services rendered by the coparcener or the karta and if it is not received because of the investment of the joint family funds in the business or to the detriment or at the expense of the joint family assets, then, it would be his individual income." * A Division Bench of the Allahabad High Court, in Mangal Singh v. Harkesh, 1958 AIR(All) 42 dealing with the same question, observed as follows (p. 47)"The general rule laid down by these cases which is common to Mitakshara and Dayabhaga both, therefore, appears to be that whatever may be the extent of the contribution of the acquiring member himself out of his self-acquired funds, if he takes the aid of any portion of joint or ancestral property in acquiring the property, however small that aid may be, the property so acquired assumes the character of joint family property and cannot be claimed by him as a self-acquisition. In this view of the matter, the extent of his contribution or that of the family fund becomes immaterial. If any help is taken from the family property, it is enough to make the self -acquired property the property of the family." * In the light of the settled position of law as seen above, let us examine whether the estate acquired by Periannan on June 20, 1973, is his separate property or the joint family property belonging to the assessee-Hindu undivided family.