COMMISSIONER OF WEALTH TAX Vs. N R SRINIVASAN

JUDGEMENT

(1.) IN pursuance of the directions of this Court in T.C.P. Nos. 291 to 304 of 1984, dt. 11th Feb., 1985, the Tribunal has stated a case and referred the following questions of law at the instance of the Revenue for our consideration :

(2.) THE assessment years with which we are concerned are 1968 69 to 1975 76. The subject matter of the tax cases relates to the validity of assessment made on the HUF under the provisions of the WT Act, 1957, hereinafter referred to as 'the Act'. There was an HUF constituted with its Karta, one N.S. Ramaswamy Iyengar and his three sons, namely, N.R. Srinivasan, N.R. Vijayaraghavan and N.R. Santhanam. The Karta of the joint family, N.S. Ramaswamy Iyengar died intestate in the year 1932 and thereafter the joint family continued with the three brothers. The joint family possessed two properties; one at Coimbatore and another at Ooty. The property at Coimbatore was situate at West Club Road, Coimbatore, and it was a very old building measuring 1,500 sq.ft. with appurtenant land. The property at Ooty was a vacant land of an extent of 2.90 acres called Leslie Cottage. The property at Coimbatore was let out to a tenant and the tenant was in occupation of the property paying monthly rent of a sum of Rs. 350. As far as the property at Ooty is concerned, it was also in occupation of a tenant. The three brothers found it difficult to maintain the joint family properties due to their avocation and placement in different places in the country and they exchanged letters dt. 9th Sept., 1943, among themselves declaring that they divided in status with effect from that date and the joint family consisted of three brothers also stood dissolved. The letters of the brothers were attested by the Chief Presidency Magistrate, Madras, Rao Bahadur L.R. Venkataraman and the Chief Inspector of Factories, Government of Madras, Rao Sahib G.C. Reddy. The partition was effected by allocating shares in the income from the properties and the brothers were enjoying the properties in the said manner.

(3.) REVENUE preferred appeals before the Tribunal against the orders of the AAC and the assessee also filed cross appeals. The Tribunal took the view that partition took place in the year 1943 and since the HUF ceased to exist from 1943, notice under S. 17 of the Act was not a valid notice and assessment could not be made on the HUF. The Tribunal also held that the property situated at Desabhandu Street. Coimbatore, could not be a joint family property. The Tribunal also held that the valuation of the properties should be done only by adopting rental capitalisation method. In this view of the matter, the Tribunal dismissed the appeals preferred by the Revenue and allowed the cross appeals preferred by the assessee. The Revenue, aggrieved by the orders of the Tribunal, sought for a reference and the Tribunal has stated a case and referred the questions of law referred to earlier.