COMMISSIONER OF INCOME TAX Vs. PRATAP M P

JUDGEMENT

(1.) THERE were two brothers by name, Rajagopal Naidu and Rangiah Naidu. Rajagopal Naidu was employed in M/s. Simpson and Company Ltd., and later he was a foreman in M/s. Addison and Company Ltd. for some time. Still later he started his own automobile concern called "Rajagopal Motor Works". His brother, Rangiah Naidu, assisted him in his business. Rangiah Naidu died in 1934 and Rajagopal Naidu died on March 25, 1956. Both during the lifetime of Rajagopal Naidu and afterwards, the heirs of Rangiah Naidu lived along with Rajagopal Naidu and the members of his family as if they constituted one family. They had not inherited any ancestral property. However, during the lifetime of both Rajagopal Naidu and Rangiah Naidu, they had their independent earnings and kept their earnings separately and also acquired properties in their individual names and enjoyed them as their separate properties, though by reason of their continued love and affection between them as brothers, they continued to live together. The assessee in the present case is one of the sons of the deceased, Rajagopal Naidu and we are concerned with the assessment years 1963-64 and 1964-65. With reference to these assessment years, the assessee originally filed his return in his status as individual, as he had been doing from the assessment year 1948-49 onwards. However, subsequently on March 17, 1966, he filed revised returns showing his status as an HUF. The question which had to be considered by the ITO was whether the status of the assessee was "individual" or "HUF". The-assessee claimed that he should be assessed in the status of "HUF" because the properties with reference to which the income was returned were the properties allotted to the assessee at a partition that took place on July 29, 1958, between all the heirs of Rangiah Naidu and Rajagopal Naidu, numbering 13. The ITO did not accept this claim and assessed the assessee only in his status as individual. The appeal preferred by the assessee to the AAC proved unsuccessful. When the assessee took up the matter further in appeal to the Tribunal, the Tribunal reversed the conclusion of the AAC as well as the ITO with regard to the status of the assessee and upheld his claim that he should be assessed in the status of an HUF. It is after this order was passed by the Tribunal, the Commissioner of Income-tax, Central, Madras, applied for and obtained under Section 256(1) of the I.T. Act, 1961, a reference of the following three questions for the opinion of this court:

(2.) AS we have pointed out already, the assessee, ever since the assessment year 1948-49, had been claiming the status of an individual and was being assessed only as an individual. Even for the, assessment years in question, he had originally filed returns in the status of an individual and only on March 17, 1966, filed revised returns when he claimed his status as an HUF. The only two facts that were available before the Tribunal for deciding the status of the assessee were:

(3.) ITEM 48 of this schedule reads as follows :