BHUPATRAI HIRACHAND Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is a reference under Section 66(1) of the Indian Income-tax Act, 1922. The reference relates to the assessment years 1955-56, 1956-57 and 1957-58. In this reference four questions of law which are set out hereinafter have been referred by the Tribunal for this court's consideration. For proper appreciation of the questions of law referred by the Tribunal it would be necessary to refer to certain facts which have been found and stated in the statement of the case submitted by the Tribunal.

(2.) One Liladhar Hirachand, a Hindu governed by Mitakshara school of law, died on March 31, 1943, leaving behind his widow, Smt. Kankubai, and a son, the applicant, Bhupatrai Hirachand, who at the time was near about 18 years of age. It appears that after the death of his father, Bhupatrai Hirachand was married and got a son in August, 1950, by name, Tarun Kumar, who is still living.

(3.) During his lifetime Liladhar carried on business under the style of "Liladhar Hirachand" and also had acquired house property. The business was his individual business. The house property was also his self-acquired property. In respect of income from the said business and also the house property Liladhar was assessed to income-tax in the status of individual up to the assessment year 1943-44. From the assessment year 1944-45, Bhupatrai Hirachand, the assessee, was assessed as individual in respect of the income from the said two sources right up to the assessment year 1952-53. For the assessment year 1953-54, the business income as well as the property income had been clubbed together as before. But, on appeal preferred by the assessee against the order of the Income-tax Officer for the said year, the Appellate Assistant Commissioner held that under the Hindu Women's Rights to Property Act, 1937, the assessee's widowed mother had half share and so only the half share of the income should be assessed in the hands of the assessee. Thereafter, assessments were made for the assessment years 1954-55, 1955-56, 1956-57 and 1957-58, on the assessee in the status of individual including therein income from business and half share of income from property. Such assessments for 1955-56, 1956-57 and 1957-58 were made on November 1, 1957, December 7, 1957, and July 31, 1957. In course of the assessment proceedings for the assessment year 1958-59, the Income-tax Officer went into the question of status and came to the conclusion that the correct status of the assessee should be that of Hindu undivided family and not individual. In that assessment year he held that the income from the business as well as the entire, income from house property were assessable in the hands of the assessee in the status of Hindu undivided family. The assessment for the assessment year 1958-59 was completed on July 11, 1959.