1998 (3) TMI 71 - HC - Income Tax

Court affirms individual ownership of properties over Hindu undivided family assets

V. Sundararaj Versus Commissioner Of Income-Tax

V. Sundararaj Versus Commissioner Of Income-Tax - [1999] 239 ITR 874, 150 CTR 398 Issues:Assessment of income from properties as individual or Hindu undivided family assets.Analysis:The case involved a dispute regarding the assessment of income from three properties in the hands of the assessee as an individual or as part of a Hindu undivided family. The properties were bequeathed to the assessee by his father through a will executed in 1964. The will specified that the assessee should take possession of the properties on the death of the testator and enjoy them absolutely with full powers of alienation. The will also indicated that the properties were the absolute properties of the testator and not joint family properties. The Income-tax Officer initially assessed the income from the properties as belonging to the assessee individually, rejecting the claim that they were joint family properties.The Appellate Assistant Commissioner, however, ruled that the income from one property should be assessed in the hands of the assessee's minor son, and the income from the other properties should be assessed in the hands of the Hindu undivided family. The Appellate Tribunal later determined that the properties devolved on the assessee as his individual properties under the will and were not joint family assets. The Tribunal considered a family arrangement but concluded that there was no pre-existing right in favor of the assessee's son to create such an arrangement, affirming that the properties were individual assets of the assessee.The assessee contended that the properties should be treated as joint family assets based on settlements with his brothers and a family arrangement. However, the court upheld the Tribunal's decision, emphasizing that the terms of the will clearly indicated the properties were given to the assessee as his individual assets. The court noted the absence of evidence to support the claim that the properties were joint family assets or that the assessee treated them as such post his father's demise. The court concluded that the Tribunal was correct in holding that the properties were the individual properties of the assessee and not joint family assets.The court reframed the question to include all three properties and affirmed the Tribunal's decision that the income from each property should be assessed in the hands of the assessee as his individual income. The court found no error in the Tribunal's judgment and ruled in favor of assessing the income from the properties as individual income, not as Hindu undivided family assets.