Separate assessment and HUF blending rules limited revisional clubbing of income from partnership interests.

Separate assessments of a Hindu undivided family and an individual assessee had already been made, and the Commissioner's suo motu revision to club agricultural income from partnership interests was held unsustainable. The alleged blending of partnership interest into the family hotchpot was not shown to be a transfer attracting the deeming provisions for settlement, disposition or transfer, and a unilateral blending by a coparcener was treated as distinct from a bilateral transfer. The provision dealing with assets remaining the settlor's property did not apply once the property had actually passed to the family. The revisional order rested on the legally untenable assumption that the assessee held two separate statuses in a manner justifying clubbing.

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Issues: Whether the Commissioner could invoke suo motu revisional power to club the assessees' agricultural income from firm interests with income assessable in different capacities, and whether the deeming provisions relating to settlement, disposition, or transfer applied to the alleged blending of the partnership interests into the Hindu undivided family.

Analysis: The assessment records showed separate assessments had been made for the Hindu undivided family and the individual assessee prior to the impugned revision. The alleged blending of interest into the family hotchpot was not shown to amount to a transfer within the meaning of the deeming provision for the purpose of clubbing. A unilateral blending by a coparcener was treated as distinct from a bilateral transfer, and the provision dealing with income arising from assets remaining the property of the settlor or disponer had no application where the property had actually gone over to the family. The provision excluding tax on amounts received out of Hindu undivided family income also indicated that both the individual coparcener and the family could be separately assessed in appropriate cases. The revisional order proceeded on a mistaken assumption that the assessee had two separate statuses as individual and Hindu undivided family, which was legally untenable.

Conclusion: The Commissioner was not justified in invoking revisional power to club the income, and the impugned orders could not be sustained.

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