1992 (10) TMI 62 - HC - Income Tax

Court rules properties inherited under will as separate, not joint family property, individual income.

The court determined that the properties acquired under a will were the separate property of the individual son, not joint family property. Consequently, ... HUF Issues:1. Whether properties acquired under a will constitute joint family propertyRs.2. Whether income from such properties should be assessed as Hindu undivided family incomeRs.3. Application of legal principles in cases of testamentary disposition.Analysis:The case involved a reference under section 256(1) of the Income-tax Act, 1961, for the assessment year 1982-83. The primary questions revolved around the nature of properties acquired under a will and the subsequent treatment of income derived from those properties. The deceased father's will dated December 14, 1973, bequeathed properties to his sons and daughter, specifying individual shares and arrangements for certain assets. The key contention was whether the properties obtained under the will should be considered joint family property or the separate property of the individual son, the assessee.The assessee initially treated the income from the property acquired under the will as his individual income but later claimed it to be part of the Hindu undivided family income. The Income-tax Officer rejected this claim, leading to an appeal. The Appellate Assistant Commissioner supported the assessee's claim, considering the income as belonging to the Hindu undivided family. However, the Appellate Tribunal overturned this decision, citing the Supreme Court's ruling in CWT v. Chander Sen [1986] 161 ITR 370. The Tribunal held that the property obtained by the assessee under the will would be his separate property, making the income individual, not joint family income.The assessee relied on the Gujarat High Court's decision in CIT v. Dr. Babubhai Mansukhbhai [1977] 108 ITR 417, which was subsequently overruled by the Supreme Court in Chander Sen's case. The Supreme Court clarified that property inherited by a son, even if previously self-acquired by the father, would be considered the son's self-acquired property. The court emphasized the provisions of section 8 of the Hindu Succession Act and rejected the Gujarat High Court's view. The court also highlighted that the intention expressed in the will was crucial in determining the nature of the property acquired.The court, after considering the will's contents and legal precedents, concluded that the properties obtained by the assessee under the will were his separate property, not joint family property. Therefore, the income derived from these properties was deemed the individual income of the assessee, not the Hindu undivided family income. The court also referenced a previous decision in CIT v. Nagarathnamma [1970] 76 ITR 352, which supported the Supreme Court's stance in similar cases. Ultimately, the reference was answered in the affirmative, favoring the revenue authorities and against the assessee.