Impartible estate income after Hindu Succession Act may be assessed as HUF income when the estate loses its special character.

Income from Government securities and house property derived from an inherited impartible estate may be treated as Hindu undivided family income once the estate loses its special impartible character after the Hindu Succession Act, 1956. Applying section 27(ii) of the Income-tax Act, 1961 and the effect of the Hindu Succession Act, the Patna HC noted that the earlier individual return did not prevent the assessee from claiming HUF status for the relevant year. The decisive point was that the inherited estate had become part of the HUF property for income-tax purposes, so the income was assessable in the hands of the HUF.

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Issues: Whether income from Government securities and house property derived from an inherited impartible estate was assessable in the status of a Hindu undivided family after the Hindu Succession Act, 1956.

Analysis: The assessee had earlier returned the income as an individual, but for the relevant assessment year claimed the two items as belonging to the Hindu undivided family on the footing that the impartible estate had lost its special character after the Hindu Succession Act, 1956 came into force. The Court applied section 27(ii) of the Income-tax Act, 1961 and the effect of the Hindu Succession Act, 1956 to hold that the impartibility of the inherited estate had disappeared and the estate had become part of the assessee's Hindu undivided family property for income-tax purposes.

Conclusion: The question was answered in the affirmative and the income was held assessable in the hands of the assessee as a Hindu undivided family.

Ratio Decidendi: Income derived from an inherited impartible estate is assessable in the hands of the holder as Hindu undivided family income once the estate loses its impartible character under the Hindu Succession Act, 1956.

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