Court excludes individual coparcener's income from Hindu Undivided Family tax

The court ruled that the jajamani income of individual coparceners should not be included in the taxable income of the Hindu undivided family. The income earned through personal services and specialized skills, even in a hereditary profession, was deemed individual income rather than joint family income, aligning with a Supreme Court precedent. The decision was based on the understanding that such income should be considered personal, not joint family income. Reference applications were allowed, and no costs were imposed.

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Issues:
1. Whether the jajamani income of the individual coparcener can be included in the taxable income of the Hindu undivided familyRs.

Analysis:
The case involved a Hindu undivided family as the assessee under the Income-tax Act, 1961, for the assessment years 1968-69 to 1975-76. The court was tasked with determining whether the income earned by individual coparceners from jajamani, a hereditary source of earning through priesthood, should be considered as part of the taxable income of the Hindu undivided family. The family had a tradition of male members acting as priests for various households, known as "Purohits," and receiving remuneration for their services.

The court considered the historical background of the family, noting a partition in 1935 that allocated specific households as jajamans to the assessee family members. The key contention was whether the income from jajamani should be treated as personal income of individual coparceners or as joint family income. The nature of the earning at the time of receipt was a point of dispute, with the assessing officer failing to provide a clear finding on the matter.

The Appellate Assistant Commissioner and the Appellate Tribunal, however, both concluded that the income derived from the hereditary profession of priesthood was joint family income. They emphasized the specialized skills and training required for performing religious ceremonies and functions, highlighting that such income was a family asset acquired through partition since 1935. The court also referred to a Supreme Court decision in Lakshmi Chand Khajuria v. Smt. Ishroo Devi, which clarified the treatment of income from the practice of a hereditary profession.

Ultimately, the court, in line with the Supreme Court precedent, ruled that the jajamani income of individual coparceners should not be included in the taxable income of the Hindu undivided family. The decision was based on the understanding that the income earned through personal services and specialized skills, even in a hereditary profession, should be considered individual income rather than joint family income. The reference applications were allowed, and no costs were imposed.

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