Court rules families not Hindu Undivided Family under Income Tax Act. Self-acquired income assessed individually.

In Re : Moolji Sicka

In Re : Moolji Sicka - [1935] 3 ITR 123 (CAL.) Issues Involved:
1. Whether the assessee's share of income from the firm is assessable in the status of a Hindu undivided family or as an individual.
2. Whether the family of the assessee qualifies as a Hindu undivided family under the Income Tax Act.
3. If the family qualifies as a Hindu undivided family, whether the income should be treated and assessed as such.

Issue-Wise Detailed Analysis:

1. Assessability of Income: Individual vs. Hindu Undivided Family
The primary question was whether the assessee's share of income from the firm of Moolji Sicka and Company should be assessed in the status of a Hindu undivided family or as an individual. The firm was initially registered as a partnership of five persons, and their shares were assessed individually. Each partner contended that they should be assessed as Hindu undivided families. The Commissioner found that none of the assessees had succeeded in proving that they had thrown their separate income into common stock. The capital used by the original members (Moolji, Purushotam, and Kalyanjee) was self-acquired and not ancestral, and there was no proof of it being thrown into common stock. Consequently, the shares were deemed individual for income tax purposes.

2. Definition of Hindu Undivided Family under the Income Tax Act
The Court had to determine what constitutes a 'Hindu undivided family' under the Income Tax Act. The Commissioner concluded that a Hindu undivided family refers to a family that, in the eye of the law, is the owner of the income, not merely a combination of persons without legal claims to such income. The Court agreed, stating that the term 'Hindu undivided family' in the Income Tax Act refers to a Hindu co-parcenary, which involves joint family property or income.

3. Existence of Co-Parcenary
The Court examined whether the families of the assessees constituted a co-parcenary. It was found that Kanji, Sewdas, and Chaturbhuj had no sons, and under Hindu Law, females cannot be co-parceners. Therefore, there was no co-parcenary in their cases. For Moolji, Purushottam, and Kalyanji, who had sons, it was found that the origin of their capital was not ancestral, and they had always treated it as separate property, never throwing it into common stock. The statement in affidavits claiming the property as joint was not sufficient to prove the creation of a co-parcenary. The Commissioner found no intention to treat the property as joint.

Conclusion
The Court concluded that none of the assessees' families qualified as a Hindu undivided family under the Income Tax Act. The income in question was rightly assessed as individual income. The answer to the first question posed by the Commissioner was in the negative, rendering the second question moot. The assessees were ordered to pay the costs of the reference.

Costs
The assessees were directed to pay the costs of this reference, exclusive of any extra cost caused by the reference back. Costs were to be taxed by the Taxing Officer.

Agreement
Jack, J. concurred with the judgment.