1965 (3) TMI 108 - HC - Income Tax

Court rules income from properties assessed individually for widow and son under Income Tax Act

Commissioner of Income Tax Versus Bani Rani Rudra

The Court ruled in favor of the assessee, determining that the income from the properties should be assessed in the hands of the widow and son as ... - Issues:Interpretation of Section 66(1) of the Income Tax Act regarding the assessment of income from house properties in the hands of a Hindu undivided family.Detailed Analysis:1. Interpretation of Section 66(1) of the Income Tax Act:The main issue in this case revolved around the interpretation of Section 66(1) of the Income Tax Act concerning the assessment of income from house properties in the hands of a Hindu undivided family. The Tribunal had to determine whether the income from the properties could be assessed in the hands of the assessee Hindu undivided family based on the provisions of Sub-sections (1) and (3) of Section 9 of the Income Tax Act.2. Facts and Background:The case involved a Hindu undivided family governed by the Dayabhaga school of Hindu law. Upon the death of the family patriarch, the widow and son succeeded to the properties in equal shares. The Income Tax authorities initially disagreed on whether the income from the properties should be assessed in the hands of the individual family members or as a Hindu undivided family. The Tribunal ultimately held that the income could be assessed separately on the son and widow as co-owners with definite shares in the properties.3. Legal Interpretation of Sections 9(1) and 9(3) of the Income Tax Act:Section 9(1) of the Income Tax Act mandates that tax on property income shall be payable by the owner of the property. Section 9(3) further clarifies that where property is owned by multiple individuals with definite and ascertainable shares, they should not be assessed as an association of persons. In this case, the widow and son were deemed to have clear ownership shares, making them ineligible to be treated as members of a Hindu undivided family for tax assessment purposes.4. Application of Dayabhaga School of Hindu Law:The judgment referred to the Dayabhaga school of Hindu law, emphasizing that under this school of law, coparceners have specific shares in joint property even before partition. The widow's entitlement to an equal share as the son was highlighted, leading to the conclusion that their shares were definite and ascertainable for tax assessment purposes.5. Impact of Hindu Succession Act 1956:The judgment also considered the impact of the Hindu Succession Act 1956, particularly Section 14, which converted the widow's limited interest into full ownership. However, for Income Tax purposes, the crucial factor was whether the shares of the widow and son were clear and ascertainable, which determined that the income from the properties should be assessed in their individual capacities.6. Decision and Conclusion:The Court ultimately ruled in favor of the assessee, affirming that the income from the properties should be assessed in the hands of the widow and son as individual owners with definite shares. The judgment highlighted the importance of clear ownership shares in determining tax assessment under the Income Tax Act. The absence of the assessee during the proceedings resulted in no order as to costs.7. Concurring Opinion:Justice Syed Sadat Abdul Masud agreed with the decision, further solidifying the ruling in favor of the assessee based on the interpretation of relevant provisions of the Income Tax Act and the principles of Hindu law applied in the case.