HUF treatment, salary exclusion, and compensation-linked interim payments were analysed as individual income and capital receipt issues.

Income from an impartible estate may be treated as Hindu undivided family income where the assessee has clearly and consistently impressed that character on it and the position has already been accepted; in the absence of fresh material, it should not be disturbed. Salary earned by holding office remains the assessee's individual income and is not included in HUF assessment merely because estate income is assessed that way. Ad interim payments made under the Bihar Land Reforms Act pending final compensation are linked to deprivation of capital assets and are capital receipts, not revenue receipts.

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Issues: (i) Whether the assessee could be assessed in the status of a Hindu undivided family in respect of income from the impartible estate; (ii) Whether salary received as a member of the Legislative Council could be excluded from the HUF assessment as individual income; (iii) Whether ad interim payments received under the Bihar Land Reforms Act were capital receipts or revenue receipts.

Issue (i): Whether the assessee could be assessed in the status of a Hindu undivided family in respect of income from the impartible estate.

Analysis: The income from an impartible estate ordinarily accrues to the holder as individual income, but a person may by a clear and unequivocal declaration impress his individual income with the character of joint family income. The assessee had consistently declared, from the relevant earlier assessment years onwards, that the income from the estate was to be treated as HUF income, and that position had been accepted by the appellate authorities after consideration. In the absence of fresh material, the department could not unsettle that accepted status for the years in question.

Conclusion: The status of the assessee as HUF for the income from the impartible estate was correctly accepted, and the issue is answered in favour of the assessee.

Issue (ii): Whether salary received as a member of the Legislative Council could be excluded from the HUF assessment as individual income.

Analysis: Salary earned from holding office was the personal income of the assessee and did not form part of the income of the Hindu joint family. The statutory fiction applicable to house property income did not extend to this salary income, and it could not be brought into the HUF assessment merely because the estate income was assessed in that status.

Conclusion: The salary income was rightly excluded from the HUF assessment and the issue is answered in favour of the assessee.

Issue (iii): Whether ad interim payments received under the Bihar Land Reforms Act were capital receipts or revenue receipts.

Analysis: The ad interim payments were made after vesting and before final compensation, and were linked to the deprivation of income-producing assets pending determination of compensation. The statutory scheme treated such payments as part of the compensation mechanism, and they were not analogous to interest or maintenance allowance. The payments therefore partook of the character of compensation for loss of capital assets and not of recurring revenue income.

Conclusion: The ad interim payments were capital receipts and the issue is answered in favour of the assessee.

Final Conclusion: All the referred questions were resolved against the department, with the assessee succeeding on the status issue, the exclusion of salary income, and the character of the ad interim payment.

Ratio Decidendi: Where an assessee clearly and consistently impresses individual income with the character of joint family income and that position has been accepted by the appellate authorities, the assessment cannot be altered without fresh material; and interim payments made pending determination of compensation for compulsory deprivation of income-producing assets are capital receipts.

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