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Issues: (i) Whether income from house property jointly possessed by members of a Dayabhaga Hindu undivided family was assessable in the hands of the family or in the hands of the individual members under section 9(3) of the Indian Income-tax Act, 1922 and section 26 of the Income-tax Act, 1961; (ii) Whether income from bustee lands assessable under the head "other sources" was taxable in the hands of the Hindu undivided family or in the hands of the individual coparceners.
Issue (i): Whether income from house property jointly possessed by members of a Dayabhaga Hindu undivided family was assessable in the hands of the family or in the hands of the individual members under section 9(3) of the Indian Income-tax Act, 1922 and section 26 of the Income-tax Act, 1961.
Analysis: The relevant provisions were treated as in pari materia. For Dayabhaga coparceners with definite and ascertained shares, the members could not be treated as an association of persons or as a Hindu undivided family for this purpose. The earlier decisions recognising separate assessment in proportion to inherited or owned shares governed the house-property income.
Conclusion: The income from house property was assessable in the hands of the individual members and not in the hands of the Hindu undivided family, in favour of the assessee.
Issue (ii): Whether income from bustee lands assessable under the head "other sources" was taxable in the hands of the Hindu undivided family or in the hands of the individual coparceners.
Analysis: The income from bustee lands was assessed as income from other sources, to which section 9(3) of the Indian Income-tax Act, 1922 and section 26 of the Income-tax Act, 1961 did not apply. The reasoning applicable to house property could not be extended to income taxed under section 12 of the 1922 Act or section 56 of the 1961 Act. The Wealth-tax decision relied upon was held inapplicable because the statutory schemes were different.
Conclusion: The bustee income was assessable under the head "other sources" in the hands of the Hindu undivided family and not in the hands of the individual coparceners, in favour of the revenue.
Final Conclusion: The reference was answered by holding that house-property income of the Dayabhaga family was separately assessable in the hands of the members, while bustee income under the head "other sources" remained assessable in the hands of the family.
Ratio Decidendi: Where Dayabhaga coparceners hold house property in definite and ascertained shares, the income is separately assessable in their hands, but income from other sources is governed by the specific charging provisions applicable to that head and is not controlled by the rule of separate assessment under the house-property provisions.
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