Partitioned joint family property remains HUF property where it retains that character in the recipient's hands

Property received by a coparcener on partition of joint family property does not automatically become separate property; its tax treatment depends on whether it retains the character of Hindu undivided family property in the recipient's hands. On these facts, the assessee and his daughter were regarded as constituting a Hindu undivided family, so the income from the partitioned properties was assessable in that family's hands and not in the assessee's individual hands.

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Issues: Whether the income from properties allotted to the assessee on partial partition of the joint Hindu family was assessable in his individual hands or in the hands of the Hindu undivided family consisting of himself and his daughter.

Analysis: The properties received on partition had earlier formed part of joint family/coparcenary property. The governing principle applied was that where property already impressed with the character of joint family property comes to a coparcener on partition, its character does not necessarily change into separate property; its assessability depends on whether, in the hands of the recipient, it continues to constitute joint family property. On the facts, the assessee and his daughter were treated as constituting a Hindu undivided family, and the income from the partitioned properties was held to belong to that family rather than to the assessee individually.

Conclusion: The income was not assessable as the assessee's individual income and was assessable in the hands of the Hindu undivided family consisting of the assessee and his daughter.

Ratio Decidendi: Property received by a coparcener on partition of joint family property remains assessable as joint family property if, in the recipient's hands, it continues to answer the legal character of Hindu undivided family property.

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