HUF status survives blending of inherited property into family hotchpotch, and past assessments support continuity.

Property inherited by Hindu heirs and blended into the family hotchpotch can form or continue as a Hindu Undivided Family. The record did not show any legally effective disruption of the family unit, and the earlier consistent acceptance of HUF status in assessment years weighed against the Revenue's challenge. Even if disruption had occurred, the sons could reunite and hold the inherited property as an HUF. The wife's and daughters' lack of coparcenary share did not invalidate the arrangement, as their contribution could at most be treated as a gift to the family estate. The HUF status was upheld and the interest disallowance was not justified.

---

---

Issues: Whether the interest paid by the assessee-firm to the estate of the deceased partner, claimed to belong to a Hindu Undivided Family, was rightly disallowed on the footing that the HUF did not exist or had been disrupted.

Analysis: The assessee's case was that the deceased Hindu partner had constituted a family with his wife and sons, that the property inherited by the heirs was thrown into the family hotchpotch, and that the HUF was consistently accepted in earlier assessments. The Revenue relied on the devolution of the estate under the Hindu law of succession and on the circumstance that the deceased had joined partnership with his sons. The finding was that, even assuming disruption had taken place, the sons could validly reunite and hold the inherited property as an HUF. The material on record did not show any legally effective disruption of the family unit so as to displace the consistent treatment of the HUF in earlier years. The absence of a coparcenary share in the wife and daughters did not invalidate the arrangement, since their contribution could at best be treated as a gift to the family estate.

Conclusion: The HUF status was upheld and the disallowance of interest was not justified. The assessee succeeded.

Ratio Decidendi: Property inherited by Hindu heirs and thrown into the common hotchpotch of a family can constitute or continue as an HUF, and consistent assessment of the same status in earlier years is a relevant factor in deciding the issue.

---