1986 (6) TMI 86 - AT - Income Tax

Will properties treated as individual income, not joint family ownership. Appellate Authority's order reversed.

The Tribunal ruled that the properties bequeathed under the will should be considered individual income, as the will indicated the properties were given ... Hindu Undivided Family, Assessable As Issues:Interpretation of a will to determine if properties bequeathed are individual or HUF income.Analysis:The case involved the interpretation of a will executed by the assessee's father, determining whether the income from properties bequeathed under the will should be considered individual income or Hindu Undivided Family (HUF) income. The will left certain movable properties to the wife and daughters, and other movable and immovable properties to the two sons. The question was whether the properties bequeathed to the sons were intended for individual enjoyment or as part of the joint family. The Income Tax Officer (ITO) initially assessed the income from the properties in the individual assessments of the sons. However, the Appellate Authority Commissioner (AAC) held that the properties should be treated as going into the joint family based on an affidavit filed by the assessee and his brother stating their joint ownership. The revenue appealed this decision.The key argument revolved around the interpretation of the will. The departmental representative contended that the will clearly indicated the properties were given to the assessee with full rights, making the income assessable in the individual assessment. On the other hand, the assessee argued that the properties were intended for the enjoyment of his family, not him individually, as per his father's intention. The will explicitly stated that the properties were to be enjoyed by the two sons equally with full rights, without mentioning the families of the sons. This lack of indication towards family ownership led to the conclusion that the properties were self-acquired and should be assessed individually.The Tribunal referred to legal precedents to support its decision. Citing cases like C. N. Arunachala Mudaliar v. C. A. Murganatha Mudaliar and M. P. Periakaruppan Chettiar v. CIT, the Tribunal emphasized that the intention of the testator, as expressed in the will, determines the nature of the property. In cases where the will clearly indicates that the properties were meant for the sons individually, without mention of ancestral or joint family ownership, the income from such properties should be considered individual income. Applying this reasoning to the present case, the Tribunal held that the properties received by the assessee under the will were self-acquired and not ancestral, leading to the inclusion of the income in the individual assessments of the assessee. Consequently, the order of the AAC was reversed, and the assessments made by the ITO were upheld for all relevant years.In conclusion, the Tribunal allowed the appeals, affirming that the income from the properties bequeathed under the will should be considered individual income, as the will indicated the properties were given to the sons individually with full rights, without specifying joint family ownership.