Relinquishment of joint family interest excluded the karta's wife from HUF status for wealth-tax rate purposes.

For wealth-tax rate purposes, the relevant inquiry was whether a person with taxable wealth was a member of, or otherwise interested in, the HUF property under assessment. The majority held that a female member of a Hindu joint family can validly relinquish her interest in joint family property, and on the facts the karta's wife had ceased to have an assessable interest after her deed of relinquishment. Her separate taxable wealth therefore could not be treated as wealth of a person interested in the assessed HUF. The assessee-HUF was not liable to be assessed as a specified HUF at the higher rate, and the Commissioner's direction was unsustainable.

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Issues: Whether the assessee-HUF was liable to be assessed as a specified HUF at a higher rate of wealth-tax on the basis of the karta's wife's taxable wealth, despite her deed of relinquishment dated 5-4-1971 stating that she had ceased to be a member of the family.

Analysis: The majority held that a female member of a Hindu joint family can relinquish her interest in joint family property and, on the facts, the wife of the karta had effectively given up her rights in the property relevant to the assessments. The assessment in question was of the HUF owning the subject property, and once the wife had relinquished her interest, her separate taxable wealth could not be treated as the wealth of a person interested in that assessed HUF. The separate opinions accepted that membership in a Hindu family is a matter of status, but the majority treated the relinquishment as sufficient to exclude her from the assessed HUF for wealth-tax rate purposes.

Conclusion: The assessee was not assessable as a specified HUF and the Commissioner's direction to apply the higher rate was unsustainable.

Ratio Decidendi: For determining whether a HUF is a specified HUF under the wealth-tax rate schedule, the relevant inquiry is whether a person with taxable wealth is a member of, or otherwise interested in, the HUF/property actually under assessment; a person who has validly relinquished her interest in that property cannot be counted for that purpose.

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