TaxTMI 
TaxTMI 
1979 (5) TMI 71
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....erties: 1. 1/9th South Canal Bank Road, Madras and 2. 49 Nalla Thambi Mudali Street, Madras. It was contended before the Asst. Contr. of ED that the properties, both movable and immovable belonged to the HUF consisting of the deceased, his wife and son and of which the deceased was the karta. The Asst. Contr. noticed that certain properties belonged to Sri Appaswamy Mudaliar, the father of the deceased, that he had executed a will on 21st Oct., 1918 by and under which he bequeathed all his properties to his two sons, Sri Thirunavukkarasu Mudaliar and the deceased to be taken by them absolutely, that subsequently the deceased and his elder brother divided those properties under registered partition deed executed on 2nd July, 1951 by an....
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....ed to be his exclusive properties. It was pointed out that the deceased had filed returns of income showing the income from these properties as belonging to the HUF right from 1963-64 onwards. The Appl. Contr., of ED did not accept the contention that the properties acquired by the deceased from his father were ancestral properties in his hands. She found that such properties belonged to the father of the deceased as his individual properties and there was nothing in the will to show that that he had bequeathed the properties to be taken by the deceased as ancestral properties. She however held, that since the deceased had returned the income from the properties subsequently acquired from out of the proceeds of sale of the properties got by....
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....the immovable properties of which the deceased was possessed at the time of his death had been acquired from out of the proceeds of sale of the properties got by him from his father under the aforesaid will. Therefore such immovable properties were also his exclusive properties and could not be said to have belonged to the HUF of which the deceased was the karta. 6. It was contended by the Departmental Representative before us that the Appeal. Contr., was not justified in holding that the deceased had impressed such properties with joint family character. This contention cannot be accepted. It is seen that from the asst. yr. 1963-64 onward the deceased had been filing returns of income claiming rental income from the immovable properties....
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....d to be a gift under s. 27 of the said Act and since the deceased continued to reside in one of the properties and was in enjoyment of the income from the other he could not be said to have been totally excluded from the properties and that therefore such properties should be deemed to have passed under s. 10 of ED Act. He urged that when the deceased impressed these properties with joint family character, his son became entitled to a right by birth in them and could have enforced a partition. According to the Departmental Representative, there was thus an extinguishment of a right of the deceased in the properties and consequently it was a disposition under Expl. 2 to s. 2(15), that since it was a disposition in favour of the relatives of ....
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....roperty in the common stock of the joint family would not amount to "extinguishment at the expense of the deceased of a debt or otherwise" since the interest of the thrower in the erstwhile separate property would extend to the whole of the property under the Hindu law. It is to be noticed that the above view has been reiterated by the Madras High Court in CED vs. Smt. Mookammal(5). 9. The Departmental Representative contended that in view of the decision of the Supreme Court in P. Ranganayaki Ammal & Others vs. CED. Madras (105 ITR 92), the decisions of the Madras High Court referred to above can no longer be considered as good law. We are unable to accept the above contention. The Supreme Court was concerned in that case with the quest....
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....Act, 1953, the question was to be considered whether provisions of s. 10 would be attracted. In our opinion the provisions of s. 10 cannot be said to apply to such a transaction, where an individual Hindu coparcener throws his separate properties in the family hotchpot or impresses them with joint family character. It is inherent in the very nature of the transaction that he would continue to be owner of the properties so dealt with and such ownership would extend to the entirety of the properties. Indeed it is because of this that the Madras High Court has held in the decisions quoted above that there would be no extinguishment of the right of the thrower and consequently the transaction would not amount to a disposition. In other words in....