V.S. Desai, J.
1. This is a reference under section 66(1) of the Indian Income-tax Act 1922, at the instance of the Commissioner of Income-tax and relates to an item of Rs. 927, which has been deleted from the assessment of the assessee as an individual on the ground that the said amount was not the income of the assessee as an individual but of the undivided Hindu family.
2. The assessee was a member of a Hindu undivided family consisting of his father, his younger brothers and the children of himself and his brothers and other female members of the family. The assessee, however, has his own independent income arising from salary, interest on Government securities, interest on bank current accounts and dividend income in respect of which he was assessed in the status of an individual. On 27th August, 1955, the assessee made a declaration whereby he impressed the separate and self-acquired property of the joint family consisting of himself, his wife, son and two daughters. The declaration was the effect that he had on that date thrown all his separate and self-acquired property into the family hotchpotch and the same would thereafter be held by him as the karta of the Hindu undivided family consisting of himself, his wife, son and daughters. It may be noted that before making the said declaration, he had not declared his intention to separate from the main joint family consisting of his father and his other brothers and their children. He and his branch, therefore, continued to remain in the main joint family as members thereof. The income derived from the assets, which were the subject-matter of the declaration made by the assessee, was Rs. 927 in the assessment year 1956-57 for which the relevant account year was the financial year ending with 31st March, 1956. During the assessment year 1956-57 the assessee submitted two returns, one in the status of an individual and the other in the status of a Hindu undivided family. The amount of Rs. 927 was included in the return submitted in the status of a Hindu undivided family and the other return filed in the status of an individual included the income derived from his self-acquired property. The Income-tax Officer took the view that although the declaration made by the assessee was a genuine and bona fide declaration, the income derived by the assessee from the assets, which were the subjects-matter of the said declaration, still remained the assessee's income as an individual because the assessee could not in law create a Hindu undivided family a separate assessable unit in the circumstances of the case. According to the Income-tax Officer, it was not possible to regard any joint Hindu family as being composed of a number of sub-families, which are stranded together for certain other purposes and have an independent existence for certain other purposes. Since the assessee was already a member of the Hindu undivided family consisting of his father and other brothers from which he has not separated, it was not possible for him to constitute a joint Hindu family of himself, his wife son and daughters as a distinct and separate assessable unit apart from the main joint Hindu family to which he still continued to belong. In the view that he took the Income-tax Officer included the amount of Rs. 927 in the individual assessment of the assessee. The assessee took the matter in appeal to the Appellate Assistant Commissioner. According to the Appellate Assistant Commissioner the Income-tax Officer was to correct in taking the view that it was not possible to regard a joint Hindu family as being composed of a number of sub-families which were stranded together for certain purposes and had an independent existence for certain other purposes. It was possible, according to him, that while the main joint Hindu family as being composed of a number of sub-families which were stranded together for certain purposes and had an independent existence for certain other purposes. It was possible according to him, that while the main joint Hindu family remained intact, the branch families of the main family may have separate existence as assessable units as Hindu undivided families under the Indian Income-tax Act. The Appellate Assistant Commissioner was also of the opinion that it was possible for a member of the branch family to impress his self-acquired property with the character of the joint family property of the branch family so as to make the income from that property the income of the branch family as a Hindu undivided family under the Indian Income-tax Act. On the merits of the case, in view of the several steps, which the assessee had taken to give his self-acquired property the character of the joint family property of the branch family of which he was the karta there could be no doubt whatsoever that he had clearly and unequivocally thrown the said property into common stock of his branch family and abandoned all intentions to hold it as a separate property thereafter. According to the Appellate Assistant Commissioner the item of Rs. 927 was the income of the Hindu undivided family and had, therefore, to be deleted from the individual assessment of the assessee. He accordingly allowed the assessee's appeal in this respect and directed the Income-tax Officer to revise the assessment accordingly. The view taken by the Appellate Assistant Commissioner was confirmed by the Income-tax Appellate Tribunal in the appeal which the department took to it. Thereafter at the instance of the department, the Tribunal drew up a statement of case and referred to this court the following question as arising out of its order :
'Whether the income of Rs. 927 arising from the property covered by the declaration of August 27, 1955, is properly excluded from the total income of the assessee ?'
4. Mr. Joshi, the learned counsel for the revenue, has argued that the view taken by the Appellate Assistant Commissioner and the Appellate Tribunal is erroneous and the amount of Rs. 927 must be properly regarded as the income of the assessee as an individual. According to Mr. Joshi a joint Hindu family or a Hindu coparcenary, which is a narrower body within the Hindu joint family, is a creature of law and cannot be created by act of parties save in so far that by adoption, a stranger may be introduced as a member thereof. A joint Hindu family consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. It is this corporate body, which is an assessable unit under the Indian Income-tax Act. No two or more members of a joint Hindu family can form themselves into another Hindu joint family distinct from the main body and having a separate existence as an assessable unit under the Indian Income-tax Act. According to Mr. Joshi, in the present case the Hindu undivided family, which is an assessable unit under the Indian Income-tax Act, is the unit consisting of the assessee father, the assessee, his brothers and their children and the other female members. The assessee intention, by the declaration which he made on the 27th of August, 1955, was to constitute another assessable unit consisting of a few members of the main joint Hindu family. Since this the assessee was incompetent to do in law, the declaration made by him or the steps taken by him could not have the effect of bringing into existence a different Hindu undivided family as an assessable unit and the income from the said property would still be the separate income of the assessee himself. According to Mr. Joshi, therefore, the income of Rs. 927 was still in law the income of the assessee himself as an individual and the Income-tax Officer was right in including it in his individual assessment.
5. Mr. Joshi's argument in the alternative was that even if it were assumed that it was possible for a branch Hindu family exist as a separate assessable unit while it was still a member of the main Hindu undivided family, the assessee was not in a position to give to this latter Hindu undivided family any property which it could regard as belonging to it exclusively and independently of the main family, by impressing some of his own self-acquired property with the character of the property of the said Hindu undivided family. Mr. Joshi contended that if the assessee, who was a member of the main Hindu undivided family, were to exercise the power possessed by him under the Hindu law to throw his self-acquired property in the hotchpotch of the joint family, the only hotchpotch into which he could throw his property was the hotchpotch of the main Hindu undivided family. According to Mr. Joshi while the assessee had not separate from the main Hindu undivided family and had continued to remain a member thereof, he had no right to throw his self-acquire property into the hotchpotch of a branch family consisting of himself, his wife and children. Another argument advanced by Mr. Joshi was that even if it were assumed that a member of the main family could throw his self-acquired property into the hotchpotch of the branch family to which he belongs, it was only if the branch family had a hotchpotch as distinct and separate from the hotchpotch of the main Hindu family that he could do so. Where, however, there was no such hotchpotch of the new joint family or the said hotchpotch was empty, there could be no right in the member of the branch family to throw his self-acquired property into the hotchpotch, which either did not exist or was wholly empty if it could be deemed to exist. Finally Mr. Joshi has argued that whatever may be the position so far as the Hindu law is concerned, under the Indian Income-tax Act once an assessable unit exists, until the said unit is completely disrupted by a partition thereof, other assessable units a Hindu undivided families cannot be recognised under the Indian Income-tax Act. Since in the present case the main Hindu undivided family is not shown to have been disrupted, a new Hindu undivided family as an assessable unit under the declaration made by the assessee cannot be recognised by the income-tax department.
6. In our opinion there is no substance in any of the contentions raised by the learned counsel for the revenue. It is true that a Hindu undivided family, which consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters, and the Hindu coparcenary, which is a narrower body within the joint family consisting of persons, who acquire by birth an interest in the joint or coparcenary property, are creatures of law and cannot be created by act of parties save in so far that by adoption a stranger may be introduced as a member thereof. It must, however, he remembered that a joint Hindu family springs from a Hindu male and every Hindu male can be the stock of a fresh descent constituting a joint Hindu family a joint Hindu family or a Hindu coparcenary. Where from a Hindu male a joint Hindu family springs into existence, this family goes on having its different branches and sub-branches. Each branch starts with the male descendant of the common ancestor and each sub-branch with the male descendant of the head of the branch. While the entire group proceeding from the common ancestor with its several branches and sub-branches in the normal undivided state is a Hindu joint family, each of the branches of each of the sub-branches again is a Hindu joint family according to the concept of a joint family under the Hindu law. It is, therefore, possible for a main Hindu undivided family to be composed of a large number of branch families, property may be possessed by the entire family in which members of the family have interest by birth. Individual members of the family again may possess property, which belongs to them separately as distinct from the joint family of which they are members. Where a Hindu joint family consists of branch families it may also be that each of the branch families may possess property which constitutes the joint family property of that branch alone and in which the other branches or the main Hindu family as such have no right or interest. That such is the position under the Hindu law is clearly pointed out in Sudarsanam Maistri v. Narasimhulu Maistri. Bhashyam Ayyangar J. dealing with the principles of Hindu law bearing on the conception of the Hindu joint family observed as follows :
'The Mitakshara doctrine of joint family property is founded upon the existence of an undivided family, as a corporate body.... and the possession of property by such corporate body. The first requisite therefore is the family unit; and the possession by it of property is the second requisite.'
7. Omitting the female members of the family out of consideration the learned judge observed :
'... the conception of a Hindu family is a common male ancestor with his lineal descendants in the male line, and so long as that family is in its normal condition, viz., the undivided state-it forms a corporate body. Such corporate body, with its heritage, is purely a creature of law and cannot be created by act of parties save in so far that, by adoption a stranger may be affiliated as a member of that corporate family. Persons, who by birth or adoption are not members of a Hindu family, cannot in the absence of a custom having the force of law, by mere agreement, become or be made members of a joint family.'
8. Having thus described the concept of the joint family, the learned judge observed :
'According to the above conception of a family, there may, of course, be one or more families all with one common ancestor, and each of the branches of that family, with a separate common ancestor.'
9. With regard to the possession of the property by the main family as well as by one or more of branch families it was observed.
'As regard the property of such family, the 'unobstructed heritage devolving on such family with its accretions, is owned by the family as a corporate body, and one or more branches of that family, each forming a corporate within a larger corporate body, may possess separate 'unobstructed heritage' which, its accretions, may be exclusively owned by such branch as corporate body.'
10. There can be no doubt, therefore, that the main joint family which is the larger corporate body, may contain within itself one or more smaller corporate bodies, each of which is a joint Hindu family itself according to the conception of the Hindu law. It is also clear that property may be possessed by the larger corporate body and property may also be possessed by the smaller corporate bodies within the larger corporate body which may belong exclusively to such smaller corporate bodies. Mr. Joshi's contention, therefore, that while the main joint family exists, branch families cannot exist separately so as to possess property as belongings to themselves only, cannot be accepted. The other contention of Mr. Joshi also that while the main Hindu joint family exists in the undivided state smaller groups constituting separate joint families cannot exist within the larger family as that would amount to creating joint families by two or more members of the main family by their act, cannot also be accepted. The branch family springing from the head of the branch is itself a Hindu undivided family as conceived under the Hindu law. It is not a creation by act of parties, but is the creation by law. When it is said that two or more members of the family cannot come together to form a separate Hindu family as distinct from the main Hindu family, what is meant is, as explained by Bhashyam Ayyangar J. in the case referred to above :
'... so long as a family remains an undivided unit, two or more members thereof - whether they be members of different branches or of one and the same branch of the family, - can have no legal existence as a separate independent unit; but if they comprise all the members of a branch, or of a sub-branch, they can form a distinct and separate corporate unit within the larger corporate unit and hold property as such.'
11. Thus, if a family consists of a father and four sons and their children, it is not possible, for instance, for the father and one or two of his sons to say that they will form another joint family so long as the original or main can have no legal existence. Similarly, if one or two sons of the father think of constituting a separate joint family as of themselves alone such a Hindu undivided family also can have no legal existence. But, if the entire body of members of a branch which itself forms a joint family under the Hindu law think of regarding themselves as a smaller corporate unit possessing property of its own, such a corporate body can both have a legal existence and also possess property.
12. What the assessee has done in the present case is that he has by his declaration regarded the joint Hindu family of himself, his wife and children a smaller corporate body possessed of its own property within the larger corporate body of the Hindu undivided family.
13. The next argument of Mr. Joshi, viz., that so long as the assessee did not separate from the main joint family, he had no right to throw his self-acquired property into any other hotchpotch except the hotchpotch of the main Hindu family, is also not supported either on principle of the authority. As we have seen, a smaller corporate body as a joint family capable of holding property of its own as distinct from the property of the main family or main corporate body, can have a legal existence and can hold property, while the main family remains intact. It would, therefore, follow that while the main family may possess property which belongs to the entire family or in other words belongs to the hotchpotch of the main family, each of the smaller joint families existing within the main family may possess property, which belongs to its own hotchpotch. Under the Hindu law any member of a joint family can throw his self-acquired property in the hotchpotch of the family to which he belongs and thus make it the joint family property of the said family. A member of the smaller joint family can, therefore, impress his self-acquired property with the character of the joint family property of the smaller family to which he belongs. He is no doubt also a member of the main joint family and he can, if he so chooses, throw his self-acquired property in the hotchpotch of the main family also. But that will be a matter of his volition. There is nothing in the Hindu law or in the concept of a joint family under the Hindu law which prevent him from throwing his property in the hotchpotch of the smaller unit to which he belongs, while the larger unit remains intact. The ability of the smaller unit to possess property of its own implies that it can have its own hotchpotch and into that hotchpotch can fall properties just in the same manner in which they can fall in the hotchpotch of the main family. Thus, there can be no legal obstruction whatsoever in the way of the assessee, who was possessed of his self-acquired property which he could deal with or dispose of in any way he liked, to give that property not to the entire joint family but to the branch consisting of himself and his children. The further argument of Mr. Joshi, that the throwing of property into the common hotchpotch is only possible where there is already a family hotchpotch, which is not altogether empty or in other words where there is some nucleus of the family, cannot be entertained in view of the decision of this court in I. T. Reference No. 27 of 1960 decided on the 30th of October, 1961, and the decision of other High Courts in Duggirala Sadasiva Vittal v. Bolla Rattain, M. K. Stremann v. Commissioner of Income-tax, and Keshavlal Lallubhai Patel v. Commissioner of Income-tax.
14. The last contention of Mr. Joshi that where there is a Hindu undivided family as an assessable unit, unless the said unit is completely disrupted by a complete partition, no other unit of Hindu undivided family can be recognised under the Indian Income-tax Act also appears to us to be unsustainable. The Hindu undivided family as an assessable unit is a unit which is capable of holding property and satisfies the requirements of a Hindu undivided family. If the assessee's family consisting of himself, his son, wife and daughters is an assessable unit capable of holding property as belonging to it and, therefore, an assessable unit under the Indian Income-tax Act, the circumstance that the said family is also a member of another larger unit, which is also an assessable unit under the Income-tax Act, will in no way affect it from being an assessable unit itself. No provision of the Indian Income-tax Act has been pointed out to us which can be regarded as bringing in a prohibition which is suggested by Mr. Joshi. Mr. Joshi has referred us to section 25A of the Income-tax Act, but the provision of that section, in our opinion, does not lead to that result.
15. In the result, therefore, in our view, the decision of the Appellate Assistant Commissioner and the Appellate Tribunal in the present case was correct. Our answer to the question referred to us is in the affirmative. The Commissioner shall pay the costs of the assessee.
16. Question answered in the affirmative.