Govinda Bhat, C.J.
1. This is a reference under s. 256(1) of the I.T Act, 1961, made the Income-tax Appellate Appellate Tribunal, Bangalore Bench, Bangalore. The question of law referred for the opinion of this court is :
'Whether, on the facts and in the circumstances of the case, the income from shares and house property was rightly assessed in the status of individual ?'
2. The assessment relates to the assessment year 1969-70; the relevant accounting year ended on March 31,1969. The assessment was made on the assessee in the status of an individual. He is a Hindu and has a wife and daughter. On March 15,1969, the assesee wrote a letter to the ITO stating that with effect from March 4, 1969, he has thrown four items of immovable properties and some shares in limited companies into the hotchpot of his HUF and the said properties have to the dealt with and treated as properties belonging to the HUF of which the assessee is the karta. Besides income from the property and the shares mentioned in his letter, the assessee had income from salary. In the return submitted for the assessment year 1969-70, the income from the property and the shares thrown into the hotchpot of the family was not included, the assessee's contention being that the said income formed the income of his HUF. The ITO did not accede to that contention and proceeded to make an order of assessment on the assessee in the status of an individual. His appeal to the AAC was rejected and that order was affirmed by the Tribunal, Bangalore Bench, in second appeal.
3. The Tribunal gave two reasons for rejecting the claim of the assessee for exclusion of the property income and the dividend income. Firstly, in order to constituea HUF there must be more one coparcener. Secondly, that the family of the assessee did not own any joint family property on March 4,1969, and that it is only in case where the family owns some joint family property that its member can throw his individual property into the common hotchpot. Aggrieved by the said order, the assessee sought reference to this court. The Tribunal has thereupon stated a case and referred the question of law set out above for the opinion of this court.
4. This matter came up before us on November 25,1974, when after hearing the reference in part we called for a further statement of the case from the Tribunal clarifying the amount of dividend income declared after March4, 1969, and the property income accrued after the said date. Pursuant to our said order, the Tribunal submitted a further statement of the case. The Tribunal has stated that out of the total income of Rs. 838 derived from property a sum of Rs. 62 only accured after March 4, 1969, and the balance Rs. 776 accrued before March 4,1969. With regard to the dividend income the Tribunal has stated that out of the total dividend income of Rs. 7,335 received during the accounting period a sum of Rs. 1,926 received from the Syndicate Bank was declared on March 31,1969, and the balance Rs. 5,409 had been declared prior to March 4,1969. The Tribunal has also stated that the assessee had paid a sum of Rs. 8,017 as insterest on sums borrowed for acquisition of the shares, but it was not able to gather the facts as to the actual amount of interest that could be related to the shares that had been thrown into the hotchpot.
5. In view of the further statement of facts submitted by the Tribunal, learned counsel are agreed that the dispute now is restricted to a total sum of Rs. 1,988 out of which Rs. 62 is the property income derived after March 4, 1969 and Rs. 1,926 being dividends declared after March 4,1969. The property income and the dividend income which accured prior to March 4,1969, are assessable in the hands of the assessee in the status of an individual. It cannot be contended and in fact it was not the contention of the learned counsel for the department that the said income which accured after March 4,1969, can be included in assessment made on the assessee in the status of an individual if we hold that the properties and the shares were thrown into the common hotchpot and the said properties thereafter became the properties of the HUF.
6. The ITO in his assessment order (annexure B) has not disputed the facturn of the declaration throwing the properties into the family hotchpot. In order words, it is not the case of the department that the declaration was a sham declaration, not intended to be given effect to.
7. It is now settled law that in order to constitute a HUF, it is not necesary that there must be more than one coparcener in the family. It is sufficient if we refer to the lates decision of the Supreme Court in C. Krishna Prasad v. CIT : 97ITR493(SC) . It was appeal from a decision of this court which was sffirmed by the Supremem Court. At page 496 of the report, this is what Khanna J., who delivered the Judgment of the Bench, said :
'It is well sttled that a Hindu joint family consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. A Hindu coparcenary is a much narrower body than the joint family; It includes only those persons who acquire by birth an interest in the joint or coparcenary property, these being the sons, grandsons, and great-grandsons of the holder of the joint property for the time being. The plea that there must be at least two male members to form a HUF as a taxable entity has no force.'
8. The second reason given by the Tribunal that in order to impress the self-acquired property of a coparcener with the character of joint family property by throwing it voluntarily into the common stock of the family, there must be in existence some joint family property belonging to the joint family, is also clearly untenable. The law is also clear that a joint family need not own or possess any joint family property. It is also settled law that any individual member can by throwing his individual property into the common hotchpot, impress his individual property with the character of joint Hindu family property. This is the view taken by the Punjab and haryana High Court in Addl. CIT v. Inder Singh Uppal . Therefore, the view of the law taken by the Tribunal is clearly untenable. Sri Rajasekharamurthy, learned conuse for the department did not seriously contend that the view of the Tribunal is right.
9. In our judgment, the properties and the shares described in the assessee's letter dated March 15, 1969, became HUF property with effect from March 4, 1969, and the income therefrom derived after the said date has to be excluded in the computation of the individual income of the assessee.
10. Accordingly, our answer to the question referred is that, on the facts amd circumstances of the case, the income derived after March 4,1969, from the shares and the property thrown into the common hotchpot of the family as per the assessee's letter dated March 15,1969 has to be excluded from the computation of the assessee's income in the status of an individual for the assessment year 1969-70.
11. The assessee is entitled to the costs of this reference. Advocate's fee Rs. 250.