1. IT Appeal No. 62 and IT Appeal No. 94 relate to the assessments on Shri P.G. Narayanaswamy for the assessment year 1979-80. The former is an appeal by the assessee and the latter by the department. IT Appeal No. 95 is an appeal by the revenue relating to the assessment on Shri P.G. Subramaniam also for the assessment year 1979-80.
2. S/Shri P.G. Narayanaswamy and P.G. Subramaniam are partners in the firm known as P.G. Parameswara Iyer & Sons. Shri Narayanaswamy is also employed in a bank. He has, therefore, salary income apart from his share of income from the firm. Shri Subramaniam has no salary income.
Shri Narayanaswamy and Shri Subramaniam were the members of a HUF.There was a partition in the family on 2-9-1974 by which Shri Narayanaswamy and Shri Subramaniam took their shares separately. They were not married at that time. They were thereafter assessed as individuals up to and inclusive of the assessment year 1978-79. But, during the previous year relevant to the assessment year 1979-80, both Shri Narayanaswamy and Shri Subramaniam got married. It is their case that by their marriage a joint Hindu family came into existence with regard to each of them. On this basis, Shri Narayanaswamy filed a return in his individual capacity with regard to his salary income and a return in the status of a HUF with regard to the income from the firm. Shri Subramaniam filed a return as HUF with regard to the income from the firm. The ITO held that in view of the Kerala Joint Hindu Family System (Abolition) Act, 1975 ('the Kerala Act') which came into force with effect from 1-12-1976, the assessees cannot claim the status of HUF. He, therefore, assessed them as individuals. The appeal by Shri Narayanaswamy and the appeal by the department relating to Shri Narayanaswamy are from the assessment made on Shri Narayanaswamy as an individual. The appeal by the department with regard to Shri Subramaniam relates to a protective assessment made on Shri Subramaniam as HUF.3. The AAC confirmed the finding of the ITO that in view of the Kerala Act, there can be no HUF and that there can be assessment only as individuals. He, therefore, confirmed the assessment on Shri Narayanaswamy as individual. He also confirmed the assessment on Shri Subramaniam as individual and cancelled the protective assessment made on him as HUF.4. The grounds taken by the department in their appeals in the case of Shri Narayanaswamy and Shri Subramaniam are common and are to the effect that the AAC ought to have found that the ITO had not passed an order under Section 171(3) of the Income-tax Act, 1961 ('the Act'), against which an appeal is specifically provided, that the AAC ought to have held that the appeal from the assessment order on the question of partition of HUF was not competent, that the AAC erred in holding that the HUF is disrupted even though the ITO had not passed an order under Section 171(3) and that the AAC erred in holding that there is a disruption of the HUF by the operation of the Kerala Act. It may be stated straightaway that the appeals by the department are misconceived. The appeals seem to have been filed under the wrong impression that the ITO had for the first time accepted a plea by the assessees that there had been a disruption of the joint family and had made an assessment on them individually while the previous assessment was on the HUF. This is a case where the assessees were being assessed previously as individual and the ITO assessed them as individuals during 1979-80 also. He only rejected a contention raised by the assessees that in the particular assessment year they should have been assessed as HUF because they had got married and a HUF had come into existence during the relevant previous year. The ITO did not hold that there was any disruption in the joint Hindu family in the previous year and he did not also go into the question of partition. With regard to the appeals by the assessees, they related to the claim of status as HUF and an appeal with regard to the status was perfectly competent.
There is, therefore, no merit in the contention of the department that the AAC should not have entertained the appeals. The appeals by the department have, therefore, to fail.
5. No appeal seems to have been filed by Shri Subramaniam against the confirmation of the assessment on him as an individual.
6. With regard to Shri Narayanaswamy, the only ground taken by him in his appeal is that the AAC erred in confirming the finding of the ITO, that no HUF came into existence by the marriage of the assessee during the relevant previous year because of the operation of the Kerala Act.
7. It was first contended by the learned representative for the assessee that, in the normal course, in other words, but for the Kerala Act, the assessee would have become a HUF because of his marriage in the relevant previous year. As already stated, in a partition in the original HUF on 2-9-1974 the assessee took a separate share. It is settled law that an assessee obtaining share in a partition in a HUF and remaining unmarried can only claim the status of individual for the purpose of income-tax assessment as there could be a joint Hindu family only if there was a plurality of persons vide C. Krishna Prasad v. CIT  97 ITR 493 (SC). It is also settled law that the share falling to an unmarried coparcener on a partition does not lose its character of joint family property and that a HUF will come into existence on the marriage of the coparcener and that the wife along with her husband can constitute a HUF vide Prem Kumar v. CIT  121 ITR 347 (All.) and in CIT v. Krishna Kumar  143 ITR 462 (MP) (FB). Therefore, in the normal course, the assessee would have been an individual from 2-9-1974 being the date of partition till 12-6-1978 when he got married and became a HUF. The question for consideration now is the effect of the Kerala Act which came into force on 1-12-1976. It is clear that if the joint family system stood abolished with effect from 1-12-1976 by the operation of the Kerala Act, no joint family could have come into existence subsequently on 12-6-1978 when the assessee got married. The contention of the learned counsel for the assessee is that the Kerala Act has no effect in the case of the assessee. According to him, the Act only abolishes a joint Hindu family which was in existence on 1-12-1976. It is claimed that on this day, the assessee was only an individual and not a HUF. Section 3 of the Kerala Act provides that on and after the commencement of this Act, no right to claim any interest in |any property of an ancestor during his or her lifetime which is founded on the mere fact that the claimant was born in the family of the ancestor shall be recognised. It is claimed by the learned representative for the assessee that this section operates only against any possible claim by any person to revive the joint Hindu family by the birth of a son or daughter. It is claimed that in the present case, the revival of the joint Hindu family has taken place because of the marriage of the assessee and that there is no provision in the Kerala Act which prevents the creation of a HUF by a marriage subsequent to the commencement of the Act. We are unable to accept this argument. The provisions of the Act should be construed as a whole. The preamble says that the enactment was made to abolish the joint family system amongst the Hindus in Kerala. It is not the purpose of the Act to save the system in any given case and what is contemplated is the total abolition of the system. By Section 3, the right by birth on which the continuity of the family is based, is abolished. By Section 4 the joint tenancy is replaced by tenancy-in-common and a notional partition amongst the members of the HUF is effected. It is true that the section is not in terms applicable in the case of the present assessee because there were no other members in his family. By Section 5 the rule of pious obligation of a Hindu son is abrogated. Section 7 provides that save as otherwise expressly provided in this Act, any text, rule or interpretation of Hindu law or any custom or usage as part of that law in force immediately before the commencement of this Act shall cease to have effect with respect to any matter for which provision is made in this Act. It is pointed out by the learned representative for the assessee that this repealing section only applies to matters for which provision is made in the Act and that no express provision is made in the Act with regard to the particular contingency which has arisen in the present case, namely, the revival of the HUF by the marriage of the assessee. Even going by the contentions advanced by the learned representative for the assessee, no HUF would have come into existence by the birth of a son. No son of the assessee can claim any right in the property of the assessee. It, therefore, looks incongruous that a HUF consisting of the assessee and his wife would came into existence and that this HUF can continue to exist but without having the incidence of any other provisions of the Hindu law. It has been held by the Kerala High Court in Writ Appeal No. 159 of 1981 by judgment dated 15-2-1981 that the Kerala Act has put an end to the existence of all joint Hindu families in Kerala, that the consequence was that from the commencement of the Act there could be no joint Hindu family in the State and it is a case of statutory extension of all joint families. We are unable to accept the argument of the assessee that the provisions of the Kerala Act will not apply to the joint Hindu family, which, ever according to the learned representative for the assessee, was dormant in the assessee. We, therefore, confirm the findings of the AAC and the ITC that the assessee could be assessed only as an individual.