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P. Pavanasa Nadar Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 25 of 1967 (Reference No. 2 of 1967)
Judge
Reported in[1973]87ITR552(Mad)
ActsIncome Tax Act, 1922 - Sections 34, 34(1) and 66(1)
AppellantP. Pavanasa Nadar
RespondentCommissioner of Income-tax
Appellant AdvocateK. Narayanaswamy, Adv.
Respondent AdvocateV. Balasubrahmanyan and ;J. Jayaraman, Advs.
Cases ReferredN. V. Narendranalh v. Commissioner of Wealth
Excerpt:
- - 4. the facts of this case clearly fall within the ratio of the decision of the supreme court in n......of the case, the assessment of the income of the house property and of the business of palaniappa match works for the assessment years 1957-58 to 1960-61 in the hands of the assessee in the status of an individual is correct in law ?' 2. the assessee was originally a member of a hindu undivided family consisting of himself, his brother and his father, which carried on business in the manufacture of match sticks under the name and style of national match works, sivakasi. after the death of the assessee's father, he and his brother became divided in respect of the said business, which was thereafter carried on in partnership between them. in or about 1947 there was a further partition between the assessee and his brother both in respect of the said business and the other assets. by this.....
Judgment:

Ramanujam, J.

1. The following two questions have been referred to us under Section 66(1) of the Income-tax Act, 1922 :

' 1. Whether, on the facts and in the circumstances of the case, the reopening of the original assessments for the assessment years 1957-58 to 1959-60 under Section 34(1)(b) of the Income-tax Act, 1922, is correct in law ?

2. Whether, on the facts and in the circumstances of the case, the assessment of the income of the house property and of the business of Palaniappa Match Works for the assessment years 1957-58 to 1960-61 in the hands of the assessee in the status of an individual is correct in law ?'

2. The assessee was originally a member of a Hindu undivided family consisting of himself, his brother and his father, which carried on business in the manufacture of match sticks under the name and style of National Match Works, Sivakasi. After the death of the assessee's father, he and his brother became divided in respect of the said business, which was thereafter carried on in partnership between them. In or about 1947 there was a further partition between the assessee and his brother both in respect of the said business and the other assets. By this process the assessee and his sons came to own the business in match works. The Hindu undivided family of the assessee and his sons later acquired a new business called Palaniappa Match Works at Alathur, and certain assets in foreign countries. Subsequently on October 5, 1953, there was a partition between the assessee and his sons in which the business of National Match Works, Palaniap,pa Match Works and the foreign assets as also other properties came tb be divided between them. The assessee got a house property and the business of Palaniappa Match Works towards his share. The foreign assets, however, continued to be owned jointly by the assessee and his sons.

3. From the assessment year 1954-1955 up to the assessment year 1959-1960 three assessment orders were made on the assessee every year. The assessments relating to the house property and the business of Palaniappa Match Works were in the status of a Hindu undivided family, of 'himself, his mother, wife and daughters, while the foreign income was assessed in thehands of the joint family consisting of the assessee and his sons. In the course of the assessment year 1960-61 the Income-tax Officer re-examined the position in regard to these assessments and came to the conclusion that in respect of the income from the properties and the business allotted to the assessee at the partition the assessment had wrongly been made in the status of a Hindu undivided family and that he should have been properly assessed in his status as an individual along with his other income. In that view proceedings were initiated under Section 34 of the Act. The assessee challenged not only the legality and propriety of the proceedings initiated under Section 34, but also contended that the income from the properties allotted to him at the partition had been rightly assessed in the status of a Hindu undivided family. The Income-tax-Officer, the Appellate Assistant Commissioner and the Tribunal have taken the view that the income from the properties allotted to the assessee at the partition should have been assessed only in the status of an individual and not in the status of a Hindu undivided family.

4. The facts of this case clearly fall within the ratio of the decision of the Supreme Court in N. V. Narendranalh v. Commissioner of Wealth-tax, : [1969]74ITR190(SC) wherein it has been held that, where a coparcener, having a wife and two minor daughters and no son, receives his share of joint family properties on partition, such property in the hands of the coparcener belongs to the Hindu undivided family of himself, his wife and minor daughters and cannot be assessed as his individual property for the purpose of wealth-tax. Though that decision was rendered under the provisions of the Wealth-tax Act, the legal position set out therein is applicable to the facts of this case also. We, therefore, answer the second question in the negative and in favour of the assessee. In view of our answer on the second question, it is not necessary to answer the first question.

5. The result is that the original assessments made on the assessee for the assessment years 1957-58 to 1959-60 will stand and the reassessment in that behalf will stand set aside. The original assessment for the year 1960-1961 will stand modified accordingly. There will be no order as to costs.


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