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Commissioner of Income-tax Vs. Balai Chandra Paul and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 38 of 1971
Judge
Reported in79CWN589,[1976]105ITR666(Cal)
ActsIncome Tax Act, 1922 - Sections 9(3) and 12; ;Income Tax Act, 1961 - Sections 26 and 56
AppellantCommissioner of Income-tax
RespondentBalai Chandra Paul and ors.
Appellant AdvocateB.L. Pal and ;Ajay Mitra, Advs.
Respondent AdvocateSanjoy Kumar Bhattacharjee, Adv.
Cases ReferredGovinda Chandra Das v. Commissioner of Wealth
Excerpt:
- .....the circumstances of the case, and having regard to the rights of the coparceners in a dayabhaga hindu undivided family the income from property possessed jointly by the members of the hindu undivided family should be assessed to tax in the hands of the family or in the hands of the individual members applying the provisions of section 9(3) of the indian income-tax act, 1922, or section 26 of the income-tax act, 1961, for the assessment year 1961-62 and section 26 of the income-tax act, 1961, for the assessment years 1962-63 to 1965-66 ? 2. whether, on the facts and in the circumstances of the case, the income from bustees should be assessable under the head 'other sources' in the hands of the hindu undivided family or in the hands of the individual coparcencers with reference to their.....
Judgment:

Deb, J.

1. The Income-tax Appellate Tribunal, Calcutta, under Section 256(1) of the Income-tax Act, 1961, has referred the following questions of law to this court :

1. 'Whether, on the facts and in the circumstances of the case, and having regard to the rights of the coparceners in a Dayabhaga Hindu undivided family the income from property possessed jointly by the members of the Hindu undivided family should be assessed to tax in the hands of the family or in the hands of the individual members applying the provisions of Section 9(3) of the Indian Income-tax Act, 1922, or Section 26 of the Income-tax Act, 1961, for the assessment year 1961-62 and Section 26 of the Income-tax Act, 1961, for the assessment years 1962-63 to 1965-66 ?

2. Whether, on the facts and in the circumstances of the case, the income from bustees should be assessable under the head 'other sources' in the hands of the Hindu undivided family or in the hands of the individual coparcencers with reference to their share as in the relevant years ?'

2. The assessee is a Hindu undivided family and is governed by the Dayabhaga school of Hindu law. In the assessment years 1961-62 to 1965-66 the Income-tax Officer has assessed the assessee under two heads, namely, (i) income from house property; and (ii) income from 'other sources' consisting of bustee lands.

3. The appeals preferred by the assessee from the said assessment orders were allowed in part by the Appellate Assistant Commissioner who was of the opinion that the income from the house property should be assessed in the hands of the individual members of the family as they had a distinct and definite share therein, but not the income from the bustee lands which should be assessed in the hands of the family.

4. The department preferred five appeals to the Appellate Tribunal and the assessee filed five cross-objections from the said decisions. The Tribunal by a consolidated order dismissed those appeals and the assessee's cross-objection for the assessment year 1961-62, but allowed the cross-objections for the other years, for in its opinion the income from the bustee lands should be assessed in the hands of the individual members of the family by applying the principle laid down by this court in the case of Govinda Chandra Das v. Commissioner of Wealth-tax : [1969]71ITR20(Cal) .

5. It has been contended before us by Mr. B. L. Pal, the learned advocate for the department, that the income from the house property should be assessed in the hands of the family, for 'a Hindu undivided family' and an 'association of persons', according to him, are two distinct status for the purpose of taxation under the Indian Income-tax Act, 1922, and the Income-tax Act, 1961, and, therefore, though the individual members of a Dayabhaga Hindu undivided family may have definite and ascertained shares in the house property, yet they cannot be individually assessed under Section 9(3) of the 1922 Act and Section 26 of the 1961 Act, for these two Sections speak of an association of persons and not a Hindu undivided family.

6. But we are not impressed by his contention. Section 9(3) of the 1922 Act and Section 26 of the 1961 Act are in pari materia and it has been held by this court in the case of Commissioner of Income Tax v. Bani Rani Rudra : [1966]59ITR216(Cal) that as the heirs of a deceased Hindu governed by the Dayabhaga school of Hindu law inherit the properties in definite and ascertained shares they can neither be treated as an association of persons nor as members of a Hindu undivided family, and though they may remain in joint possession of the properties inherited by them yet they should be separately assessed in respect of the house property in accordance with the respective shares inherited by them under Section 9(3) of the Indian Income-tax Act, 1922.

7. The court has also taken the same view in an earlier decision in the case of Biswa Ranjan Sarvadhikary v. Income-tax Officer : [1966]59ITR216(Cal) .

8. In this state of the law our answer to question No. 1 is in favour of the assessee, that is to say, that on the facts and in the circumstances of the case, and having regard to the rights of the coparceners in a Dayabhaga Hindu undivided family, the income from the house property possessed jointly by the members of the Hindu undivided family should be assessed to tax not in the hands of the family but in the hands of the individual members by applying the provisions of Section 9(3) of the Indian Income-tax Act, 1922, for the assessment year 1961-62 and Section 26 of the Income-tax Act, 1961, for the assessment years 1962-63 to 1965-66.

9. Now, with regard to the income from the bustee lands it has been contended by Mr. Sanjoy Kumar Bhattacharjee, the learned advocate for the assessee, that these lands are owned in distinct shares by the individual members of the family under the Dayabhaga school of Hindu law, and, therefore, the individual members should be separately assessed on the principles laid down in the cases cited above and also in the case of Govinda Chandra Das v. Commissioner of Wealth-tax : [1969]71ITR20(Cal) . But we are not impressed by his contention.

10. A claim made by the assessee under Section 25A of the 1922 Act was rejected at the time of assessment for the assessment year 1961-62. The assessee has shown the income from the bustee lands as 'income from other sources' of the Hindu undivided family and was assessed as such. Section 9(3) of the 1922 Act and Section 26 of the 1961 Act do not apply to the income from other sources and such income has to be assessed under Section 12 of the 1922 Act, or under Section 56 of the 1961 Act, as the case may be. In our opinion, the principles laid down by this court in Commissioner of Income-tax v. Smt. Bani Rani Rudra : [1966]59ITR216(Cal) and in Biswan Ranjan Sarvadhikary v. Income-tax Officer, in these circumstances, cannot be invoked for assessment of income from other sources under the Income-tax Acts.

11. The decision of this court in Govinda Chandra Das v. Commissioner of Wealth-tax is on the Wealth-tax Act but the Wealth-tax Act and the Income-tax Act are not in pari materia. Further, there is no such section in the Wealth-tax Act like Section 9(3) as in the Indian Income-tax Act, 1922, nor there is any such section in the Wealth-tax Act like Section 26 as in the Income-tax Act, 1961. Hence, the assessee cannot rely on Govinda Chandra Das's case, for it has no application in relation to the assessment of income from other sources under the respective Income-tax Acts.

12. In this view of the matter, our answer to question No. 2 is in favour of the department, that is to say, that on the facts and in the circumstances of the case, the income from the bustees should be assessed under the head 'other sources' in the hands of the Hindu undivided family and not in the hands of the individual coparceners.

13. In the facts and circumstances of this case, we make no order as to costs.

R.N. Pyne, J.

14. I agree.


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