Law:

Section:

Section 4 of the Income-tax Act, 1961 - Individual - Assessable as - Assessment year 1963-64 - Whether existence of joint family property is an essential condition for impressing one's personal property with character of joint family property - Held, no FACTS The assessee was a member of the HUF, the in her individual capacity and with the aid of her personal funds, entered into a partnership with her father-in-law and her minor son was also admitted to the benefits of the partnership. The partnership-firm owned and ran two cinema theatres, 'NK' and 'NL' for which separate accounts were maintained. On 1-9-1961, the assessee made a sworn declaration that her exclusive or separate ownership and enjoyment of her share capital investment and share in the profits and losses of 'NK' would cease to be her self - acquired or separate property and the ownership, enjoyment and possession of the same would vest only with the HUF to be enjoyed by it exclusively, and wholly thereafter. For the assessment year 1963-64, the assessee did not include this income in her return. The assessee pleaded before the ITO that her share of the profit from the business of 'NK' credited to her account in the books of the firm, really belonged to the HUF by virtue of and with effect from her declaration of 1-9-1961, and was, therefore, not assessable in her hands. The ITO held that the share income from 'NK' accrued to the assessee in her individual capacity and not as an agent of the HUF and, hence, assessable in her hands. On appeal, the AAC rejected the claim of the assessee on the ground, inter alia, that the assessee could not have thrown her personal property in her joint family hotchpotch as the joint family did not possess any joint family property. On second appeal, the Tribunal held that the holding of property by the joint family was not all necessary to enable a member of the family to impress his or her personal property with the character of the joint family property. On reference : HELD Where the joint family owns the nucleus of joint family property the process of throwing the property of a coparcener into the common stock will be called 'blending' but where there is no…

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