Law:

Section:

Section 64(2) of the income-tax act, 1961 Transfer of assets for benefit of spouse or minor child Conversion into huf property Income of HUF included in assessee's income on transfer of property from individual to huf after 31-12-1969 Interest on deposit standing originally in the name of individual subsequently converted as that of HUF interest and share income included in the hands of individual-Whether justified held, yes Facts The assessee, as individual, had a deposit with a firm. He impressed this amount with the character of HUF with effect from 18-03-1972. He became a partner in the said firm on 4-09-1972. In the previous year relevant to the assessment year 1973-74, he earned Rs. 1,000 as interest on the deposit for the period from 1-04-1972 to 3-09-1972 and share income of Rs. 8,204 for the period from 4-09-1972 to 31-03-1973. The assessee claimed that these amounts belonged to the HUF. The ITO rejected this claim and added the impugned amounts in his taxable income under section 64(2). Both the A AC and the Tribunal confirmed the assessment. On reference : Held Where a member has converted his separate property into joint family property on or after 1-1-1970, the part of the income from the converted property proportionate to that member's interest in the joint family property is taxable as his income and not as income of the joint family. The Tribunal was, therefore, right in confirming the inclusion of interest and the share income in the income of the assessee. IT REFERENCE NO. 589 OF 1976 Judgment R.R. Rastogi, J.-The assessee, an individual, had deposited a sum of Rs. 20,000 in his individual account with Messrs. Sohan Mal Hakam Chand and Company of Muzaffarnagar. With effect from 18th March, 1972, he impressed this amount with the character of HUF property. He became a partner in the aforesaid firm on September 4, 1972. In the previous year relevant to the assessment year 1973-74, he earned Rs. 1,000 as interest on the aforesaid amount for the period from April 1, 1972, to September 3, 1972, and share income of Rs. 8,204 for the period from September 4, 1972, to March 31, 1973. In his assessment, the assessee claimed that these two amounts…

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