Law:

Section:

Section 4 of the income-tax act, 1961-Hindu undivided family-Assessability of income-Assessees grandmother gave her own funds to assessee's father with specific intention that funds be used for benefit of family-Assessee s father accepted funds on that condition and acquired other properties with these funds as nucleus-Later entire properties partitioned under arbitrator's award-Whether assessee's share under award would constitute huf property-Held, on facts, yes-Whether funds emanating from female member could validly form nucleus of joint family property-Held, yes Facts The assessee's paternal grandmother S gave her own funds to her son (the assessee's father), AR, with the intention that they should be used for the benefit of the entire family. With these funds as nucleus, AR did business and entered into other transactions thereby acquiring properties in his name as well as in the names of others. After some time, the properties so acquired were divided by metes and bounds under an arbitration award which was made into a decree of court. The assessee was married and had children and hence claimed the status of HUF in respect of his share under the award/decree. The ITO held that although the assessee got the share under a court's decree, it could not be treated as joint family property, and, accordingly, assessed him in the status of individual. The AAC sustained the ITO's order on the grounds, inter alia, (i ) that funds emanating from a female member could not, in law form the nucleus of joint family property; and (ii) that the partition under the award was a disposition of properties of AR to other members of his family who had no inherent right of partition over those properties. The Tribunal agreed with the A AC's view. On reference: Held 1. Under the Mitakshara law, it is not correct to hold the view that only ancestral property can be joint family property. Property can be joint family property in other ways too, like, when it is acquired by joint labour of the family members or where it comes as a gift to the family as a whole. It is now well settled that there can be a gift or settlement of property for the benefit of a joint family as such. Such…

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