Law:

Section:

Section 3 of the Wealth-tax Act, 1957-Hindu undivided family-Assessability of-R had inherited certain immovable HUF properties from his father-He got married under the special marriage act and later his marriage was also solemnised according to hindu rites-Subsequent to his marriage, he made gift of aforesaid HUF properties to his wife, minor children and claimed exclusion of gifted properties in his wealth-tax assessment as HUF-Whether r justified in claiming that his marriage under the special marriage act amounted to severance of his joint status making property, inherited by him from his father, his separate property which he could validly gift-Held, on facts, no [since R's marriage was later also solemnised in accordance with hindu rites also]-Whether value of gifted properties was liable to be assessed in the hands of R's HUF-Held, on facts, yes Facts On his father's death, R, as the sole surviving coparcener of his father's family, received some HUF properties. He got married in 1939 under the Special Marriage Act. Thereafter, the marriage was also solemnised according to Hindu rites. Some of the properties were gifted by him by means of a registered document in favour of his minor sons, daughters, and wife in 1946. Some of the gifted properties had been sold and the sale proceeds had been kept with the assessee. For the assessment years 1964-65 to 1968-69, R filed his wealth-tax returns in the status of HUF and claimed (i) that the immovable properties mentioned in Part IV of the returns, which had been gifted by him to his wife, sons and daughters in 1946, should not be included in his wealth ; (ii) that he be assessed as an individual because of his marriage under the Special Marriage Act, which amounted to severance of his joint status ; (iii) that the property received from his father had become his separate property after the severance of joint status and it could validly be gifted by him in favour of his wife and children ; and (iv) that the sale proceeds of some of the gifted properties sold by him should be treated as debts owed by him to his wife and children. The WTO held that the correct status of the assessee was that of a HUF and as such R…

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