Law:

Section:

Section 4 of the Income-tax Act, 1961 - Hindu undivided family - Assessability of - Assessment year 1975-76 - Assessee's father executed a settlement deed in favour of assessee's mother in respect of some of properties which fell to his share in partition - In regard to one item of properties, settlement deed provided that mother was at liberty to sell and enjoy sale proceeds but if she did not sell or dispose of property during her lifetime, property should be divided among her three sons and their heirs equally - She died and had not disposed of that property during her lifetime - Whether assessee's one-third share of income from such property could be taxed in his hands as income of his HUF - Held, yes FACTS S, the assessee's father, owned ancestral as well as separate properties and he entered into a deed of partition with his sons in respect of the properties. With reference to the properties which fell to the share of the assessee's father under the partition, he executed a deed of settlement in favour of his wife and his daughters. In regard to one item of properties, wife was given the right to sell and enjoy the sale proceeds with absolute rights and it was also provided that, if she did not sell or dispose of the said property during her lifetime, it was to be divided among her three sons and their heirs equally in three shares. She died on 18-11-1974 and as deceased had not disposed of that property at the time of her death, the assessee and his two brothers and their heirs became entitled to the same. The assessee claimed that one-third share of income from such property could not be subjected to tax in his hands as an individual but that income should be taxed as the income of the HUF consisting of himself and his sons and other heirs. The ITO rejected this claim. But the AAC and the Tribunal accepted the same. On reference: HELD The use of the expression 'heirs' in the settlement deed is not intended to connote a heritable and alienable estate, but to denote a class of beneficiaries along with the son of the settlor, viz., the assessee and his heirs. That the benefit of the gift was intended by the settlor to be taken by the sons and their heirs,…

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