Law:

Section:

Section 4 of the Income-tax Act, 1961 - Hindu undivided family - Assessable as - Assessment year 1975-76 and 1976-77 - On 13-4-1955 there was partition in HUF of S and his minor sons, N and P, as a result of which S was liable to pay certain amount to P - Later on, before his marriage, P withdrew Rs. 5,000 from amount due by S to P to make payment for certain property purchased jointly by P and. N - Subsequently, P got married - Whether since property in question was purchased by P with ancestral funds, it became property belonging to HUF of P, i.e., assessee-HUF and, therefore, income derived from such property was assessable in hands of assessee-HUF - Held, yes FACTS On 13-4-1955, there was a partition in the HUF of S and his minor sons, N and P, as a result of which S became liable to pay to P a certain amount of money. P got married on 9-6-1974, Before his marriage, P, along with his brother N, had purchased a property G under a sale deed for a sum of Rs. 5,23,000. Out of the amount, which S was liable to pay to P at the time of partition, P withdrew a sum of Rs. 50,000 and paid it as an advance against the purchase of the aforesaid property. While completing the assessments for the assessment years 1975-76 and 1976-77, the ITO held that since the sum of Rs. 50,000 withdrawn by P from S for the purpose of paying advance for the purchase of the property 'G' represented ancestral properties in the hands of P, the property 'G' purchased therewith should also be considered to be belonging to the HUF of P, i.e., the assessee-HUF and not to P as an individual. He, therefore, assessed the income derived from the aforesaid property in the hands of the assessee-HUF. On appeal, the AAC held that the property in question belonged to P and N in their individual capacity. On further appeal by the revenue, the Tribunal held that the property in question belonged to the assessee-HUF and, consequently, the income arising therefrom was to be assessed in the hands of the assessee-HUF. On reference : HELD In the instant case, on 13-4-1955, there was a partition in the HUF of S and his sons P and N. As a result of the above mentioned partition, S became liable to pay to his…

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