Law:

Section:

Section 4 of the Income-tax Act, 1961 [Corresponding to section 3 of the Indian Income-tax Act, 1922], read with section 16 of Wealth-tax Act, 1957 - Hindu undivided family - Assessable as - Whether a sole coparcener in respect of property which fell to his share after partition of HUF, for purpose of income-tax and wealth-tax should be assessed as Hindu undivided family - Held, yes FACTS The assessee on partition obtained his share out of the ancestral property of an original joint Hindu Mitakshara family. After partition, his family consisted of himself and his wife, there being no issue. Thus, he was the sole coparcener in respect of the property that fell to his share after partition. The assessee claimed to be assessed in the status of Hindu undivided family as he asserted that he and his wife constituted a "Hindu undivided family" in respect of the assets inherited by him. The contention was negatived both by the WTO and on appeal by the AAC. On further appeal, the Tribunal held that though the assessee was bound to maintain his wife, the wife could not be said to own any right in property received by the assessee at the time of partition and the assets, therefore, belonged to the assessee individually and dismissed the appeal. On reference : HELD If it be held that the property in the hands of a sole surviving coparcener is not the property of the HUF, startling results may ensue. As soon as he gets a son or adopts a son, the property will become the property of a HUF. If that son happens to die, the property will then become the property of an 'individual' until another son is either born or adopted. There will thus be a bewildering complexity as regards the status of an assessee which would vary from time to time. The safer test seems to be, as pointed out by the Privy Council in the case of Attorney General of Ceylon v. A.R. Arunachalan Chettair [1957] A.C. 540 : [1958] 34 ITR (ED) 42, whether there is a potentiality of a coparcener being brought into existence either by law or by nature. So long as that potentiality is there, the property must be held to be that of a HUF. Such a potentiality exists in the case of a sole surviving coparcener, because…

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