Law:

Section:

Section 4, read with section 10(3), of the Income-tax Act, 1961 [Corresponding to section 3, read with section 4(3)(vii), of the Indian Income-tax Act, 1922] - Income - Chargeable as - One 'S' had three wives and a married son, 'L' - 'S' and 'L' together with their wives had formed joint Hindu family - Both 'S' and 'L' died - Payment of estate duty on estate left behind by deceased was paid out of joint family fund - Levy of estate duty was challenged by widows - Board set aside levy of estate duty and estate duty deposited was refunded to HUF with interest accrued thereon - Each widow had adopted son - Later, on severance of joint status, assessee, adopted son of 'L', became entitled to share in family estate - ITO brought to tax said share - Whether amount of interest on estate duty accrued as income to joint family but it was income of joint family and not of individual members - Held, yes - Whether once income was received by joint family, it become merged into joint family assets and become capital of family - -Held, yes - Whether, therefore, share of assessee in joint family property prior to cessation of status of HUF was of revenue nature and, therefore, not liable to tax - Held, yes FACTS One 'S' had three wives and a married son, 'L'. A HUF was formed by 'S' and 'L' together with their wives. Both 'S' and 'L' died. The revenue authorities levied estate duty in respect of the estate left behind by the deceaseds. The estate duty was paid out of the joint family fund. The levy of the estate duty was challenged by the three widows and the dispute was carried to the Judicial Committee of the Privy Council. The Board set aside the entire levy of the estate duty and the estate duty was refunded along with interest accrued thereon. Each widow had adopted a son. A dispute arose between the three widows. A suit for partition of the joint family property was then filed. Under a settlement reached, between the three widows and the assessee, adopted son of 'L', he was held to be entitled to 5/24th share in the estate.The ITO brought to tax the assessee's share of the amount of interest received on the estate duty refunded. On appeal, the AAC confirmed the order of…

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