Law:

Section:

Section 4 of the Income-tax Act, 1961 - Hindu undivided family - Assessable as - Assessment year 1960-61 - Whether notwithstanding death of male member of HUF, HUF continues, but property of HUF gets diminished to extent of share of male Hindu dying - Held, yes - Karta of HUF was partner in two firms - He held shares in two firms in his capacity as karta of HUF - Karta died instate after commencement of Hindu Succession Act, 1956 - Whether on death of Karta, share of joint family in two firms reduced to extent of share of karta - Held, yes - Whether, therefore, income of share of karta was not liable to be included in income of HUF - Held, yes FACTS The Karta of HUF was a partner in two firms. The Karta held shares in the two firms in capacity as the karta of HUF. The income derived by the karta was assessed in karta's hands as income of HUF. The karta died intestate after the enactment of the Hindu Succession Act, 1956. The Karta's share in joint family property devolved by succession on heirs of karta. The Tribunal excluded the income of the share of karta from the assessment of HUF. On reference: HELD When a male Hindu dies after the commencement of the Hindu Succession Act having at the time of his death an interest in a Mitakshara coparcenary property, his interest in the property devolves by succession on his heirs if he had left behind him a surviving female relative specified in clause (1) of the schedule to the Hindu Succession Act. For the purpose of computation or determination of the share of the male Hindu, Explanation (1) to section 6 of the Hindu Succession Act assumes that a notional partition in the family had taken place immediately before his death. Notwithstanding the death of a male member of a HUF, the HUF continues, but the property of the HUF gets diminished to the extent of the share of the male Hindu dying. Therefore, on the death of the karta, the share of the joint family in the two firms reduced to extent of share of karta. The Tribunal was entirely right in holding that the income of the share of the karta was not liable to be included in the income of the HUF. Note : The case was decided against the revenue. JUDGMENT Govinda Bhat,…

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