Commissioner of Income Tax vs Basant Singh

Prem Chand Jain, J.—The assessee is an HUF (hereinafter referred to as "the assessee"). The assessment year commenced on 1st April, 1971. The financial year was the " previous year ". The assessee derived, (i) share income from the firm, M/s. Khazan Singh Basant Singh, (ii) interest income from M/s. Basant Singh and Sons, (iii) dividend income, and (iv) bank interest. The assessment was completed by the ITO on 13th March, 1974, at a total income of Rs. 90,680 as against the declared income of Rs. 24,055 as per the original return and the declared income of Rs. 23,805 as per the revised return. Basant Singh, karta of the assessee, had during the accounting year under consideration, a wife and three daughters. The said persons during the accounting year under consideration derived incomes, namely, Rs. 24,996, Rs. 17,375, Rs. 14,033 and Rs. 13,492 respectively. The said incomes were included while computing the income of the assessee. This inclusion was confirmed, on appeal, by the AAC. On second appeal, the Tribunal found that the three amounts reserved for marriage expenses of three unmarried daughters could not be taken to belong to the karta of the family. With regard to the amount belonging to the wife of the karta, the Tribunal held that this amount, on partition, came to belong to her and she being a female member, could not even have thrown this amount into the hotchpot of the assessee. Consequently, all the four amounts were held not to belong to the assessee.

On an application made by the Commissioner, the Tribunal has referred the following questions for our decision :

"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the income earned on the three amounts provided at the time of partition on March 31, 1958, between the father and his two sons for marriages of the unmarried daughters of the former could not be treated as income of the assessee-Hindu undivided family ?

(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has been right in law in holding that the income earned on the amount falling to the share of Ram Piari at the time of the partition on March 31, 1958, was not includible as income of the assessee- Hindu undivided family ? "

So far as question No. 2 is concerned, it may be observed at the outset that Mr. Awasthy, learned counsel for the petitioner, very fairly conceded that the decision of the Tribunal was correct and that the income earned on the amount falling to the share of Smt. Ram Piari at the time of the partition on 31st March, 1958, was not includible in the income of the assessee. Consequently, this petition is answered against the Revenue and in favour of the assessee.

So far as the first question is concerned, the Tribunal has found as a fact that the three amounts in favour, of the three daughters were kept for marriage expenses at the time of the partition in the year 1958, that as these three amounts were exclusively given to the three daughters as marriage expenses before partition, the same could not, after the partition be, in law, said to belong to Basant Singh, karta, and that in the circumstances of the case no question could arise for throwing into the hotchpot, of the three amounts given to the three daughters before partition. In view of these fin lings, it is quite evident that the three amounts were given to the daughters before partition and the same belonged to them exclusively. In this situation, the Tribunal was justified in concluding that the said amounts could not be treated as the income of the assessee. Consequently, the answer to question No. 1 is returned in favour of the assessee and against the Revenue.

In the circumstances of the case, we make no order as to costs.