1971 (8) TMI 91 - SC - Income Tax

Summary

Issues:
1. Interpretation of section 29 of the Agricultural Income-tax Act regarding the status of tenancy in common.
2. Assessment of income of a Hindu undivided family post-partition.
3. Validity of the Tribunal's decision regarding the status of the family.
4. Applicability of section 29(1) in determining the tax liability of a Hindu undivided family.

Analysis:
The Supreme Court addressed the interpretation of section 29 of the Agricultural Income-tax Act in a case involving the status of tenancy in common. The High Court had ruled in favor of the assessee, disregarding the legislative mandate of partition in the family in definite portions as per section 29. The Court found the question referred to the High Court to be misconceived and suggested reframing it before answering. The case pertained to the assessment years 1956-57 and 1957-58, following a family partition on August 29, 1956. The Tribunal confirmed the division of the family properties by metes and bounds, leading to the issue of tax liability for the Hindu undivided family's income.

The Court noted that the High Court concluded that no income from the relevant accounting years could be taxed as the Hindu undivided family's income. The partition deed was executed on September 15, 1956, post the karar on August 29, 1956. Consequently, the income earned after the division could not be attributed to the Hindu undivided family. The Court also questioned the clarity of the expression "a Hindu undivided family which is being assessed for the first time as a Hindu undivided family" in section 29(1), stating it lacked enforceability due to ambiguity.

Regarding the Tribunal's decision on the family's status, the Court emphasized that the Tribunal's order confirming the family's division should be considered as an order under section 29. The appellant's argument that the family should be deemed undivided due to the absence of an order under section 29 by the Agricultural Income-tax Officer was dismissed. The Court upheld the Tribunal's decision and dismissed the appeal, with no representation from the respondent. The Court appreciated the assistance of amicus curiae Mr. S. T. Desai and made no order as to costs in the appeal.