TMI Blog1993 (11) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... e properties was assessable in the hands of the assessee-company and not in the hands of the Hindu undivided family ? " Facts.--Sri M. Lal Singh made an affidavit on April 11, 1959, declaring that he was the karta of a Hindu undivided family consisting of five members who had formed a limited private company (which we shall refer to as " the assessee-company ") ; that the land under the two periodic pattas bearing Nos. 201 and 1398 of Guwahati town issued in his name would be transferred to the assessee-company to secure the interest of the members for the use and maintenance of the whole joint family ; and that the land was for the use and maintenance of the joint family. The assessee-company was registered on June 23, 1959, with an auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants under the assessee-company on nominal rental of Rs. 4,000 per annum and relegating the existing tenants occupying the same property to the position of sub-tenants under the aforesaid members of the joint family who could realise the rent from the sub-tenants. In terms of the various resolutions adopted by the assessee-company, Smt. Amrit Kaur, on behalf of the assessee-company, executed a deed of release on October 3, 1966, in favour of the Hindu undivided family. The terms of the deed of release are in the following words : " .... 1. That the company having admitted and accepted the claim of the joint family in its general meeting held on March 24, 1964, to the effect that the transfer made in its favour by the late M. Lal Singh on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulled on the strength of their deed." The assessment years are of 1962-63 to 1969-70. The Assessing Officer held that M. L. Singh was the absolute owner of the land and it was validly transferred by him to the assessee-company and, therefore, the land and building standing thereon belonged to the assessee-company despite the so-called release deed, The Appellate Assistant Commissioner, on appeals, confirmed the orders of all assessment years. There were appeals by the assessee-company before the Tribunal. The Tribunal observed that M. L. Singh was the absolute owner of the land and building, not the Hindu undivided family ; that the transfer of property made by M. L. Singh to the assessee-company could not be challenged ; that there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions or to perpetrate fraud, and that the income-tax authorities were entitled to pierce the veil of corporate personality and look at the reality of the transaction. The ratio of the decisions of the Supreme Court in the abovecited cases is that the court, or the income-tax authority, has the power to lift the veil and examine the nature of the transaction if it is used for tax evasion or to circumvent tax obligation and the court has power to reject such a transaction for the purpose of the taxing statutes. Coming to the case on hand, considering the terms of reference, we proceed with the case assuming that M. L. Singh was the karta of a Hindu undivided family. The transfer of the properties by M. L. Singh to the assessee-company was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperties and the sale was invalid, the assessee-company took a decision to transfer the possession of the properties by treating the surviving members of the Hindu undivided family as tenants under the assessee company. If the surviving members of the Hindu undivided family were treated as tenants under the assessee-company in respect of the properties in question, how any of the members of the Hindu undivided family could assert title against the assessee-company ? That apart, if the sale of the properties by M. L. Singh to the assessee-company was nullified by the assessee-company at the instance of Amrit Kaur, M. L. Singh or his heirs are to pay back the money received by M. L. Singh, as the price of the properties, to the assessee-comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... swami Chettiar v. A. S. P. A. Arumugam Chettiar, AIR 1967 SC 1395, the Supreme Court has held that a release can be usefully employed as a form of conveyance by a person having some right or interest, to another having a limited estate and the release then operates as enlargement of limited estate ; and a deed called a deed of release also can, by using words of sufficient amplitude, transfer title to one having no title before transfer. In view of the above decisions of the Supreme Court, it follows that a deed of release or instrument styled a release deed, in given cases, may operate as a conveyance if it clearly discloses an intention to effect a transfer for valuable consideration. Therefore, the deed of release in question should be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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