TMI Blog1979 (12) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... raja Pratap Uday Nath Sahdeo of Chotanagpur, who was the holder of an impartible estate, on his death on 7th March, 1950. The late Maharaja was being assessed in the status of an individual. After the enforcement of the Hindu Succession Act, 1956, the assessee claimed to be assessed in the status of an HUF. According to the assessee, by the enforcement of the said Act, the rule of primogeniture, relating to succession to an impartible estate, had been rendered ineffective and was not saved by any provision of the said Act. The assessee, therefore, claimed the status of an HUF from the assessment year 1965-66 onwards. The ITO, however, rejected the assessee's claim and reiterated the status of individual for making the assessment on the assessee. The AAC, however, on appeal, accepted the assessee's claim to be assessed in the status of an HUF, from the year from which such claim had been made, namely, from the assessment years 1965-66 to 1969-70. There were appeals by the department before the Income-tax Appellate Tribunal against the orders of the AAC, which failed. The Tribunal also accepted the assessee's claim to be assessed in the status of an HUF after the change brought about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bihar Land Reforms Act. On further appeal to the Income-tax Appellate Tribunal, the assessee's claim was accepted. The Tribunal, in accepting the assessee's plea for the said sum of Rs. 29,922, being a capital receipt, relied on the aforesaid decision of the Supreme Court in the case of S. R. Y. Sivaram Prasad Bahadur [1971] 82 ITR 527. On these facts, question No. 1, aforesaid, has arisen for the assessment year 1970-71, which has been referred for the opinion of this court. The third question is common for both the assessment years 1970-71 and 1971-72. The facts in this respect are few : The assessee, as a member of the Legislative Council, received a sum of Rs. 3,542 for the assessment year 1970-71 and Rs. 2,680 for the assessment year 1971-72 as remuneration. He did not include this income in, the return of income of the HUF, on the ground that it was his individual income. Since the assessee was assessed by the ITO in the status of an individual, the said amounts were included in his income for the respective assessment years. In view of the acceptance of the assessee's claim for being assessed in the status of an HUF by the AAC as also by the Tribunal, the said amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble estate was held in coparcenary as joint family property and further observed that the junior members had no present interest in the estate. Their Lordships clearly observed that (p. 1805) : " The income of the importable estate is the individual income of the holder of the estate and is not the income of the joint family. " On the basis of these decisions and on certain others declaring an identical view, it was urged that the status" in which the assessee could be assessed, could be only that of an individual and not that of an HUF. The Tribunal, according the learned counsel for the department, had, therefore, gone wrong in confirming the AAC's order, adopting the assessee's status, for the purpose of assessing it to income-tax, as an HUF. On behalf of the assessee it was urged that by the coming into force of the Hindu Succession Act, 1956, it created a change in the law of succession to an importable estate. By virtue of s. 4 of the said Act, any custom or usage in force, laid by any text or in such other manner, ceased to have effect after the enforcement of the said Act, so that the right of the holder of an importable estate over the income of the estate itself fel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be assessed in that status until he raised a claim for the assessment years 1965-66 onwards to be assessed in the status of an HUF. The change in the attitude of the assessee, as the assessee himself put it before the ITO, was because of the change brought about by the Hindu Succession Act, 1956. May be that, notwithstanding the enforcement of the said Act, the assessee having been vested with the property of an importable estate, he could not be divested of it by the passing of the said Act, the incidents attaching to an importable estate would continue to be enjoyed by him. As has been urged by the learned counsel for the department by citing several case law that the holder of an importable estate holds all of it for himself to the exclusion of all the junior members of his family. The income arises exclusively to the individual holder of the importable estate over which the joint family has no claim. The assessee, however, has clearly indicated by his claim before the ITO and also by the unequivocal declarations made by him in the returns of income for the assessment years 1965-66 onwards that now he did not consider himself to be the individual owner of the income arising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to change it, without any fresh material to make the assessment of the income as arising to the assessee in his individual capacity and not as a member of the Hindu joint family. I will accordingly answer question No. 2, aforesaid in the affirmative, that is to say, the Tribunal was correct in determining the status of the assessee as an HUF for assessing the income arising from the importable estate. So far as the income from the house property is concerned, that has to be assessed in the status of an individual by virtue of the fiction created by the I.T. Act, 1961 under s. 27 thereof. It follows as a natural corollary that the income from salary earned as a member of the member of the legislative council being his individual income, cannot be assessed along with the income from the income the Hindu Joint family. Such an income has therefore, to be excluded from the assessment in question. Question No.3 is therefore, also answered in the affirmative. The next question which remains to be considered is as to what is the nature of the interim payments made to the assessee under the provisions of the Bihar Land Reforms Act; whether capital or revenue. On behalf of the department, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way their income producing assets. The interim payments did not appear to have any relationship with the compensation ultimately payable. On the other hand, it takes note of the loss of income incurred by the former owners due to the abolition of the estates. The contention that it was in lieu of interest on the compensation payable overlooks the fact that the liability of the Government to pay the compensation excepting to the extent provided in section 54A arose only after the compensation payable was finally determined under section 39." The case of Raja Rameshwara Rao [1963] 49 ITR 144 (SC) was distinguished saying that there the question was in respect of payment of interim maintenance allowance and that was why it was held that it was revenue receipt. The relevant portion of s. 33 of the Bihar Land Reforms Act is as follows: " 33. Making ad interim payments to Proprietor, etc.-(1) After the date of vesting and before the date of payment of compensation under sub-section (2) of section 32 or of the amount assessed as a perpetual annuity under clause (3) of section 24 ad interim payments shall be made six-monthly to the outgoing intermediary or, as the case may be, six-mo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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