State of Tamil Nadu Vs. P. Ganesa Odyar - Court Judgment

Excerpt:
direct taxation - family - income tax act, 1961 - whether father constituting family with wife and children can by settlement create right in favour of his daughters to exclude properties covered by settlement deed from agricultural income-tax - out of lands got by partition assessee settled certain acres in favour of both of his daughters - assessee submitted before assessing officer (ao) income from lands settled on members of hindu undivided family (huf) could not be assessed in his hands - agricultural income tax officer (aito) made assessment including income from lands settled by assessee in favour of daughters - appeal to tribunal - tribunal set aside assessment and remanded matter back to aito for computation of income - appeal by state - properties settled by assessee on daughters deemed to be made by him as 'karta' of huf and income from properties received from grandmother assessable as his individual income - court directed ao to assess income of assessee according to directions given. head note: income tax huf--formation--general principles. ratio & held: there need not be more than one male member to form a hindu undivided family as a taxable entity under the income tax act. the expression `hindu undivided family' in the income tax act is used in the sense in which a hindu joint family is understood under the personal law of the hindus. under the hindu system of law a joint family may consist of a single male member and widows of deceased male members, and the income tax act does not indicate that a hindu undivided family as an assessable entity must consist of at least two male members. under section 3 of the income tax act not a hindu coparcenary but a hindu undivided family is one of the assessable entities. a hindu joint family consists of all persons lineally descended from a common ancestor, and includes their wives and unmarried daughters. a hindu coparcenary is a much narrower body than the joint family; it includes only those persons who acquire by birth an interest in the joint or coparcenary property, these being the sons, grandsons, and great grandsons of the holder of the joint property for the time being. case law analysis: gowli buddanna v. cit (1966) 60 itr 293 (sc) relied. application: also to current assessment years. income tax act 1961 s.171 agricultural income tax agricultural income--huf or individual income--property settled on minor children by karta of huf. ratio: in the circumstances of the case income from property settled on minor children by karta of hindu undivided family was not includible in total income of hindu undivided family. held: the lands in the name of the father of the assessee, were inherited by the assessee, as the son of his father, and the income derived from such land cannot be assessed in the status of a hindu undivided family because under section 8 of the hindu succession act, 1956, the property inherited from the father will be the individual separate property of the assessee.accordingly, the assessement had to be made on the hindu undivided family consisting of the assessee, his wife and children in respect of the income derived by him from (a) properties received on partition among his father, his grandfather and himself, (b) properties acquired from income from properties obtained on partition, and (c) properties acquired by the assessee on the death of his father are to be assessed as his individual proeprties. the properites settled by the assessee on his minor children should be deemed to have been made by him in his capacity as the karta of the hindu undivided family consisting of himself, his wife and children. the income from such properties could not be included in that of the hindu undivided family under the provisions of section 9(2). the income from properties received by the assessee from his grandmother was assessable in his hands as his individual income. application: also to current assessment years. t n agrl ita 1955 s.9(2) - t.n. district police act, 1859 [act no. 24/1859]. section 10 & tamil nadu special police subordinate service rules, rule 14(b), clause (iv) explanation (1); [a.p. shah,c.j., f.m. ibrajhim kalifulla & v. ramasubramanian, jj] rule 14(b),ci.(iv) explanation (1) providing that a person acquitted or discharged on benefit of doubt shall be treated as person involved in criminal case - validity being questioned - held, the impugned rule 14(b) ci.(iv) explanation (1) has been issued in exercise of the power conferred upon the government under the tamil nadu district police act, the criminal city police act and the proviso to article 309 of the constitution., the rule is not assailed on the ground of lack of competence. it is challenged only on the ground that it is violative of articles 14 and 16 of the constitution. but it is well settled that if a rule passes the twin tests of (i) being founded on an intelligible differentia, and (ii) such differentia having a nexus with the object sought to be achieved, it cannot be said to be violative of articles 14 and 16 of the constitution. the impugned rule creates a classification of persons, who were not involved in criminal cases and persons, who were involved in criminal cases. the object of creating such a classification is to ensure that only those persons, whose character and antecedents were beyond and shadow of doubt alone, are permitted entry into the police service of the state. the rule is only a reflection of the intention of the government to maintain purity of administration. the rule merely provides a check post or a filter point, to ensure that only those, who had a clean record of personal life, are admitted into the system. that the existing system, has already come under heavy dose of criticism, cannot be swept under the carpet. therefore, as an employer, the government is entitled to prescribe, especially in a disciplined force like the police force, such a restriction at the entry level. there cannot be a dispute about the proposition that an employer has the right to prescribe any qualifications for appointment to a post. if that be so, an employer has a concomitant right even to prescribe disqualifications when it comes appointment to a post. persons who were never involved in criminal cases, need not be treated as equals to or on par with persons who were involved in criminal cases merely because they are acquitted later, especially in the matter of selection to the police service of the state. the classification made between them, is not only reason able but also has a nexus with the object sought to be achieved. the employer does have the right to choose a person untainted with any allegations. the attempt made to assail the impugned rules on the ground of violation of articles 14 and 16 of the constitution is fragile. the impugned rules themselves appear to be a product of the application of the right to equality. a person, who was never involved in any criminal case, cannot be equated to a person, who was involved in a criminal case, merely because he is acquitted later, at least insofar as matters of public employment are concerned. therefore, the challenge to the impugned rule on the ground of infringement of articles. 14 and 16 of the constitution must fail. -- section 10 & tamil nadu special police subordinate service rules, rule 14(b), clause (iv) explantion (1); appointment - state police service - disqualification of a person acquitted on benefit of doubt or discharged in a criminal case - validity? held, by virtue of explanation 1 to clause (iv) of rule 14(b) of the t.n. special police subordinate service rules, a person acquitted on benefit of doubt or discharged in a criminal case, can still be considered as disqualified for selection to the police service of the state and that the same cannot be termed as disqualified for selection to the police service of the state and that the same cannot be termed as illegal or unjustified. the reason as to why cr.p.c. does not make a distinction between an acquittal on benefit of doubt and an honourable acquittal, is to ensure that no person shall be tried for a second time for the same offence for which he is tried and convicted or acquitted once. what is provided under section 300(1) of cr.p.c. is only a reassurance of the constitutional right guaranteed under article 20(2). the principle behind this prescription under section 300 of cr.p.c. is to avoid double jeopardy to a person. if the code recognizes such a distinction, it may make inroads into this concept of double jeopardy. but the concept of double jeopardy, to some extent, is allergic to service law. in many cases the supreme court has made it clear - (i) that the imposition of a punishment and the denial of promotion did not amount to double jeopardy, and (ii) that the conviction by a criminal court and the disciplinary proceedings initiated either on the basis of conduct which let to the conviction or on pure questions of misconduct, did not amount to double jeopardy. since the concept of acquittal is an acquittal, is an off shoot of the principle of double jeopardy underlying section 300(1) of the code, it cannot be imported into service law, where the principle of double jeopardy itself is looked down upon. therefore, the explanation 1 to rule 14(b) of the impugned rules, treating a person acquitted on benefit of doubt, as a person involved in a criminal case, is only in tune with well settled principles applicable to service jurisprudence. a person discharged does not even have protection under section 300 of cr.p.c. and hence such a person cannot assail the explanation 1 to the impugned rule 14(b). -- section 10 & tamil nadu special police subordinate service rules, rule 14(b), clause (iv) explantion (1); - appointment to state police service - failure of a person to disclose in the application form, either his involvement in a criminal case or pendency of a criminal case against him - effect? - held, the failure of a person to disclose his involvement in a criminal case, at the earliest point of time, when the application form is filled up, is fatal. his subsequent disclosure, whether before acquittal or after acquittal, will not cure the defect. in any case, the subsequent disclosure may not have any effect upon his selection, since his case will then fall under any one of the two explanations under clause (iv) of rule 14(b) and make him ineligible for the current selection or for all future selection depending on whether the acquittal is honourable or otherwise. -- t.n. district police act, 1859. section 10 & tamil nadu special police subordinate service rules, rule 14(b), clause (iv) explanation (1); rule 14(b),ci.(iv) explanation (1) providing that a person acquitted or discharged on benefit of doubt shall be treated as person involved in criminal case - validity being questioned - held, the impugned rule 14(b) ci.(iv) explanation (1) has been issued in exercise of the power conferred upon the government under the tamil nadu district police act, the criminal city police act and the proviso to article 309 of the constitution., the rule is not assailed on the ground of lack of competence. it is challenged only on the ground that it is violative of articles 14 and 16 of the constitution. but it is well settled that if a rule passes the twin tests of (i) being founded on an intelligible differentia, and (ii) such differentia having a nexus with the object sought to be achieved, it cannot be said to be violative of articles 14 and 16 of the constitution. the impugned rule creates a classification of persons, who were not involved in criminal cases and persons, who were involved in criminal cases. the object of creating such a classification is to ensure that only those persons, whose character and antecedents were beyond and shadow of doubt alone, are permitted entry into the police service of the state. the rule is only a reflection of the intention of the government to maintain purity of administration. the rule merely provides a check post or a filter point, to ensure that only those, who had a clean record of personal life, are admitted into the system. that the existing system, has already come under heavy dose of criticism, cannot be swept under the carpet. therefore, as an employer, the government is entitled to prescribe, especially in a disciplined force like the police force, such a restriction at the entry level. there cannot be a dispute about the proposition that an employer has the right to prescribe any qualifications for appointment to a post. if that be so, an employer has a concomitant right even to prescribe disqualifications when it comes appointment to a post. persons who were never involved in criminal cases, need not be treated as equals to or on par with persons who were involved in criminal cases merely because they are acquitted later, especially in the matter of selection to the police service of the state. the classification made between them, is not only reason able but also has a nexus with the object sought to be achieved. the employer does have the right to choose a person untainted with any allegations. the attempt made to assail the impugned rules on the ground of violation of articles 14 and 16 of the constitution is fragile. the impugned rules themselves appear to be a product of the application of the right to equality. a person, who was never involved in any criminal case, cannot be equated to a person, who was involved in a criminal case, merely because he is acquitted later, at least insofar as matters of public employment are concerned. therefore, the challenge to the impugned rule on the ground of infringement of articles. 14 and 16 of the constitution must fail - section 10 & tamil nadu special police subordinate service rules, rule 14(b), clause (iv) explantion (1); appointment - state police service - disqualification of a person acquitted on benefit of doubt or discharged in a criminal case - validity? held, by virtue of explanation 1 to clause (iv) of rule 14(b) of the t.n. special police subordinate service rules, a person acquitted on benefit of doubt or discharged in a criminal case, can still be considered as disqualified for selection to the police service of the state and that the same cannot be termed as disqualified for selection to the police service of the state and that the same cannot be termed as illegal or unjustified. the reason as to why cr.p.c. does not make a distinction between an acquittal on benefit of doubt and an honourable acquittal, is to ensure that no person shall be tried for a second time for the same offence for which he is tried and convicted or acquitted once. what is provided under section 300(1) of cr.p.c. is only a reassurance of the constitutional right guaranteed under article 20(2). the principle behind this prescription under section 300 of cr.p.c. is to avoid double jeopardy to a person. if the code recognizes such a distinction, it may make inroads into this concept of double jeopardy. but the concept of double jeopardy, to some extent, is allergic to service law. in many cases the supreme court has made it clear - (i) that the imposition of a punishment and the denial of promotion did not amount to double jeopardy, and (ii) that the conviction by a criminal court and the disciplinary proceedings initiated either on the basis of conduct which let to the conviction or on pure questions of misconduct, did not amount to double jeopardy. since the concept of acquittal is an acquittal, is an off shoot of the principle of double jeopardy underlying section 300(1) of the code, it cannot be imported into service law, where the principle of double jeopardy itself is looked down upon. therefore, the explanation 1 to rule 14(b) of the impugned rules, treating a person acquitted on benefit of doubt, as a person involved in a criminal case, is only in tune with well settled principles applicable to service jurisprudence. a person discharged does not even have protection under section 300 of cr.p.c. and hence such a person cannot assail the explanation 1 to the impugned rule 14(b). - section 10 & tamil nadu special police subordinate service rules, rule 14(b), clause (iv) explantion (1); - appointment to state police service - failure of a person to disclose in the application form, either his involvement in a criminal case or pendency of a criminal case against him - effect? - held, the failure of a person to disclose his involvement in a criminal case, at the earliest point of time, when the application form is filled up, is fatal. his subsequent disclosure, whether before acquittal or after acquittal, will not cure the defect. in any case, the subsequent disclosure may not have any effect upon his selection, since his case will then fall under any one of the two explanations under clause (iv) of rule 14(b) and make him ineligible for the current selection or for all future selection depending on whether the acquittal is honourable or otherwise.orderthanikkachalam, actg. cj.1. a division bench of this court referred the following question for the opinion of the full bench : 'whether a father constituting a family with his wife and children, can by a settlement create a right in favour of his daughters so as to exclude the properties covered by such a settlement deed from the agricultural income-tax ?' 2. the abovesaid question arose from the following facts. one muthusamy odayar of pillarnathan village was the grandfather of the assessee. the assessee's father was one palanisamy odayar. muthusamy odayar had admittedly some ancestral property. subsequently, from the income of that ancestral property as also from the personal earnings of grandfather, father and the assessee, some further properties were acquired. the original ancestral properties as well as the subsequently acquired properties were the subject matter of partition between muthusamy odayar. palanisamy odayar and the assessee in an oral partition on 5-8-1954 and each one of them was thereafter enjoying the properties allotted to them separately. to confirm the oral partition, a partition deed came to be executed on 7-8-1959. according to the said partition deed, muthusamy odayar got 27.26 acres, palanisamy odyar 25.15 acres and the assessee got 37.98 acres. certain lands were give away to five sisters of the assessees. out of the lands got by the partition, the assessee settled 13.96 acres in the name of his minor daughter. parimalam, and 13.34 acres in the name of another minor daughter, vimala, under a document dated 25-11-1959. the settlement deed stated that the settlement have been made by the assessee for the purpose of providing for the education, marriage etc., of the minor daughters. the deed also stated that the title and possession have been given to the settle with immediate effect. muthusamy odayar settled the properties obtained by him in the partition in a settlement deed dated 15-5-1960, under which an extent of 13.10 acres had been settled in favour of his brother. appathurai odayar, and an extent of 14.21 acres in favour of his wife. subbammal. subsequent to these documents, the grandfather muthusamy odayar, grandmother, subbammal and the father, palanisamy odayar have all died. the assessee's father, palanisamy odayar, appears to have acquired 3.50 acres before his death. the assessee also acquired 9.38 acres and 9.29 acres and held them in the benami names of anthonisamy and natesa odayar. having regard to the lands in the actual possession and enjoyment of the assessee, the assessment came to be made by the assessing authority treating the assessee as an individual. 3. on these facts, the assessee, in the assessment year 1977-78, before the assessing officer submitted that inasmuch as there was settlement of the properties in the individual names of the members of the joint family, the income derived from the lands settled on the members of the huf cannot be assessed in the hands of the assessee. the assessee filed a return in form no. 11, furnishing an income of rs. 7,000 and declaring his status as an huf. the agrl. ito made an assessment treating the status as individual and determining the net income at rs. 55,875. in making the assessment, he included the income from lands which were settled by the appellant, who is the respondent herein, in favour of his minor daughters appellant, who is the respondent herein, in favour of his minor daughters and lands standing in the name of the grandmother of the appellant, the assessee herein. there was an appeal before the aac of agrl. income-tax, which was dismissed ultimately. thereafter, the matter was taken up before the agrl. tribunal. the assessee contended that the income from the lands of the assessee's minor daughters and the lands in the name of the assessee's grandmother should not be included in the hands of the deceased. it was submitted that the authorities should have determined the status of the assessee as an huf following the decision of the tribunal in the case of the same assessee in the earlier assessment years. it was further submitted that the provisions of section 9(2) of the tamil nadu agricultural income-tax act, 1955 shall not be applicable to the facts of this case. according to the assessee, the lands in the name of the grandmother was a separate unit of assessment and the assessee's share was only a fractional one and it should be considered in the individual status of the assessee. 4. considering the facts of this case the tribunal, following the earlier orders in the case of the same assessee in the earlier assessment years, held that (i) the status of the assessee is an huf and not individual; (ii) that the income from the lands standing in the name of the minor daughters cannot be clubbed with that of the assessee and (iii) that the appellant, the assessee herein, will be assessable as an individual on 1/21 share of the property of the grandmother and the remaining 20/21 share is not assessable in the hands of the assessee as individual or as an huf. accordingly, the tribunal set aside the assessment and remanded the matter back to the agrl. ito for appropriate computation of the income in respect of the lands held by the assessee. 5. as against this order, the state preferred t.c. no. 1226 of 1979. when this tax case came up for consideration, the division bench expressed the view that in the decision of state of tamil nadu v. p. ganesa udayar : [1988]172itr199(mad) , this court has not taken into account that a presumption that a certain person is the karta of an undivided family is a concept with respect to the family in which more than one person had a share in an undivided property, and that there is no scope of a certain person being a karta with respect to the properties which exclusively belong to him or in a family in which the others who live with him do not have any interest in the property of their own, except spes successionis. this was a doubt expressed by the division bench, which led to the reference to the full bench. 6. an answer to the question referred before the full bench finds a place in the judgment of the supreme court in gowli buddanna v. cit : [1966]60itr293(sc) wherein the supreme court has held as under : '... that property of the joint family did not cease to belong to the family merely because the family was represented after a's death by a single coparcener b, who possessed rights which an owner of property might possess, and the income received therefrom was taxable as income of the hindu undivided family. there need not be more than one male member to to form a hindu undivided family as a taxable entity under the income-tax act. the expression 'hindu undivided family' in the income-tax act is used in the sense in which a hindu joint family is understood under the personal law of the hindus. under the hindu system of law a joint family may consist of a single male member and widows of deceased male members, and the income-tax act does not indicate that a hindu undivided family as an assessable entity must consist of atleast two male members. under section 3 of the income-tax act not a hindu coparcenary but a hindu undivided family is one of the assessable entities. a hindu joint family consists of all persons lineally descended from a common ancestor, and includes their wives and unmarried daughters. a hindu coparcenary is a much narrower body than the joint family; it includes only those persons who acquire by birth an interest in the joint or coparcenary property, these being the sons, grandsons, and great grandsons of the holder of the joint property for the time being.' (p. 293) 7. similarly, while considering the provisions of sections 4(1), 8, 19. sch. class i of the hindu succession act, 1956, the supreme court in the case of cwt v. chander sen : [1986]161itr370(sc) held as under : 'held, affirming the decision of the high court, that since c had inherited the amount standing to the credit of his father, r, from whom he had separated by partition in relation to that asset, under section 8 of the hindu succession act, 1956, that amount belonged to c in his individual capacity and did not constitute an asset of the hindu undivided family of c and his sons. that amount could not be assessed to wealth-tax in the hands of that family and the interest credited to that amount was allowable as a deduction in computing the business income of that family.' (p. 371)it was further held : '(iii) it would be difficult to hold today that property which devolved on a hindu under section 8 of the hindu succession act would be hindu undivided family property in his hands vis-a-vis his own son; that would amount to creating two classes among the heirs mentioned in class i, the male heirs in whose hands it will be joint hindu family property vis-a-vis their sons and female heirs with respect to whom no such concept could be applied or contemplated. the express words of section 8 of the act cannot be ignored and must prevail. the preamble to the act reiterates that the act is, inter alia, to 'amend' the law. with that back ground, the express language which excluded son's son but included son of a predeceased son cannot be ignored.' (p. 371) 8. so also in the case of cit v. p. l. karuppan chettiar : [1992]197itr646(sc) , the supreme court, while considering section 8 of the hindu succession act, held that the income from the property inherited by a son on the death of his father was not assessable as the income of the joint family since the property is inherited under section 8. 9. in view of the foregoing decisions, we have got to hold that the lands in the name of the father of the assessee, as the son of his father, and the income derived from such land cannot be assessed in the status of huf because under section 8 the property inherited from the father will be the individual separate property of the assessee. 10. accordingly, we hold that the assessment had to be made on the huf consisting of the assessee, his wife and children in respect of the income derived by him from (a) properties received on partition among his father, his grandfather and himself (b) properties acquired from income from properties obtained on partition and (c) properties acquired by the assessee on the death of his father are to be assessed as his individual properties. the properties settled by the assessee on his minor children should be deemed to have been made by him in his capacity as the karta of the huf consisting of himself, his wife and childern. the income from such properties could not be included in that of the huf under the provisions of section 9. (2) the income from properties received by the assessee from his grandmother was assessable in his hands as his individual income. 11. accordingly, the assessing officer is directed to assess the income of the assessee in the light of the directions given by us in this order. this tax case is allowed to the abovesaid extent. however, there will be no order as to costs. 12. order accordingly.

Judgment:
ORDER

Thanikkachalam, Actg. CJ.

1. A Division Bench of this Court referred the following question for the opinion of the Full Bench :

'Whether a father constituting a family with his wife and children, can by a settlement create a right in favour of his daughters so as to exclude the properties covered by such a settlement deed from the agricultural income-tax ?'

2. The abovesaid question arose from the following facts. One Muthusamy Odayar of Pillarnathan Village was the grandfather of the assessee. The assessee's father was one Palanisamy Odayar. Muthusamy Odayar had admittedly some ancestral property. Subsequently, from the income of that ancestral property as also from the personal earnings of grandfather, father and the assessee, some further properties were acquired. The original ancestral properties as well as the subsequently acquired properties were the subject matter of partition between Muthusamy Odayar. Palanisamy Odayar and the assessee in an oral partition on 5-8-1954 and each one of them was thereafter enjoying the properties allotted to them separately. To confirm the oral partition, a partition deed came to be executed on 7-8-1959. According to the said partition deed, Muthusamy Odayar got 27.26 acres, Palanisamy Odyar 25.15 acres and the assessee got 37.98 acres. Certain lands were give away to five sisters of the assessees. Out of the lands got by the partition, the assessee settled 13.96 acres in the name of his minor daughter. Parimalam, and 13.34 acres in the name of another minor daughter, Vimala, under a document dated 25-11-1959. The settlement deed stated that the settlement have been made by the assessee for the purpose of providing for the education, marriage etc., of the minor daughters. The deed also stated that the title and possession have been given to the settle with immediate effect. Muthusamy Odayar settled the properties obtained by him in the partition in a settlement deed dated 15-5-1960, under which an extent of 13.10 acres had been settled in favour of his brother. Appathurai Odayar, and an extent of 14.21 acres in favour of his wife. Subbammal. Subsequent to these documents, the grandfather Muthusamy Odayar, grandmother, Subbammal and the father, Palanisamy Odayar have all died. The assessee's father, Palanisamy Odayar, appears to have acquired 3.50 acres before his death. The assessee also acquired 9.38 acres and 9.29 acres and held them in the benami names of Anthonisamy and Natesa Odayar. Having regard to the lands in the actual possession and enjoyment of the assessee, the assessment came to be made by the assessing authority treating the assessee as an individual.

3. On these facts, the assessee, in the assessment year 1977-78, before the Assessing Officer submitted that inasmuch as there was settlement of the properties in the individual names of the members of the joint family, the income derived from the lands settled on the members of the HUF cannot be assessed in the hands of the assessee. The assessee filed a return in Form No. 11, furnishing an income of Rs. 7,000 and declaring his status as an HUF. The Agrl. ITO made an assessment treating the status as individual and determining the net income at Rs. 55,875. In making the assessment, he included the income from lands which were settled by the appellant, who is the respondent herein, in favour of his minor daughters appellant, who is the respondent herein, in favour of his minor daughters and lands standing in the name of the grandmother of the appellant, the assessee herein. There was an appeal before the AAC of Agrl. Income-tax, which was dismissed ultimately. Thereafter, the matter was taken up before the Agrl. Tribunal. The assessee contended that the income from the lands of the assessee's minor daughters and the lands in the name of the assessee's grandmother should not be included in the hands of the deceased. It was submitted that the authorities should have determined the status of the assessee as an HUF following the decision of the Tribunal in the case of the same assessee in the earlier assessment years. It was further submitted that the provisions of section 9(2) of the Tamil Nadu Agricultural Income-tax Act, 1955 shall not be applicable to the facts of this case. According to the assessee, the lands in the name of the grandmother was a separate unit of assessment and the assessee's share was only a fractional one and it should be considered in the individual status of the assessee.

4. Considering the facts of this case the Tribunal, following the earlier orders in the case of the same assessee in the earlier assessment years, held that (i) the status of the assessee is an HUF and not individual; (ii) that the income from the lands standing in the name of the minor daughters cannot be clubbed with that of the assessee and (iii) that the appellant, the assessee herein, will be assessable as an individual on 1/21 share of the property of the grandmother and the remaining 20/21 share is not assessable in the hands of the assessee as individual or as an HUF. Accordingly, the Tribunal set aside the assessment and remanded the matter back to the Agrl. ITO for appropriate computation of the income in respect of the lands held by the assessee.

5. As against this order, the State preferred T.C. No. 1226 of 1979. When this tax case came up for consideration, the Division Bench expressed the view that in the decision of State of Tamil Nadu v. P. Ganesa Udayar : [1988]172ITR199(Mad) , this Court has not taken into account that a presumption that a certain person is the karta of an undivided family is a concept with respect to the family in which more than one person had a share in an undivided property, and that there is no scope of a certain person being a karta with respect to the properties which exclusively belong to him or in a family in which the others who live with him do not have any interest in the property of their own, except spes successionis. This was a doubt expressed by the Division Bench, which led to the reference to the Full Bench.

6. An answer to the question referred before the Full Bench finds a place in the judgment of the Supreme Court in Gowli Buddanna v. CIT : [1966]60ITR293(SC) wherein the Supreme Court has held as under :

'... That property of the joint family did not cease to belong to the family merely because the family was represented after A's death by a single coparcener B, who possessed rights which an owner of property might possess, and the income received therefrom was taxable as income of the Hindu undivided family.

There need not be more than one male member to to form a Hindu undivided family as a taxable entity under the Income-tax Act. The expression 'Hindu undivided family' in the Income-tax Act is used in the sense in which a Hindu joint family is understood under the personal law of the Hindus. Under the Hindu system of law a joint family may consist of a single male member and widows of deceased male members, and the Income-tax Act does not indicate that a Hindu undivided family as an assessable entity must consist of atleast two male members.

Under section 3 of the Income-tax Act not a Hindu coparcenary but a Hindu undivided family is one of the assessable entities. A Hindu joint family consists of all persons lineally descended from a common ancestor, and includes their wives and unmarried daughters. A Hindu coparcenary is a much narrower body than the joint family; it includes only those persons who acquire by birth an interest in the joint or coparcenary property, these being the sons, grandsons, and great grandsons of the holder of the joint property for the time being.' (p. 293)

7. Similarly, while considering the provisions of sections 4(1), 8, 19. Sch. Class I of the Hindu Succession Act, 1956, the Supreme Court in the case of CWT v. Chander Sen : [1986]161ITR370(SC) held as under :

'Held, affirming the decision of the High Court, that since C had inherited the amount standing to the credit of his father, R, from whom he had separated by partition in relation to that asset, under section 8 of the Hindu Succession Act, 1956, that amount belonged to C in his individual capacity and did not constitute an asset of the Hindu undivided family of C and his sons. That amount could not be assessed to wealth-tax in the hands of that family and the interest credited to that amount was allowable as a deduction in computing the business income of that family.' (p. 371)

It was further held :

'(iii) It would be difficult to hold today that property which devolved on a Hindu under section 8 of the Hindu Succession Act would be Hindu undivided family property in his hands vis-a-vis his own son; that would amount to creating two classes among the heirs mentioned in Class I, the male heirs in whose hands it will be joint Hindu family property vis-a-vis their sons and female heirs with respect to whom no such concept could be applied or contemplated. The express words of section 8 of the Act cannot be ignored and must prevail. The preamble to the Act reiterates that the act is, inter alia, to 'amend' the law. With that back ground, the express language which excluded son's son but included son of a predeceased son cannot be ignored.' (p. 371)

8. So also in the case of CIT v. P. L. Karuppan Chettiar : [1992]197ITR646(SC) , the Supreme Court, while considering section 8 of the Hindu Succession Act, held that the income from the property inherited by a son on the death of his father was not assessable as the income of the joint family since the property is inherited under section 8.

9. In view of the foregoing decisions, we have got to hold that the lands in the name of the father of the assessee, as the son of his father, and the income derived from such land cannot be assessed in the status of HUF because under section 8 the property inherited from the father will be the individual separate property of the assessee.

10. Accordingly, we hold that the assessment had to be made on the HUF consisting of the assessee, his wife and children in respect of the income derived by him from (a) properties received on partition among his father, his grandfather and himself (b) properties acquired from income from properties obtained on partition and (c) properties acquired by the assessee on the death of his father are to be assessed as his individual properties. The properties settled by the assessee on his minor children should be deemed to have been made by him in his capacity as the karta of the HUF consisting of himself, his wife and childern. The income from such properties could not be included in that of the HUF under the provisions of section 9.

(2) The income from properties received by the assessee from his grandmother was assessable in his hands as his individual income.

11. Accordingly, the Assessing Officer is directed to assess the income of the assessee in the light of the directions given by us in this order. This tax case is allowed to the abovesaid extent. However, there will be no order as to costs.

12. Order accordingly.