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The Supreme Court in the case of Gowli Buddanna v. CIT (1966) 60 ITR 293 (SC) held that as per S. 4 of the Income Tax Act: Charge of income-tax , the Sole surviving coparcener will be assessable as Hindu undivided family

Facts

Buddappa, his wife, his two unmarried daughters, and the kid he had adopted, Buddanna, were all members of the same Hindu undivided family. Buddappa died away on July 9th, 1952. During his lifetime, Buddappa was given the position of manager of the Hindu joint family regarding the family’s financial activities. These transactions involved the family’s commercial operations. The Income-tax Officer assessed Buddanna for the assessment year 1951-1952 based on the previous year’s revenue as a Hindu joint family under the title “Sri Gowli Buddappa (dead) represented by his legal successor Sri Gowli Buddanna, Oil Mills Owner, Raichur.” This was done to determine the amount of tax that was owed.

Issue

Whether or whether the lone male coparcener who has survived from a Hindu joint family, his widowed mother, and his sisters constitute a Hindu undivided family following the Income Tax Act. And if the assessment of the joint-income families in Hinduism was correct.

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Following section 3 of the Income Tax Act, one of the taxable entities is not a Hindu coparcenary but rather a Hindu undivided family. A Hindu joint family is composed of all lineal descendants of a common ancestor, as well as their husbands and unmarried daughters still living at home.

A Hindu coparcenary is a far more limited organization than a joint family. It includes just those persons who acquire an interest in the joint or coparcenary property upon birth. These persons are the sons, grandsons, and great-grandsons of the present joint property owner. Hence, it is feasible for a joint Hindu family to consist of the widows of prior coparceners and just one male member.

Also without substance is the claim that a Hindu undivided family cannot be deemed a taxable entity unless it has at least two adult male members. The phrase “Hindu undivided family” under the Income Tax Act refers to a Hindu joint family in the same sense that the word “Hindu joint family” is used elsewhere in the Act. The basis for this approach is Hindu personal law. It seems that the Income Tax Act does not specify that a Hindu undivided family must have at least two male members to be regarded as an assessable business. In contrast, the Hindu legal system authorizes a joint family to consist of just a single male member and the widows of deceased male members.

Held

According to this, the fact that a joint family is represented by a single coparcener who has property rights does not imply that the family’s property no longer belongs to the family as a whole. In this case, the Hindu undivided family was the original owner of the property from which the money was finally recovered. Buddanna represented the family, which consisted of a widow and daughters born into the family, after the death of Buddappa. Nonetheless, the property remained the property of the Hindu undivided family, and any income derived from it was taxed as income of the Hindu undivided family.

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Order reviewed by Jay Kumar Gupta