COMMISSIONER OF WEALTH-TAX vs. GORDHANBHAI JETHABHAI PATEL

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WTR/1/1985HC GujaratGJHC24012537198522 February 2001Author: HONOURABLE MR. JUSTICE J.M.PANCHAL,HONOURABLE MR. JUSTICE MOHIT S. SHAH3 pages

AI SummaryAllowed

What did the High Court hold?

The High Court held that the Tribunal was right in concluding that the deposit in the name of Gordhanbhai Jethabhai Zaveri (HUF) was not includible in the wealth of the assessee. The Court relied on its own prior decision in Commissioner of Wealth Tax vs. Gordhanbhai Jethabhai Patel (1993) 203 ITR 706. In that decision, the High Court had interpreted the expression "Hindu undivided family" under the Wealth Tax Act, 1957, to mean a Hindu joint family as understood in personal laws. The Court had held that a Hindu undivided family can consist of a single male member, his wife, and daughters, and that the formation of a smaller HUF is possible even after a partition of a larger HUF. Therefore, the Tribunal's finding was upheld. The reference is answered in the affirmative, in favour of the assessee and against the revenue.

What were the facts?

The assessee, an individual, had a credit balance in the books of the firm M/s Gordhanbhai Jethabhai in the name of Gordhanbhai Jethabhai Zaveri (HUF). The assessee claimed this balance belonged to the HUF and was not includible in his individual wealth. The Wealth-tax Officer (WTO) disagreed, holding the balance belonged to the assessee and included it in his wealth for assessment year 1977-78. The Appellate Assistant Commissioner confirmed the WTO's order. The Income Tax Appellate Tribunal (ITAT), following its own prior decisions for assessment years 1967-68 to 1976-77, held the balance belonged to the HUF and allowed the assessee's appeal. The revenue has referred a question of law to the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in coming to the conclusion that the deposit in the name of Gordhanbhai Jethabhai Zaveri (HUF) is not includible in the wealth of the assessee? Assessee's Contention: The credit balance in the firm's books in the name of Gordhanbhai Jethabhai Zaveri (HUF) belongs to the HUF and is not includible in the individual wealth of the assessee. The Tribunal has consistently held this view for previous assessment years. Revenue's Contention: The revenue contends that the Tribunal was not right in holding that the deposit is not includible in the wealth of the assessee. The revenue's argument is implicit in their request for a reference to the High Court and their challenge to the Tribunal's order.

Which sections of the Income-tax Act were involved?

Wealth Tax Act, 1957

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

WEALTH TAX REFERENCE No 1 of 1985

For Approval and Signature:

Hon'ble MR.JUSTICE J.M.PANCHAL and Hon'ble MR.JUSTICE M.S.SHAH

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF WEALTH-TAX Versus GORDHANBHAI JETHABHAI PATEL -------------------------------------------------------------- Appearance: MR AKIL KURESHI with MR MANISH R BHATT for Petitioner NOTICE SERVED for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE J.M.PANCHAL and MR.JUSTICE M.S.SHAH

Date of decision: 22/02/2001

ORAL JUDGEMENT (Per : MR.JUSTICE J.M.PANCHAL)

At the instance of the revenue, the Income Tax Appellate Tribunal, Ahmedabad Bench "A" has referred the following question of law for our opinion relating to assessment year 1977-78 :-

"Whether on the facts and in the circumstances of the case, the Tribunal was right in coming to the conclusion that the deposit in the name of Gordhanbhai Jethabhai Zaverbhai (H.U.F.) is not includible in the wealth of the assessee ?"

The assessee is an individual. In the books of account of the firm M/s Gordhanbhai Jethabhai, there was a credit balance in the name of Gordhanbhai Jethabhai Zaveri (HUF). The assessee claimed that the credit balance in the said account belonged to the HUF and was not liable to be included in the wealth of the assessee. The WTO, however, held that the ownership of the said balance was of the assessee. In view of the said conclusion, the WTO included the said credit balance in the wealth of the assessee. On appeal filed by the assessee, the Appellate Assistant Commissioner of Wealth-tax confirmed the order of the WTO and dismissed the appeal of the assessee. Thereupon, the assessee approached the Tribunal. The Tribunal, following its own order in the assessee's case for the assessment years 1967-68 to 1976-77, held that the balance in the accounts belonged to the HUF and was not liable to the included in the wealth of the assessee. The Tribunal accordingly allowed the appeal of the assessee. Hence, this reference at the instance of the revenue.

As observed earlier, the Tribunal has relied upon its own judgment in the case of the assessee for the assessment years 1967-68 to 1976-77. The earlier order expression `Hindu undivided family' as appearing in the Wealth Tax Act, 1957, the Division Bench of this High Court has held as under :-

"The expression "Hindu undivided family" in the Wealth-tax Act, 1957, is used in the sense in which a Hindu joint family is understood in the personal laws of Hindus. Under the Hindu system of law a joint family may consist of a single male member and his wife and daughters and there is nothing in the scheme of the Wealth-tax Act, 1957, to suggest that a Hindu undivided family as an assessable unit must consist of at least two

male members. The contention that when there is complete partition, no further Hindu undivided family can come into existence cannot be accepted. There can be no doubt that the larger Hindu undivided family will come to an end but that would not mean that a smaller Hindu undivided family of a coparcener who receives the share in the coparcenary property cannot come into existence thereafter."

In view of the principle laid down by the Division Bench of this Court in the above quoted decision, we are of the opinion that the Tribunal was right in holding that the deposit in the name of Gordhanbhai Jethabhai Zaveri (HUF) was not includible in the wealth of the assessee. The reference is, therefore, answered in the affirmative i.e. in favour of the assessee and against the revenue.

The reference stands disposed of with no order as to costs.

(J.M. Panchal, J.)

(M.S. Shah, J.)

sundar/-

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