| Question And Answer | |
|---|---|
| Subject: | Amount received on Family arrangement |
| Category: | Income-Tax |
| Querist: | Prakash Kulkarni |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Family Arrangement, taxability |
| Date: | October 28, 2022 |
Assessee is an individual and Hindu. He got married with another woman in the life time of first wife. He had two children from first wife and a daughter from second wife. First wife expired and thereafter almost 25 years assessee and his second wife are living together as husband and wife and also accepted by all family and society. Assessee was also assessed to tax in the capacity of HUF also.
The family members consisting of the children of first wife and the second wife and her daughter has decided to settle their disputes about the property of the individual and HUF of the assessee by way of family arrangement and full partition of HUF. Accordingly, executed the memorandum of family arrangement. As per said arrangement, the second wife and her daughter have received certain properties.
AO has issued show cause that amounts are taxable in the hands of second wife and her daughter under Income Tax Act is it justified in law ?
With respect to the son, The Hon’ble Supreme Court in the case of CWT v. R. Sridharan [1976] 104 ITR 436 (SC)held that where a Son born out of this wedlock was brought up as Hindu and assessee had expressly declared that he and his son formed HUF. Therefore, the assessee’s son was Hindu and he could validly be a member of HUF headed by his father and be governed by Hindu law.
With respect to the wife, she was socially recognized as his wife for around 25 years. Further it is the moral and legal obligation to maintain a relative out of funds of the HUF. Therefore, she would be the spouse of the assessee and thus a relative of all the members of the HUF.