Case: T. S. Srinivasan Vs. Commissioner Of Income Tax, Madras

2. The question arose out of the following facts. The appellant, hereinafter referred to as the assessee, is the youngest son of T. V. Sundaram Ayyangar, who was the Karta of a Hindu undivided family consisting of a number of persons. There was a partition of the above family and 150 shares of Rs. 1,000 each in T. V. Sundaram Iyengar and Sons Limited, a private limited company, were divided equally among the co-parcencers, the assessee getting 25 shares of the value of Rs. 25, 000. With the aforesaid shares as nucleus, the assessee acquired house-properties, shares and deposits upto March 31, 1952. As the assessee was also the Service Manager of the aforesaid private limited company, he also received substantial remuneration.3. The first son, named Venugopal, was born to the assessee on December 11, 1952, and it is common ground that the conception of the child must have taken place sometime in March, 1952.4. For the assessment year 1952-53, the assessee was assessed as an individual with reference to all his sources of income. For the assessment year 1953-54 (accounting year April 1, 1952 to March 31, 1953) the assessee claimed that income from all sources, except salary, should be assessed in the hands of H. U. F., consisting of himself and his son Venugopal, which according to him had come into existence in or about March 1952 when Venugopal was conceived.5. The Income-tax Officer, while admitting that a male child acquires coparcenary rights in the family even from the date of his conception, considered that this proposition applied only as far as the minors rights inter se other members were concerned, and as far as the claims of the State or outsiders were concerned, he thought that an unborn son would not come into the picture. Therefore, he recognised the family only from the date of the birth of the child, viz., December 11, 1952. The Appellate Assistant Commissioner up held his view and the assessee also failed before the Appellate Tribunal . The High Court answered the question against the assessee.

Court's reasoning:
10. Apart from the difficulty of reconciling this doctrine with the scheme of the Act, Mr. Sastri has not been able to satisfy us that any rights of the son are being affected by not recognising his existence for the purposes of S. 3 of the Act till he is actually born. Income-tax is a liability and it could not have been the intention of the legislature to impose a liability on persons yet unborn.11. Mr. Sastri contends in the alternative that what we are concerned with is the status at the end of the accounting year and that at least in this case where the child was in existence at the end of the accounting year, the status would be that of Hindu undivided family. This point was not raised before and the learned Attorney-General rightly objected to it being raised at this stage. But even if a Hindu undivided family was in existence towards the end of the accounting year, still the whole income received or accrued in the accounting year did not thereby become the assessable income of the Hindu undivided family Till the child was born the income which accrued to, or arose to, or was received by the assessee was his income. The Act disregards subsequent application of income and profits once they have arisen. When the income and profits arose, they belonged to the assessee, as no Hindu undivided family was then in existence. This position cannot be displaced by the birth of the son, which brought into existence a Hindu undivided family.