1997 (7) TMI 94 - HC - Income Tax

Summary

Issues Involved:
1. Assessability of entire value of Hindu undivided family properties to estate duty on the death of the sole surviving coparcener.
2. Application of sections 6, 7, and 39 of the Estate Duty Act, 1953.
3. Relevance of the Hindu Succession Act, 1956, in determining the power of disposal of properties by the sole surviving coparcener.
4. Validity of the views taken by different High Courts on the issue.

Issue-Wise Detailed Analysis:

1. Assessability of Entire Value of Hindu Undivided Family Properties to Estate Duty on Death of Sole Surviving Coparcener:
The core issue was whether the entire value of properties belonging to the Hindu undivided family (HUF) was assessable to estate duty upon the death of Telu Ram, the sole surviving coparcener. The accountable person, his wife, contended that only half of the HUF properties should be included in the estate passing on his death, as she claimed ownership of half the properties. The Assistant Controller of Estate Duty, however, included the entire estate for levy of estate duty, concluding that the deceased, being the sole surviving coparcener, was competent to dispose of the whole properties. The Tribunal upheld this view, rejecting the accountable person's appeal.

2. Application of Sections 6, 7, and 39 of the Estate Duty Act, 1953:
The Tribunal held that sections 7 and 39 of the Estate Duty Act had no application and that the entire properties passed under section 6 of the Act. Section 6 states that property within the disposing capacity of the deceased shall be deemed to pass on his death. Section 7 pertains to interest ceasing on death, including coparcenary interest in joint family property, while section 39 deals with the valuation of interest in coparcenary property ceasing on death. The Tribunal concluded that these sections did not apply as there was no coparcenary interest to cease upon the death of the sole surviving coparcener.

3. Relevance of the Hindu Succession Act, 1956, in Determining the Power of Disposal of Properties by the Sole Surviving Coparcener:
The accountable person argued that section 39 of the Estate Duty Act should apply, implying a deemed partition immediately before the death of the deceased, thus only half the property should be considered. However, the Tribunal and the court concluded that the provisions of the Hindu Succession Act, 1956, did not affect the power of disposal of properties by the sole surviving coparcener. The court emphasized that a female member of an HUF cannot claim partition and has only a right to maintenance. Therefore, the entire property passed to the accountable person upon the death of the sole surviving coparcener.

4. Validity of the Views Taken by Different High Courts on the Issue:
The court noted divergent views from various High Courts. The Bombay and Orissa High Courts held that only the deceased's share in the HUF property should be considered, applying section 39 of the Estate Duty Act. Conversely, the Madhya Pradesh, Allahabad, Madras, Patna, and Andhra Pradesh High Courts held that the entire property passed on the death of the sole surviving coparcener. The court agreed with the latter view, emphasizing that the sole surviving coparcener had absolute ownership and disposing power over the property, akin to self-acquired property. The court specifically dissented from the Bombay and Orissa High Courts' views, concluding that sections 7 and 39 of the Estate Duty Act did not apply in the case of a single coparcener.

Conclusion:
The court concluded that the entire value of the properties belonging to the HUF was assessable to estate duty on the death of the sole surviving coparcener. The question referred was answered in the affirmative, against the assessee and in favor of the Revenue. The court followed the view taken by the Madhya Pradesh, Allahabad, Madras, Patna, and Andhra Pradesh High Courts, rejecting the contrary views of the Bombay and Orissa High Courts.