1992 (10) TMI 27 - HC - Income Tax

Summary

Issues Involved:
1. Applicability of Section 39(1) of the Estate Duty Act, 1953.
2. Determination of the deceased's share in the Hindu undivided family (HUF) property.
3. Legal status and rights of a sole coparcener and his wife in a Hindu joint family.
4. Interpretation of relevant Supreme Court decisions and their applicability.

Issue-wise Detailed Analysis:

1. Applicability of Section 39(1) of the Estate Duty Act, 1953:

The primary issue was whether Section 39(1) of the Estate Duty Act, 1953, applies to a Hindu joint family consisting of a sole coparcener and his wife. Section 39(1) states that the value of the benefit accruing from the cessation of a coparcenary interest in any joint family property governed by the Mitakshara school of Hindu law, which ceases on the death of a member, shall be the principal value of the share in the joint family property which would have been allotted to the deceased had there been a partition immediately before his death.

The court concluded that Section 39(1) clearly applies, as on the death of a member of a Hindu undivided family, only the principal value of the deceased's share in the joint family property, which would have been allotted to him had there been a partition immediately before his death, would be deemed to pass.

2. Determination of the Deceased's Share in the HUF Property:

The court examined the facts and found that the deceased was the sole surviving coparcener of a joint Hindu family consisting of himself and his wife. The court held that each member had an equal interest in the properties of the said joint family. Therefore, in the event of a partition, the deceased would have been entitled to only one-half of the property as his share. Consequently, Section 39(1) would be clearly attracted, and on the death of the deceased, only a half share of the family property would be deemed to pass.

3. Legal Status and Rights of a Sole Coparcener and His Wife in a Hindu Joint Family:

The court addressed the Revenue's contention that the wife of the deceased, although a member of the joint family, had no right to claim partition and thus the entire property should be considered as passing on the death of the sole coparcener. The court disagreed, stating that the wife, as a member of the joint family, is entitled to a share in the event of a partition, even though she cannot claim partition herself. The court emphasized that Section 39(1) visualizes a deemed partition immediately before the death of the deceased, and the share of the deceased determined in such a manner would be taken as his interest in the joint family property that ceased on his death.

4. Interpretation of Relevant Supreme Court Decisions and Their Applicability:

The court referred to several Supreme Court decisions to support its conclusion:

- N. V. Narendranath v. CWT [1969] 74 ITR 190: The Supreme Court held that a Hindu undivided family could consist of a single male member, his wife, and daughters, and there is no requirement for at least two male members to form a Hindu undivided family as a taxable unit.

- C. Krishna Prasad v. CIT [1974] 97 ITR 493 (SC): The Supreme Court reiterated that a Hindu undivided family could exist with two or more members, regardless of whether they are male or female.

- Gurupad Khandappa Magdum v. Hirabai Khandappa Magdum [1981] 129 ITR 440: The Supreme Court explained the concept of deemed partition under Section 6 of the Hindu Succession Act, which is similar to Section 39(1) of the Estate Duty Act, emphasizing that the share of the deceased in the coparcenary property must be determined as if a partition had taken place immediately before his death.

- CED v. Alladi Kuppuswamy [1977] 108 ITR 439: The Supreme Court held that a Hindu widow has a coparcenary interest, and her share in the family property must be valued according to Section 39 of the Estate Duty Act upon her death.

The court also considered and disagreed with contrary views expressed by the Madhya Pradesh High Court in Ramratan v. CED [1983] 142 ITR 863 and the Allahabad High Court in CED v. Kalawati Devi (Smt.) [1980] 125 ITR 762, which held that the entire property passes on the death of the sole coparcener.

Conclusion:

The court concluded that there can be a Hindu joint family consisting of a sole coparcener and his wife. Therefore, in the event of the death of any one of them, for computing the interest of the deceased in the family property, Section 39 of the Estate Duty Act would apply. The Tribunal was right in holding that only a half share in the property of the deceased passed on his death. The question referred to the court was answered in the affirmative and in favor of the accountable person and against the Revenue.