1983 (1) TMI 49 - HC - Wealth-tax

Summary

Issues Involved:
1. Whether the status of the assessee is that of a Hindu Undivided Family (HUF) for the purpose of wealth-tax.
2. The impact of the Hindu Succession Act and the Hindu Adoptions and Maintenance Act on the assessee's status.
3. The relevance of the Supreme Court decision in Smt. Sitabai v. Ramchandra.
4. The applicability of other judicial precedents and legal principles.

Detailed Analysis:

1. Status of the Assessee as HUF for Wealth-Tax Purpose:
The primary issue is whether the assessee, a widow with an unmarried daughter, constitutes a Hindu Undivided Family (HUF) for wealth-tax purposes. The Wealth Tax Officer (WTO) assessed her as an individual, a decision upheld by the Appellate Assistant Commissioner (AAC). However, the Tribunal, relying on the Supreme Court decision in Smt. Sitabai v. Ramchandra, held that the assessee and her daughter formed an HUF. The High Court, however, disagreed, emphasizing that the assessee, being the absolute owner of the property post-partition, should be assessed as an individual.

2. Impact of the Hindu Succession Act and the Hindu Adoptions and Maintenance Act:
The Court highlighted that under Section 14 of the Hindu Succession Act, any property acquired by a female via partition becomes her absolute property. The possibility of the assessee adopting a boy under Section 8 of the Hindu Adoptions and Maintenance Act does not alter this status, as per Proviso (c) to Section 12, which states that an adopted child does not divest any person of any estate vested in them before adoption. Hence, the potential for adoption does not affect the assessee's status as an absolute owner.

3. Relevance of the Supreme Court Decision in Smt. Sitabai v. Ramchandra:
The Tribunal's reliance on this decision was scrutinized. The Supreme Court in Sitabai's case dealt with the property remaining as joint family property due to the widow's right to maintenance, allowing the adopted son to become a coparcener. However, the High Court noted that this principle did not apply here as the assessee was the absolute owner, and any adoption would not divest her of her property. Thus, the Tribunal's interpretation was deemed incorrect.

4. Applicability of Other Judicial Precedents and Legal Principles:
The High Court referred to several precedents:
- Rukmini Bai Rathor v. CWT: A similar case where a widow with an unmarried daughter was not considered an HUF.
- C. Krishna Prasad v. CIT: Clarified that a single person does not constitute a family.
- Surjit Lal Chhabda v. CIT: Distinguished between properties owned by a sole surviving coparcener and those not originally joint family properties.
- Savitri Devi v. CIT: The Patna High Court's decision was not followed as it did not align with the principles under the Hindu Succession Act and the Hindu Adoptions and Maintenance Act.
- CWT v. V. Pannalal Rastogi: Inapplicable as it dealt with a male member's status.
- CIT v. Veerappa Chettiar: Held that a joint family continues as long as the property remains undivided among widows, but was not applicable to the current case.

Conclusion:
The High Court concluded that the assessee, being the absolute owner of the property, should be assessed as an individual and not as an HUF. The possibility of adoption does not change this status. The question was answered in the negative, favoring the Department and against the assessee, with no order as to costs.