1983 (2) TMI 36 - HC - Wealth-tax

Summary

Issues Involved:
1. Status of properties devolved on the assessee on his father's death: "Individual" or "Hindu undivided family (HUF)".
2. Interpretation and effect of Section 8 of the Hindu Succession Act, 1956.
3. Applicability of pre-existing Hindu law principles post-enactment of the Hindu Succession Act, 1956.

Detailed Analysis:

1. Status of Properties Devolved on the Assessee:
The primary issue was whether the properties inherited by the assessee from his father should be assessed in the status of "Individual" or "Hindu undivided family (HUF)". The court held that the properties should be assessed in the status of "Individual" and not as HUF. The properties devolved upon the assessee under Section 8 of the Hindu Succession Act, 1956, constitute his absolute properties, and his sons have no right by birth in such properties.

2. Interpretation and Effect of Section 8 of the Hindu Succession Act, 1956:
The court analyzed Section 8 of the Hindu Succession Act, 1956, which deals with the devolution of the property of a male Hindu dying intestate. The court emphasized that Section 8 should be interpreted independently of the pre-existing Hindu law. The court noted that Section 4(1)(a) of the Act declares that any text, rule, or interpretation of Hindu law in force before the commencement of the Act ceases to have effect concerning matters provided for in the Act.

3. Applicability of Pre-existing Hindu Law Principles:
The court observed that the Hindu Succession Act intended to make a clean break from the old Hindu law in certain respects, consistent with modern and egalitarian concepts. The court stated that it would not be consistent with the spirit and object of the enactment to strain the provisions of the Act to accord with prior notions and concepts of Hindu law. The court further noted that Section 19 of the Act provides that heirs succeeding together to the property of an intestate shall take the property as tenants-in-common and not as joint tenants, which is a departure from the pre-existing Hindu law.

The court referred to various decisions to support its interpretation, including the Full Bench decision of the Madras High Court in Addl. CIT v. P. L. Karuppan Chettiar [1978] 114 ITR 523 (Mad) [FB], which held that Section 8 of the Act should be applied and not the principles of Hindu law. The court also noted decisions from the Allahabad High Court and the Madhya Pradesh High Court, which supported the view that the properties devolved under Section 8 of the Act constitute the absolute properties of the heir.

The court, however, disagreed with the contrary view taken by the Gujarat High Court in CWT v. Harshadlal Manilal [1974] 97 ITR 86 (Guj) and CIT v. Dr. Babubhai Mansukhbhai [1977] 108 ITR 417 (Guj), which held that the character of the property in the hands of the son remained ancestral.

Conclusion:
The court concluded that the properties which devolved upon the assessee on his father's death are assessable in the status of "Individual" and not in the status of "Hindu undivided family". The answer was in favor of the Department and against the assessee. The court also granted leave to appeal to the Supreme Court due to the importance of the question and the divergence of opinion among the High Courts.