1978 (4) TMI 29 - HC - Income Tax

Summary

Issues:
1. Whether the occupancy rights granted to the deceased consequent upon the abolition of the watan constituted joint family property in which he had a 1/7th share?

Analysis:
The case involved a question referred under section 64(1) of the E.D. Act by the Income-tax Appellate Tribunal, Bangalore Bench, regarding the nature of the property rights granted to the deceased following the abolition of the watan. The deceased, Bullappa, held the property in question as watan property, which was heritable. After the abolition of the watan under the Bombay Pargana and Kulkarni Watans (Abolition) Act, 1950, Bullappa applied for regrant of the property in his favor and obtained it. Upon Bullappa's death, the Assistant Controller of Estate Duty treated the entire property as the deceased's individual property for estate duty assessment. However, the Appellate Tribunal held that only a 1/7th share of the property should be considered as passing on the deceased's death, as it was joint family property.

The court analyzed the provisions of the Watans Abolition Act, specifically sections 3(4) and 4(1), which outlined the regrant of watan land to the holder upon payment of the occupancy price. It was established that on regrant, the property ceased to be impartible estate and became ordinary ryotwari property. The court noted that the property in question was joint family property before the regrant on the abolition of the watan, without the restriction of impartibility. Therefore, the court agreed with the Tribunal's decision that the property did not constitute separate property of the deceased but was joint family property in which he held a 1/7th share. As a result, the court answered the question in the affirmative, ruling against the department's contention.

In conclusion, the judgment clarified the nature of the property rights following the abolition of the watan and emphasized that the property in question, after regrant, constituted joint family property in which the deceased had a 1/7th share. The court's decision was based on the provisions of the Watans Abolition Act and the understanding that the property was not impartible after regrant, supporting the Tribunal's ruling in favor of treating only a fraction of the property as passing on the deceased's death for estate duty assessment.