1987 (9) TMI 62 - AT - Income Tax

Issues Involved:
1. Whether the property and rights obtained in the HUF or Hindu coparcenary by the Hindu woman under the Hindu Women's Rights to Property Act, 1937, were taken away by the Hindu Succession Act, 1956.
2. The status of the Hindu woman in the HUF or Hindu coparcenary after the Hindu Succession Act, 1956.
3. Whether the Hindu woman is saved from the mischief of wills made by her deceased husband under the Hindu Succession Act, 1956.
4. The competence of the Hindu woman to have a division of the Hindu coparcenary or HUF.
5. The applicability of Section 30 of the Hindu Succession Act, 1956, and the validity of the will made by the deceased husband.

Detailed Analysis:

1. Property and Rights under Hindu Women's Rights to Property Act, 1937:
The Assistant Controller of Estate Duty (ACED) argued that under Section 3(2) of the Hindu Women's Rights to Property Act, 1937, the widow acquired her husband's interest in the joint family property, which became absolute under the Hindu Succession Act, 1956. The widow's interest in the family properties would pass and devolve by succession on her heirs, making it liable for estate duty. The ACED relied on the Gujarat High Court decisions in Suketu Jayantilal Shah v. CED, Goswami Vrajraiji Ranchhodlalji Maharaj v. CED, and Sarabhai Tribhuvandas v. CED.

2. Status of Hindu Woman in HUF or Hindu Coparcenary:
The Controller of Estate Duty (Appeals) held that female members of a joint family have no interest in the properties of the HUF unless there is an actual partition. Therefore, the question of her interest passing on her death does not arise. The cases relied upon by the ACED were distinguished on the grounds that they involved situations where the husband died before the Hindu Succession Act, 1956, came into force. The Controller of Estate Duty (Appeals) relied on Smt. Anari Devi Halwasiya's case and CED v. Estate of Late Smt. K. Narasamma.

3. Deemed Partition and Wills:
The Revenue argued that the Hindu Succession Act, 1956, particularly Sections 6 and 14, should apply, contending that on the death of the husband, there is a deemed partition of the HUF. The widow should have a share as a legal heir under the Hindu Succession Act, making her a full owner of the estate. The learned Departmental Representative relied on the Supreme Court decision in Gurupad Khandappa Magdum v. Hirabhai Khandappa Magdum.

4. Competence to Divide Hindu Coparcenary or HUF:
The ACED and Revenue contended that the widow, having become the absolute owner of her share inherited from her husband, would be competent to dispose of it, making her interest property passing on her death under Sections 5 or 6 of the Estate Duty Act. The Controller of Estate Duty (Appeals) disagreed, stating that the widow is not a coparcener and cannot demand a partition to determine her share in the joint family property.

5. Applicability of Section 30 of the Hindu Succession Act, 1956:
The Judicial Member concluded that the widow's share in the HUF property passed on her death and should be included in the estate liable for duty. However, the Accountant Member disagreed, stating that the Hindu Women's Rights to Property Act, 1937, was repealed by the Hindu Succession Act, 1956, and the deceased's interest should not be included in the taxable estate.

Third Member's Decision:
The Third Member formulated a common question based on the Accountant Member's question: "Whether on facts and circumstances of the case the inclusion of half the share of the deceased in the HUF estate inherited from her husband was includible in her hands as a property passing or deemed to pass on her death, the sum being Rs. 85,329?"

The Third Member concluded that the inclusion of the deceased's share in the taxable estate was not proper. The Hindu Women's Rights to Property Act, 1937, was repealed by the Hindu Succession Act, 1956. Sections 6 and 14 of the Hindu Succession Act apply only to a male Hindu, and a female cannot claim partition. The Supreme Court decision in Gurupad Khandappa Magdum's case was distinguished as it involved a male's death without a will. The Third Member relied on the later decision in State of Maharashtra v. Narayan Rao Sham Rao Deshmukh and concluded that the deceased's interest was not includible in her taxable estate.

Final Decision:
The Third Member's decision was referred back to the Division Bench for passing the final order according to the majority decision, concluding that the inclusion of the deceased's share in the HUF estate was not includible in her hands as property passing or deemed to pass on her death.

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