1971 (11) TMI 4 - SC - Income Tax

The heirs of the deceased took the property of the deceased in separate shares. Therefore, in law each one of them is liable to pay wealth-tax as individual. It cannot be said that an individual who inherits some property from some one becomes a Hindu undivided family merely because he is a member of the Hindu undivided family

Summary

Issues:
Interpretation of Hindu law in wealth tax assessment - Whether assessment should be made on individual coparceners or as Hindu undivided family?

Detailed Analysis:
The case involved a dispute regarding the assessment status of a Hindu family under the Dayabhaga school of Hindu law for wealth tax purposes. The deceased, Prafulla Chandra Bhar, left behind properties, and the family members, including the widow and sons, had equal shares in the estate. The Wealth-tax Officer initially assessed the family as a Hindu undivided family based on the administrator's return. However, an appeal was filed challenging this status, arguing that each member's share was definite and ascertained, requiring separate assessment. The Appellate Assistant Commissioner upheld the assessment as a Hindu undivided family, emphasizing the unity of possession despite definite shares.

The matter was appealed to the Appellate Tribunal, which overturned the Assistant Commissioner's decision. The Tribunal held that under the Dayabhaga school of Hindu law, each coparcener had a distinct share and was the legal owner. As wealth tax is based on ownership, the assessment should be on individual coparceners based on their respective shares. The Calcutta High Court also supported this view in a previous judgment.

The Supreme Court, in its judgment delivered by Justice Hegde, acknowledged the property as the individual property of the deceased, with each heir inheriting a specific share separately. Consequently, the Court found no need to determine if a Dayabhaga Hindu family could be classified as a Hindu undivided family under the Wealth-tax Act. It emphasized that each heir, having received a definite share, is individually liable for wealth tax. Inheritance does not automatically convert an individual into a Hindu undivided family member.

Therefore, the Court dismissed the appeal, upholding the Tribunal's decision to assess the individual coparceners rather than as a Hindu undivided family. The respondent did not appear, and no costs were awarded. The judgment clarified the distinction between individual ownership and Hindu undivided family status in the context of wealth tax assessment under Hindu law.