1984 (7) TMI 138 - AT - Income Tax

Summary

Issues Involved:
1. Character of the property and share of the deceased in it.
2. Applicability of Dayabhaga law and the concept of coparcenary.
3. Legal effect of throwing self-acquired property into the common hotch pot of a Hindu Undivided Family (HUF).
4. Inclusion of the full value of the property in the principal value of the estate of the deceased under the Estate Duty Act, 1953.

Detailed Analysis:

1. Character of the Property and Share of the Deceased in It:
The deceased, Shri A.K. Chanda, had thrown his self-acquired property into the common hotch pot of a HUF consisting of himself, his wife, and his two daughters. The income from this property was assessed in the hands of the HUF until his death. The Commissioner held that after the death of Shri Chanda, the income should be assessed in the hands of Smt. Chanda individually. The Tribunal had to consider whether the property belonged to the HUF at the time of the deceased's death and, if so, what share of the property should be included in the estate of the deceased.

2. Applicability of Dayabhaga Law and the Concept of Coparcenary:
The Assistant Controller and the Appellate Controller both referenced Mulla's Principles of Hindu Law and the Supreme Court's decision in Surjit Lal Chhabda v. CIT to determine that under Dayabhaga law, a coparcenary is not formed until the death of the father and the presence of male issues. Since Shri Chanda did not have any male issue, the property could not be considered as part of a coparcenary. The Tribunal noted that under Dayabhaga law, a HUF could consist of males and females, but a coparcenary could not start with females.

3. Legal Effect of Throwing Self-Acquired Property into the Common Hotch Pot of a HUF:
The Tribunal considered the legal effect of throwing self-acquired property into the common hotch pot under Dayabhaga law. It referenced the Supreme Court's decisions in Gowli Buddanna v. CIT and N.V. Narendranath v. CWT, which established that a HUF could consist of a single male and other female members. The Tribunal also noted that the property, once thrown into the common hotch pot, belonged to the HUF, but the deceased retained the right to dispose of it as a full owner.

4. Inclusion of the Full Value of the Property in the Principal Value of the Estate of the Deceased:
The Tribunal had to decide whether the full value of the property should be included in the principal value of the estate of the deceased. It referenced section 6 of the Estate Duty Act, which provides that property the deceased was competent to dispose of at the time of his death shall be deemed to pass on his death. The Tribunal concluded that the deceased, being the sole coparcener, had the full power to dispose of the property, and therefore, the full value of the property should be included in the principal value of the estate.

Conclusion:
The Tribunal dismissed the appeal, holding that the full value of the property was includible in the principal value of the estate of the deceased under sections 5 and 6 of the Estate Duty Act, 1953. The deceased, being the sole coparcener, had the full power to dispose of the property, and thus, the entire property passed on his death.