1972 (6) TMI 14 - HC - Wealth-tax

Whether the deduction admissible is in respect of tax payable pursuant to the relevant return filed by the assessee or whether such deduction is admissible in respect of tax as finally determined on assessment - When one coparcener of Hindu joint family died his share devolved on mother and wife under Hindu Succession Act 1956 what is the extent of the interest of the surviving joint family in the family jewellery - Tribunal was right in taking the view that only two-thirds share in the jewellery was liable to be taken into account in computing the net wealth of the assessee Hindu undivided family and since it was of the value of less than Rs. 25, 000 it was exempt u/s 5(1)(xiv).

Issues Involved:
1. Deduction admissible in respect of tax payable.
2. Exclusion of one-third share of deceased coparcener in coparcenary property from the net wealth of the assessee.

Detailed Analysis:

Issue 1: Deduction Admissible in Respect of Tax Payable
The first question of law referred by the Tribunal is whether the deduction admissible is in respect of tax payable pursuant to the relevant return filed by the assessee or the tax as finally determined on assessment. The court concluded this issue based on a prior decision in Wealth-tax Reference No. 3 of 1970. It was held that the tax liability admissible as a deduction in computing the net wealth of the assessee must be taken as the amount of tax finally determined on assessment, not the amount computed based on the return filed by the assessee.

Issue 2: Exclusion of One-Third Share of Deceased Coparcener in Coparcenary Property
The second question arose from the assessment of a Hindu undivided family (HUF) for the assessment years 1960-61, 1961-62, and 1962-63. The issue was whether the one-third share of Dinesh in the coparcenary property, inherited by Usha and Pushpavati under section 6 of the Hindu Succession Act, 1956, should be excluded in determining the net wealth of the assessee.

The court noted that upon Dinesh's death, his interest in the coparcenary property devolved on his wife, Usha, and his mother, Pushpavati, by virtue of section 6 of the Hindu Succession Act, 1956. This devolution was confirmed by a settlement where Usha received Rs. 10,70,000 in full satisfaction of her claim. The Tribunal held that the one-third share of Dinesh ceased to belong to the HUF and thus the HUF was entitled only to the remaining two-thirds share.

The court explained that under section 6 of the Hindu Succession Act, 1956, when a male Hindu dies, his interest in the coparcenary property devolves by testamentary or intestate succession if he leaves behind certain relatives, including a wife or mother. This interest is deemed to be the share he would have received if a partition had occurred immediately before his death. Therefore, the heirs receive a definite share in the property, and the HUF continues with the remaining share.

The court further clarified that the HUF and the heirs hold the properties as tenants-in-common, not as joint tenants. This means each has an undivided share in every item of the property. Specifically, for the jewellery valued at Rs. 29,270, the Tribunal correctly observed that only two-thirds belonged to the HUF, making it exempt from wealth-tax under section 5(1)(xiv) since its value was less than Rs. 25,000.

The court supported this conclusion by referencing section 19 of the Hindu Succession Act, which states that heirs who succeed together to the property of an intestate take the property as tenants-in-common. This principle was further reinforced by decisions from various High Courts, including Calcutta, Bombay, Mysore, and Kerala, which supported the view that the heirs and the HUF hold the properties as tenants-in-common.

In conclusion, the court affirmed that only the two-thirds share of the jewellery belonging to the HUF should be included in the net wealth computation, and since its value was below the threshold, it was exempt from tax. The second question was answered in the affirmative, and the Commissioner was directed to pay the costs of each reference to the assessee.

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