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TMI Blog1986 (7) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... was divided between the father and the son, and, thereafter, it was carried on by a partnership consisting of the two. The firm was assessed to income-tax as a registered firm and the two partners were separately assessed in respect of their share of income. The house property of the family continued to remain joint. On July 17, 1965, Rangilal died leaving behind his son, Chander Sen, and his grandsons, i.e., the sons of Chander Sen. His wife and mother predeceased him and he had no other issue except Chander Sen. On his death, there was a credit balance of Rs. 1,85,043 in his account in the books of the firm. For the assessment year 1966-67 (valuation date October 3, 1965), Chander Sen, who constituted a joint family with his own sons, filed a return of his net wealth. The return included the property of the family which on the death of Rangi Lal passed on to Chander Sen by survivorship and also the assets of the business which devolved upon Chander Sen on the death of his father. The sum of Rs. 1,85,043 standing to the credit of Rangi Lal was not included in the net wealth of the family of Chander Sen (hereinafter referred to as " the assessee-family ") on the ground that this am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitute the assets of the assessee-Hindu undivided family is correct ? " Similarly, in the reference under the Income-tax Act, the following question was referred: " Whether, on the facts and in the circumstances of the case, the interest of Rs. 23,330 is an allowable deduction in the computation of the business profits of the assessee-joint family? " The answer to the questions would depend upon whether the amount standing to the credit of late Rangi Lal was inherited, after his death, by Chander Sen in his individual capacity or as a karta of the assessee-joint family consisting of himself and his sons. The amount in question represented the capital allotted to Rangi Lal on partial partition and accumulated profits earned by him as his share in the firm. While Rangi Lal was alive, this amount could not be said to belong to any joint Hindu family and qua Chander Sen and his sons, it was the separate property of Rangi Lal. On Rangi Lal's death, the amount passed on to his son, Chander Sen, by inheritance. The High Court was of the opinion that under the Hindu law, when a son inherited separate and self-acquired property of his father, it assumed the character of joint Hindu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, what had happened was that one Ram Rakshpal and his father, Durga Prasad, constituted a Hindu undivided family which was assessed as such. Ram Rakshpal separated from his father by partition on October 11, 1948. Thereafter, Ram Rakshpal started business of his own, income whereof was assessed in the hands of the assessee-family. Shri Durga Prasad also started business of his own after partition in the name and style of M/s. Murlidhar Mathura Prasad which was carried on by him till his death. Durga Prasad died on March 29,1958, leaving behind him his widow, Jai Devi, his married daughter, Vidya Wati, Ram Rakshpal and Ram Rakshpal's son, Ashok Kumar, as his survivors. The assets left behind by Durga Prasad devolved upon three of them in equal shares by succession under the Hindu Succession Act, 1956. Vidya Wati took away her 1/3rd share, while Jai Devi and Shri Ram Rakshpal continued the aforesaid business inherited by them in partnership with effect from April 1, 1958, under a partnership deed dated April 23, 1958. The said firm was granted registration for the assessment year 1958-59. The share of profit of Shri Ram Rakshpal for the assessment year under reference was determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... predeceased son. " The heirs mentioned in Class I of the Schedule are son, daughter, etc., including the son of a predeceased son but does not include specifically the grandson, being a son of a son living. Therefore, the short question is, when the son as heir of Class I of the Schedule inherits the property, does he do so in his individual capacity or does be do so as karta of his own undivided family? Now, the Allahabad High Court has noted that the case of CIT v. Ram Rakshpal Ashok Kumar [1968] 67 ITR 164, after referring to the relevant authorities and commentators, had observed at page 171 of the said report that there was no scope for considerations of a wide and general nature about the objects attempted to be achieved by a piece of legislation when interpreting the clear words of the enactment. The learned judges observed, referring to the observations of Mulla's Commentary on Hindu Law, and the provisions of section 6 of the Hindu Succession Act, that in the case of assets of the business left by a father in the hands of his son, it will be governed by section 8 of the Act and he would take them in his individual capacity. In this connection, reference was also made bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm joint Hindu family with him. But the question is, is the position affected by section 8 of the Hindu Succession Act, 1956, and, if so, how? The basic argument is that section 8 indicates the heirs in respect of certain property and Class I of the heirs includes the son but not the grandson. It includes, however, the son of a predeceased son. It is this position which has mainly induced the Allahabad High Court in the two judgments we have noticed to take the view that the income from the assets inherited by a son from his father from whom he has separated by partition can be assessed as income of the son individually. Under section 8 of the Hindu Succession Act, 1956, the property of the father who dies intestate devolves on his son in his individual capacity and not as karta of his own family. On the other hand, the Gujarat High Court has taken the contrary view. In CIT v. Dr. Babubhai Mansukhbhai (decd.) [1977] 108 ITR 417, the Gujarat High Court held that in the case of Hindus governed by the Mitakshara law, where a son inherited the self-acquired property of his father, the son took it as the joint family property of himself and his son and not as his separate property. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P in the property left by him on his death. As the effect of section 8 was directly derogatory of the law established according to Hindu law, the statutory provision must prevail in view of the unequivocal intention in the statute itself, expressed in section 4(1) which says that to the extent to which provisions have been made in the Act, those provisions shall override the established provisions in the texts of Hindu law. Accordingly, in that case, K alone took the properties obtained by his father, P, in the partition between them and, irrespective of the question as to whether it was ancestral property in the hands of K or not, he would exclude his son. Further, since the existing grandson at the time of the death of the grandfather had been excluded, an after-born son of the son will also not get any interest which the son inherited from the father. In respect of the property obtained by K on the death of his father, P, it was not possible to visualise or envisage any Hindu undivided family. The High Court held that the Tribunal was, therefore, correct in holding that the properties inherited by K from his divided father constituted his separate and individual properties and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot constitute Hindu undivided family property consisting of his own branch including his sons. It followed the Full Bench decision of the Madras High Court as well as the view of the Allahabad High Court in the two cases noted above including the judgment under appeal. The Andhra Pradesh High Court in the case of CWT v. Mukundgirji [1983] 144 ITR 18 had also to consider this aspect. It held that a perusal of the Hindu Succession Act, 1956, would disclose that Parliament wanted to make a clean break from the old Hindu law in certain respects consistent with modern and egalitarian concepts. For the sake of removal of any doubts, therefore, section 4(1)(a) was inserted. The High Court was of the opinion that it would, therefore, not be consistent with the spirit and object of the enactment to strain provisions of the Act to accord with the prior notions and concepts of Hindu law. That such a course was not possible was made clear by the inclusion of females in Class I of the Schedule, and according to the Andhra Pradesh High Court, to hold that the property which devolved upon a Hindu under section 8 of the Act would be Hindu undivided family property in his hands vis-a-vis his own s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmore, as noted by the Andhra Pradesh High Court, the Act makes it clear by section 4 that one should look to the Act in case of doubt and not to the pre-existing Hindu law. It would be difficult to hold today that property which devolved on a Hindu under section 8 of the Hindu Succession Act would be Hindu undivided family property in his hands vis-a-vis his own son; that would amount to creating two classes among the heirs mentioned in Class I, the male heirs in whose hands it will be joint Hindu family property vis-a-vis their sons and female heirs with respect to whom no such concept could be applied or contemplated. It may be mentioned that heirs in Class I of the Schedule under section 8 of the Act included widow, mother, daughter of a predeceased son, etc. Before we conclude, we may state that we have noted the observations in Mulla's Commentary on Hindu Law, 15th edn., dealing with section 6 of the Hindu Succession Act at pages 924-926 as well as Mayne's Hindu Law, 12th edition, pages 918-919. The express words of section 8 of the Hindu Succession Act, 1956, cannot be ignored and must prevail. The preamble to the Act reiterates that the Act is, inter alia, to " amend " th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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