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TMI Blog1966 (8) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... owing questions have been referred by the Tribunal to this court. "(1) Whether the provisions of section 16(3)(a)(iii) of the Indian Income-tax Act, 1922, are ultra vires the Constitution of India ? (2) Whether, in the facts and circumstances, of the case, the Tribunal was justified in holding that the provisions of section 16(3)(a)(iii) applied to the income arising from a property transferred by the holder of an impartible estate to his wife for her maintenance ?" In regard to the assessment years 1959-60 and 1960-61, the net annual value of the residental houses of the assessee at ten per cent. of the total income of the assessee under the first proviso to sub-section (2) of section 9 was challenged on the ground that the total income of the assessee to be considered in that respect should not have included the income from the two house properties transferred to his wife by way of the supplementary maintenance grant. As that contention was not accepted by the Tribunal, the following question has been referred at the instance of the assessee in respect of the last two assessment years involved : "Whether in the facts and circumstances the Tribunal was right in holding that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is, in fact and in effect, a deeming provision. The charging section 3 of the Indian Income-tax Act, 1922, is in respect of the total income of a previous year of every individual, where an individual is the assessee. The income of the wife from the assets transferred to her by her husband is taken to be the income of the husband, the individual assessee, under the deeming provision laid under section 16(3) and, in that view, becomes assessable in the hands of the husband. In the instant case, the assessee is an individual. He is the holder of an impartible estate. Incidents of impartible estate are well defined and settled by custom and by judicial precedents. The holder has uncontrolled powers of enjoyment and disposal over the impartible estate and income arising therefrom ; but all the same, the estate belongs to the Hindu joint family of which the holder, at a particular time, is a member. According to the custom giving rise to succession by primogeniture, the eldest male issue of the holder of the impartible estate succeeds to possession and enjoyment of the estate after the death of the last holder ; but the right of survivorship, which is the quintessence of law of succ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing words of the judgment delivered on behalf of the Board by Lord Dunedin in Baijnath Prasad Singh v. Tej Bali Singh are to that effect, and in that case as well as in Shiba Prasad Singh v. Rani Prayag Kumari Debi at page 345, which followed it, 'the keynote of the position' is---not that property which is not joint property devolves by virtue of custom as though it had been joint---but that the general law regulates all beyond the custom, that the custom of impartibility does not touch the succession since the right of survivorship is not inconsistent with the custom ; hence the estate retains its character of joint family property and devolves by the general law upon that person who being in fact and in law joint in respect of the estate is also the senior member in the senior line. The birth-right of the senior member to take by survivorship still remains. Nor is this right a mere spes successionis similar to that of a reversioner succeeding on the death of a Hindu widow to her husband's estate. It is a right which is capable of being renounced and surrendered. The later cases are to the same effect. Though the co-ownership of the junior member may be 'in a sense' only, carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferred to his wife. The mere fact that the transferor happens to be the husband and the transferee, the wife, would be sufficient to attract that provision. Sub-section (3) opens with the words : "In computing the total income of any individual for the purpose of assessment, there shall be included . . ." The income of an individual necessarily means the income belonging to and owned by an individual. Although the income of a wife or a minor child does not belong to that individual assessee, it is to be included in his total income under the provisions of sub-section (3). When the income from the assets transferred to the wife is sought to come within that inclusion, it would necessarily mean that the transferor-husband was himself the owner of the assets before they were transferred. In other words, the income of such assets, which would have been assessed as the income of that individual before the transfer, is brought to same assessability after the transfer of those assets if the transferee happens to be the wife and the consideration for that transfer is inadequate or the transfer is not in connection with an agreement to live apart. I cannot, therefore, accept the content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned with the other members of the joint family. "Joint ownership" was used, as it appears to me, in the sense of a restraint upon alienation of the estate. What was specifically decided in regard to the ownership of the impartible estate in Baijnath's case and reiterated in the case of Commissioner of Income-tax v. Dewan Bahadur Dewan Krishna Kishore, as already referred to, was not gone into in this case, which was decided in 1888. Another case relied upon by the revenue was Shiba Prasad Singh v. Rani Prayag Kumari Debi, where it was observed that an impartible estate belongs to the joint family for a limited purpose and though it is ancestral, it is clothed with the incidents of self-acquired property. This decision does not dispute that the joint family is the owner of the impartible estate. The incidents of custom related thereto override some of the features of joint family estate ; but that does not mean that the joint family ceases completely to be the owner of an estate only because it is impartible in nature. A later decision of this court, in the case of Commissioner of Income-tax v. Maharani Gyan Manjuri Kuari, dealt with this question elaborately and referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he benefit must go to the subject. The present law (Income-tax Act, 1961) has brought about a different position. Sections 22 to 27 deal with income from house property. In section 27(ii) it is provided that, for the purposes of sections 22 to 26, the holder of an impartible estate shall be deemed to be the individual owner of all the properties comprised in the estate. Under section 27(i), an individual, who transfers otherwise than for adequate consideration any house property to his or her spouse, not being a transfer in connection with an agreement to live apart, or to a minor child not being a married daughter, is to be deemed to be the owner of the house property so transferred. An owner of a house property is liable to assessment (section 22). The above two provisions of section 27 taken together bring the husband-transferor of house property comprised in an impartible estate to the wife under the liability of assessment on the income from that house property. Section 64 of the new Act corresponds to section 16(3) of the old Act. A distinction has thus been made in the new Act in regard to the income from house property comprised in an impartible estate where the house prop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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