9911796707
TMI Blog1969 (7) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... te arose in the assessment year 1957-58 and the subsequent years the assessee was always assessed in the status of an individual. "Kathoke Lodge" was admitedly the self-acquired property of the assessee, but on 26th January, 1956, the assessee made a certain declaration on affidavit and signed it before a Presidency Magistrate declaring it to be property belonging to a Hindu undivided family. The relevant declaration was as follows : "1. I have this day thrown my separate and self-acquired immovable property known as 'Kathoke Lodge' situated at the Main Road, Dadar, Bombay-14 into the family hotchpot and will hereinafter hold the said property as Karta of my Hindu joint family. 2. My Hindu joint family for the time being consists of myself, my wife and one child. 3. The family hotchpot for the time being consists of the said immovable property. I have made the present declaration with the intention to impress on my self-acquired property the character of the Hindu joint family property. 4. I solemnly declare that hereafter the said immovable property belongs to my Hindu joint family and I will hold the said property as Karta of my family consisting for the time being of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellate Assistant Commissioner held that, even assuming that the property was thrown into the common stock by the assessee, or, in other words, that it was a Hindu undivided family property "the income from the said property can still be considered (sic : to be) in the appellant's hands, he being the sole male member" and, in this respect, the Appellate Assistant Commissioner relied upon the decision of the Privy Council in Kalyani Vithaldas v. Commissioner of Income-tax Officer. In a further appeal by the assessee the Tribunal first of all considered the finding of the Appellate Assistant Commissioner that the assessee had not acted upon the declaration and that in fact "there was no such transfer of property to the joint family". The Tribunal did not uphold that finding. The Tribunal held that the assessee's declaration manifested his intention to impress his self-acquired property with the character of a joint Hindu family and that the fact that he had deposited the income of the property in his personal account for a few years was a matter with which they were not concerned. The assessee was, however, the karta of the joint Hindu family, and, as such, "this incident has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged that upon the decided cases it is clear that a Hindu undivided family as referred to under the Indian Income-tax Act is the same thing as the Hindu joint family under the Hindu law though it may be different from a Hindu coparcenary. So viewing it he urged that a Hindu joint family may consist of a male member, his wife and his daughter only and it is not necessary that there should be more than one male. A male Hindu can with only female members constitute a joint Hindu family, and in the present case, since the assessee's family consists of himself, his wife and unmarried daughter, that unit can constitute a Hindu undivided family. Counsel, therefore, urged that every requirement necessary for holding that Kathoke Lodge, which was separate property at one time, has now become the property of a Hindu undivided family has been fulfilled by the assessee and that, therefore, it must be held that the assessee successfully imparted to it the character of a Hindu undivided family property. He argued that the correct position in law and upon the authorities was not grasped by the Tribunal and therefore its finding is vitiated. On behalf of the department, on the other hand, it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. We do not, however, propose in deciding this reference to go into the larger question as to whether the property of the assessee, which was originally self-acquired property, assumed the character of a Hindu undivided family property, as to what are the incidents of a Hindu undivided family property and under what circumstances can separate property become Hindu undivided family property. Some of these questions have been directly answered in the authorities which were cited before us. The question referred is confined to the "income" from Kathoke Lodge. We would, therefore, without going into these larger questions, prefer to rest our decision on the short point whether the income from the property known as Kathoke Lodge after the declaration was the income of a Hindu undivided family and in this respect whether the principle laid down by the Privy Council in Kalyanji's case was correctly applied. First as to the decision of the Privy Council in Kalyanji Vithaldas v. Commissioner of Income-tax. That was a case which went up to the Privy Council from the decision of the Calcutta High Court in Moolji Sicka, In re and it is an important pronouncement upon the first point bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their hands was clearly the separate and self-acquired property of each partner. As the income from the firm had not been thrown into the common stock it could not be regarded as the income of the family and it remained the income of the individuals concerned. They therefore answered the first question in the affirmative and the second question in the negative. The second group was that constituted by Chaturbhuj, the son of Vithaldas. In his case, as we have said, his interest in the firm was obtained by way of gift from his brother, Kalyanji, and he had no son. The Privy Council held that his income from the firm was self-acquired and not ancestral property. Chaturbhuj also had no son but even if he had, their Lordships held that the son would have taken by birth no interest in the income from the firm. Therefore, they answered the second question in the negative and held that the first question did not arise in his case. They, however, observed that in none of the cases of these four persons did the fact that the man had a wife and daughter (on more than one) affect the result. The existence of a son did not make his father's self-acquired property family property or joint prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but even so, they said that it was ancestral only in the sense that if a son were to be born to either of them, the son would take an interest in that property, but no son being born no such interest had arisen to qualify or diminish the interest given by their father to them. Therefore, it would be their individual property until a son was born and the mere fact that each had a wife or a daughter would not make any difference. The wife or daughter had only a right of maintenance and therefore only an interest in the property thereby increasing the assessee's obligations, but not divesting, dividing or impairing in any way his ownership of that property and this is equally true of ancestral property as of self-acquired property. Further, their Lordships distinguished between the corpus of the property and the income from it and they pointed out that they were considering not simply a case governed by the general Hindu law but were considering a case under the Indian Income-tax Act and the expression used in that Act "the total income of the previous year of any individual, Hindu undivided family, company, unregistered firm or other association of individuals not being a registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in the hands of a Hindu male who has no son may be ancestral property, if no son is born no interest can arise to qualify or diminish the interest of such person in the income of that property and the income individual income. The reason is that having regard to the provisions of the Income-tax Act it is still his income although the property from which it comes into his hands is ancestral. The existence of a wife or daughter makes no difference because they have only an "interest" in the property in so far as they are entitled to maintenance therefrom but they do not in any way affect the ownership of that property. What then is the position which arises in the present case. No doubt the assessee who held Kathoke Lodge as his self-acquired property has declared his intention to throw it into the family hotchpot and has said that from the date of the declaration he will hold the property as the karta of his Hindu joint family. He has also declared however that his Hindu joint family consists of himself, his wife and one child which in this case is his daughter. He has also declared that the family hotchpot for the time being shall consist of only this property and none other. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the family and his right to that property and its income remains exactly the same as it was when he received that income from Kathoke Lodge as his separate property. His position as a member of the joint family after the declaration would be the same as that of a sole surving coparcener, but it is now settled law that a person who for the time being is the sole surviving coparcener is entitled to dispose of the corparcenary property as if it were his separate property. He may sell or mortgage the property without legal necessity or he may make a gift of it. It a son is subsequently born to him adopted by him, the alienation, whether it is by way of sale, mortgage or gift, will nevertheless stand, for a son cannot object to alienations made by his father before he was born or begotten. That is the position which the assessee held so far as this property is concened. So far the income is concerned, he has the complete power of disposal over the income and even assuming that he is the karta of a jont Hindu family, there is no one who can question his spending, i.e., whether or not it is for legal necessity or other justifiable purpose. If then, his right to the income remains under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le coparcener, all the assets forming the subject-matter of the returns filed by the assessee belonged to him as an individual, and not to a Hindu undivided family. When the matter came by way of appeal by special leave to the Supreme Court, the Supreme Court referred to Kalyanji's case at length and accepted the statement of the law in Kalyanji's case in so far as it decided that there was no warrant for the contention that there must be at least two male members to form a Hindu undivided family as a taxable unit. The expression "Hindu undivided family" they also held, agreeing with Kalyanji's case, was used in the sense in which a Hindu joint family was understood in the personal law of the Hindus and they categorically laid down that "under the Hindu system of law a joint family may consist of a single male member and his wife and daughters". Since they were dealing with a case under the Wealth-tax Act they observed that there was nothing in the scheme of the Wealth-tax Act to suggest that a Hindu undivided family as an assessable unit must consist of at least two male members. Having so far accepted the principles laid down in Kalyanji's case the Supreme Court pointed out the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax v. Gomedalli Lakshminarayan and in Kalyanji's case with reference to Gomedalli's case (they have referred to it as Lakshminarayan's case) they have observed : "the Bombay High Court, on the other hand, in Lakshminarayan's case having held that the assessee, his wife and mother were a Hindu undivided family, arrived too readily at the conclusion that the income was the income of the family." In Narendranath's case the Supreme Court pointed out that this remark of the Privy Council in Gomedalli's case was not correct in view of the distinction which they had pointed out in Narendranath's case as to the source of the property. They pointed out the error in the following passage ; "In Commissioner of Income-tax v. Gomedalli Lakshminarayan the property was ancestral in the hands of the father and the son had acquired an interest in it by birth. There was a subsisting Hindu undivided family during the lifetime of the father and that family did not come to an end on his death. On these facts, the Bombay High Court held that the income received from the property was liable to super-tax as the income of the Hindu undivided family in the hands of the son who was the sole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns in their individual capacity. The other class of cases are the cases where the property which being already impressed with the character of joint family property comes into the hands of the assessee as a single coparcener and with reference to that class of cases the Supreme Court held that it would not cease to be property of a Hindu undivided family. The decision in Narendranath's case, therefore, does not show that Kalyanji's case was upon the point with which we are concerned held to be incorrectly decided, or in any manner thrown in doubt. On the other hand, Narendranath's case, so far as the point before us is concerned, accepts the decision in Kalyanji's case but distinguishes that case from the other cases where the property is at source a joint family property. The decision in Narendranath's case at no stage has held so far as the point before us is concerned that Kalyanji's case was incorrectly decided. In Gowli Buddanna v. Commissioner of Income-tax the Supreme Court took the same view which they have subsequently reiterated in Narendranath's case (Civil Appeals Nos. 1477 and 1478 of 1968). In that case the family originally consisted of A, his wife and his two un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 478 of 1968 and having discussed the cases they posed the question before them by saying. "The question is, in which class of cases does the present case fall ; does it fall within the class of cases represented by Kalyanji's case or does it fall within the class of cases represented by Gomedalli's case Arunachalam's case, and Gowli Buddanna's case." They held that the case before them fell within the latter class of cases. Kalyanji's case was similarly followed in K. R. Ramachandra Rao v. Commissioner of Wealth-tax, Madras by the Madras High Court. In Rama chandra Rao's case the assessee was the sole surviving coparcener of a Hindu undivided family and it was held that he did not constitute a Hindu undivided family for purposes of assessment to wealth-tax. They referred to Kalyanji's case at page 963 and while they did not advert to the special feature in Kalganji's case which, according to the Supreme Court, in Narendranath's case distinguished it from the other cases, they merely followed it. At any rate, the decision does not throw any doubt on Kalyanji's case. The one case in which Kalyanji's case was not followed is the decision of the Patna High Court in Panna Lal Rastogi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary for us to go further than that. We have already indicated that, even if we were to assume as was assumed in Kalyanji's case that it was a joint family property in the assessee's hands after his declaration, the income would still be his individual income, though upon the distinction which the Supreme Court has drawn as to the source of the property, it must be emphasised that it was admittedly the self acquired property of the assessee before the declaration was made and could not have changed its character by it. Since he had no son and until a son was born to him the income from that property is exclusively his. Both in the matter of ownership and control it must be held that it was his individual income. Great reliance was placed on the decision of the Privy Council in Attorney-General of Ceylon v. Arunachalam Chettiar on behalf of the assessee. That case was decided along with [1958] 34 I.T.R. 20, a connected appeal where the facts are stated in detail. A father and son were the only living coparceners of a Hindu joint family governed by the Mitakshara. The son died on 9th July, 1934, and the father became the sole surviving coparcener of the Hind undivided fami ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
