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TMI Blog1973 (11) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of the death of Manilal, both the assessee and his sister, Vasumati, were unmarried. Subsequently, the assessee got married to Mrinalini and Mrinalini bore a child, a daughter, Jayashree, and no other issue was born to the couple. What the assessee received on the death of his father, Manilal, consisted entirely of the self-acquired properties of Manilal. Before the Wealth-tax Officer, the assessee claimed the status of a Hindu undivided family in regard to the net wealth which consisted entirely of the assets which he had received on the death of his father, Manilal. On the relevant valuation date the family consisted of the assessee, his wife, Mrinalini, his daughter and his mother. The Wealth-tax Officer held that the correct status was to be treated as an individual and not that of a Hindu undivided family. Against the decision of the Wealth-tax Officer, the matter was carried in appeal by the assessee and the Appellate Assistant Commissioner upheld the decision of the Wealth-tax Officer and dismissed the appeal. The matter was taken in further appeal to the Appellate Tribunal and the Tribunal held that the value of the assets left behind him by the assessee's father, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that so far as Chaturbhuj was concerned, he had obtained his interest in the firm from his brother, Kalyanji. It was not self-acquired and not ancestral property.Chaturbhuj had no son, but even if he had, the son would have taken by birth no interest in the income from the partnership. Thus, in none of the cases of the four Partners, Moolji, Purshottam, Kalyanji and Chaturbhuj did the fact that the partner concerned had a wife and daughter or more than one daughter affect the result and the existence of a son did not make his father's self-acquired property family property or joint property, and the existence of a wife or daughter did not make any difference. As regards the cases of Kanji and Sewdas, it was found that neither had a son but, in the case of each, his interest in the firm was obtained by gift from his father, Moolji. The Privy Council left the question open whether the interest obtained by each of the two partners, Kanji and Sewdas, by gift from their father, Moolji, was ancestral property or not in their respective hands but their Lordships proceeded upon the assumption that their interest was ancestral property, so that, if either had a son, the son would hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncestral in the hands of a particular person, not merely the relationship between the original and the present holder but the mode of transmission also must be looked to; and the property can ordinarily be reckoned as ancestral only if the present holder has got it by virtue of his being a son or descendant of the original owner." The Supreme Court in this case held that when the father obtains the grandfather's property by way of gift, he receives it not because he is a son or has any legal right to such property but because his father chose to bestow a favour on him which he could have bestowed on any other person as well. In paragraph 13, B. K. Mukherjee J., as he then was, delivering the judgment of the Supreme Court, observed: " It may be noted that the expression ' obtained through favour of the father ' (Pithru prasad labdha) which occurs in placitum 28, section 4 of Mitakshara is very significant. A Mitakshara father can make a partition of both the ancestral and self-acquired property in his hands any time he likes even without the concurrence of his sons ; but if he chooses to make a partition, he has got to make it in accordance with the directions laid down in the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided family consisting of the son, his widowed, mother and his two unmarried sisters. On these facts following the observations of their Lordships of the Privy Council in Arunachalam Chettiar's case , it was held by the Supreme Court that the property of the joint family did not cease to belong to the family merely because the family was represented after A's death by a single coparcener B, who possessed rights which an owner of property might possess, and the income received therefrom was taxable as income of the Hindu undivided family. The Supreme Court there held that there need not be more than one male member to form a Hindu undivided family as a taxable entity under the Income-tax Act. The expression " Hindu undivided family " in the Income-tax Act is used in the sense in which a Hindu joint family is understood under the personal law of the Hindus. Under the Hindu system of law a joint family may consist of a single male member and widows of deceased male members, and the Income-tax Act does not indicate that a Hindu undivided family as an assessable entity must consist of at least two male members. The Supreme Court pointed out that there is a distinction between a coparce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in the circumstances the power to alienate joint family property. That is what it is until he alienates it, and, if he does not alienate it, that is what it remains. The fatal flaw in the argument of the appellant appeared to be that, having labelled the surviving coparcener ' owner ', he then attributed to his ownership such a congeries of rights that the property could no longer be called ' joint family property '. The family, a body fluctuating in numbers and comprised of male and female members, may equally well be said to be owners of the property, but owners whose ownership is qualified by the powers of the coparceners. There is in fact nothing to be gained by the use of the word owner in this connection. It is only by analysing the nature of the rights of the members of the undivided family, both those in being and those yet to be born, that it can be determined whether the family property can properly be described as ' joint property ' of the undivided family. Thus, according to this passage from the decision of the Privy Council in Arunachalam's case the correct test is not the power of disposal which a sole surviving coparcener has over the property but the test of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his hands. In this connection, a distinction must be drawn between two classes of cases where an assessee is sought to be assessed in respect of ancestral property held by him : (1) where property not originally joint is received by the assessee and the question has to be asked whether it has acquired the character of a joint family property in the hands of the assessee ; and (2) where the property already impressed with the character of joint family property comes into the hands of the assesee as a single coparcener and the question required to be considered is whether it has retained the character of joint family property in the hands of the assessee or is converted into absolute property of the assessee." Mr. K. H. Kaji rightly pointed out that on the facts of each of the cases, Gowli Buddanna's case, N. V. Narendranath's case and the case which came up before the Gujarat High Court in Bharatkumar Chnubhai v. Commissioner of Income-tax, each of the three cases fell in the second category, namely, where property which had already been impressed with the character of joint family property came into the hands of the assessee as a single coparcener and the question arose whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idowed mother, his wife and his daughter were entitled to be maintained out of the property and were not only members of the family but had certain rights in the property which is in dispute. These are the rights of the members of the family who were in existence at the valuation date but applying the test of members yet to be born, it is obvious that if a son were to be born to the assessee or to be adopted by the assessee, then the newly born son or it adopted son would get right as from birth or as from the date of adoption into the property which is the subject-matter of dispute and when they become the members of the family in this manner, either by birth or by adoption, the property would undoubtedly become joint family property in the hands of the assessee. But, as the Supreme Court pointed out in Arunachala Mudaliar v. Muruganatha Mudaliar, it is the mode of transmission from Manilal to the assessee which is the crucial question and the mode of transmission in this case is not an inter vivos gift or testamentary bequest from Manilal to the assessee but the course of transmission is by succession and undoubtedly that mode of transmission of the property would stamp it with t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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