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TMI Blog1996 (5) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate Tribunal under section 64(1) of the Estate Duty Act, 1953 (hereinafter referred to as "the Act"), is as under : The late Shri Chillu Ram, the deceased, constituted a Hindu undivided family (HUF) along with his wife, Smt. Kastoori Devi. This Hindu undivided family of the deceased held certain movable and immovable properties and had also a one-third share in the properties owned and held by the bigger Hindu undivided family of Jawahar Lal Gainda Lal. The bigger Hindu undivided family was assessed as such till the assessment year 1954-55. A partial partition of the bigger Hindu undivided family took place and was recognised by the Income-tax Officer on January 4, 1958. The deceased in his capacity of "karta" of his smaller Hindu undivided family, became a partner to the extent of 1/3rd share in a firm styled as Jawahar Lal Gainda Lal. Shri Chillu Ram died on January 29, 1974. At the time of his death, the deceased had, as mentioned above, 1/3rd share in certain properties of the bigger Hindu undivided family and was also having share in the properties belonging to his own smaller Hindu undivided family. After the death of the deceased, the accountable persons filed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aller Hindu undivided family. The learned Appellate Tribunal, therefore, directed that one-half share only which belonged to the deceased in the smaller Hindu undivided family and which passed on his death should be included in the principal value of the estate of the deceased. In arriving at its conclusion, the learned Appellate Tribunal examined the scope and applicability of sections 6, 7 and 39 of the Act and held that the provisions of section 6 do not stand attracted to the facts of the present case. Learned counsel for the Department urged that since the deceased was the sole surviving male member of the smaller Hindu undivided family, he had a one-third share in the properties of the bigger Hindu undivided family. The said one-third share belonging to the deceased would be deemed to pass on his death and, therefore, the provisions of section 6 would apply to the present case. Learned counsel urged that since the smaller Hindu undivided family had only one male member, the interest and share of the smaller Hindu undivided family in the bigger Hindu undivided family would belong to such sole male member, i.e., the deceased, and the entire interest would pass on his death. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be at least two members to constitute a Hindu undivided family is that the joint family property does not cease to be such simply because of the temporary reduction of the coparcenary unit to a single individual. The basic character of the property remains the same. A Hindu coparcenary, on the other hand, is a much narrower body than the joint family. It is purely a creature of law and cannot be created by act of parties, save to the extent that by adoption a stranger may be introduced as member thereof. It includes only those persons who acquire by birth an interest in the joint or coparcenary property and ordinarily it extends up to four degrees counted from and inclusive of a common male ancestor. In view of this specific feature of a coparcenary no female can be member of it although she can be a member of a joint Hindu family. Even a wife who is entitled to maintenance out of her husband's property and has, to that extent interest in his property, is not her husband's coparcener. The essence of a coparcenary under Mitakshara law is unity of ownership. The ownership of the coparcenary property lies in the whole body of coparceners and there is a community of interest an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (3) makes it quite clear that the newly created interest of the Hindu widow was in substitution of her right under the pre-existing Hindu law to claim maintenance. Sub-section (3) further clarifies her interest and says that though her interest would be a limited interest yet she would have the same right of claiming partition as a male owner had. A combined reading of sub-sections (2) and (3) of section 3 thus makes it abundantly clear that on the death of her coparcener-husband the widow substitutes him in the coparcenary and no severance of the interest of the deceased coparcener is brought about by his death. By such substitution in the coparcenary her interest does not become defined and that remains a fluctuating one liable to increase by deaths and decrease by births in the family. By virtue of sub-section (3) she becomes entitled to claim partition of coparcenary property and would be entitled to be allotted the same share as her deceased husband would have been entitled to, had he lived on the date on which she claimed partition. But the conferment of the right of statutory substitution and the further right of claiming partition would not raise the status of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... she did not become a coparcener notwithstanding the fact that she would continue to be a member of the joint Hindu family. It is to be remembered that both the enactments, i.e., the 1937 Act and the Hindu Succession Act, 1956, talk of conferment of rights on a widow in the joint family property in lieu of the earlier rights under the ordinary Hindu law. It is a widow who becomes, in a sense, a substituted coparcener in the coparcenary. A wife does not acquire that status during the lifetime of her husband. The interest of the Hindu female, i.e., the wife in the coparcenary property, is created in her favour only after the death of her husband who was a coparcener in the coparcenary. The position of a widowed mother may somewhat be different depending upon whether she is a sonless mother or not. Since such an issue is not there in the present case, we need not discuss it. Anyway, as stated earlier, a coparcenary consists of male members only and the wife of the male member does not become a coparcener in the coparcenary during the life time of her husband. She would undoubtedly be a member of the joint Hindu family which may be constituted even by herself and her husband only. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily would be required to be included in the estate liable to duty under the Estate Duty Act. In so far as the property belonging to the smaller Hindu undivided family is concerned, the deceased was the sole surviving coparcener and as such having the power to dispose of such property as if it were his own separate property. The entire property belonging to the smaller Hindu undivided family shall be deemed to pass on his death and liable to pay estate duty. Now, in so far as the question of applicability of section 6 and/or section 7 of the Estate Duty Act is concerned, it would be worthwhile to refer to the following observation made by Dwivedi J. of the Allahabad High Court in O. S. Chawala's case [1973] 90 ITR 68 [FB] : "The scheme of the Act is twofold. Firstly, there are properties which pass on the death of a person. Section 5(1) imposes duty on their value. Secondly, there are properties in which the deceased had an interest or power of appointment and which really do not pass on his death. The scheme of the Act is to impose duty on the value of such properties also. In the second class will fall provisions like sections 6, 7, 8, 9 and 10. The Act creates a fiction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Duty Act. In the course of the arguments, learned counsel for the parties referred to certain cases to which a reference may be made. In the case of T. R. Ekambaram v. CED [1967] 66 ITR 67 (AP), the effect of declaration made by the deceased in his will that certain property was his self-acquired property was considered. The property covered by the will wad found to have been acquired by the deceased with the aid of joint family property. It was held by the Andhra Pradesh High Court that the will did not alter the basic character of the property. In the instant case, though the will made by the deceased does not affect the basic character of the property of the smaller Hindu undivided family as being joint Hindu family property as the same had been acquired with the nucleus obtained by the deceased on partial partition of the bigger Hindu undivided family, since the deceased, being sole surviving coparcener in the smaller Hindu undivided family, was competent to dispose of the said property, the will made by him makes no difference in so far as levy of estate duty is concerned. In the case of Asst. CED v. Balakrishna Menon [1967] 64 ITR 223 (Ker) [FB], upon which the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f only one-third of the family properties, the reason being that by a legal fiction the adopted son is like a posthumous son, who is deemed to come into existence before the death of his father. This court held that after partition the property received by Budhumal continued to be joint family property in his hands. The son, adopted by his widow, would be deemed to have been in existence at the time of Budhumal's death. Therefore, at the time of death, the deceased could not have disposed of the joint family property. The court further held that in view of section 39, the share of Budhumal in the family property at the time of his death was one-third and this one-third alone would be deemed to have passed on his death. Their Lordships had considered the question of the interest of the deceased person in joint family properties at the time of his death, in the light of the decision of their Lordships of the Supreme Court in Krishnamurthi Vasudeorao Deshpande v. Dhruwaraj, AIR 1962 SC 59. In the case of Krishnamurthi, AIR 1962 SC 59, their Lordships of the Supreme Court deduced the following principles on the basis of their earlier decision in the case of Srinivas Krishnarao Kango v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho inherits the estate of the adoptive father is his heir, irrespective of the inheritance having passed through a number of persons, each being the heir of the previous owner. This court considered the case of Amarendra Man Singh Bhramarbar v. Sanatan Singh [1933] 60 Ind App 242 ; AIR 1933 PC 155, which related to an impartible zamindari. The last of its holders was Raja Bibhudendra. He died on December 10, 1922, unmarried. A collateral, Banamali, succeeded to the estate as the family custom excluded females from succeeding to the Raj. On December 18, 1922, Indumati, mother of Bibhudendra adopted Amarendra to her husband, Brajendra. The question for determination, in that case, was whether Amarendra could divest Banamali of the estate, and it was answered in the positive by the judicial Committee. This court said at page 19 of SCR (at page 386 of AIR) : 'The estate claimed was that of his adoptive father, Brajendra, and if the adoption was at all valid, it related back to the date of Brajendra's death, and enabled Amarendra to divest Banamali.' The last holder of the estate was not Brajendra, the adoptive father, but Bibhudendra, who may be said to be the adoptive brother. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... simply substitutes her husband in the coparcenary. In our opinion, therefore, since the 1937 Act and the Hindu Succession Act, 1956, have made drastic changes in the very concept of "family" and "coparcenary" under the Hindu law and the case of Dhani Devi and Jhavermal [1973] 89 ITR 96 (Raj), was decided without making any reference to the provisions of the said Acts, the principles laid down therein with regard to the share of the widow of a deceased in the coparcenary property do not afford much help to the accountable persons in the present case after the coming of the Hindu Succession Act into force. In the case of CIT v. Raghunandan Saran [1977] 108 ITR 818 (All), the karta was looking after the business of the family and the question was whether the salary paid to the karta was deductible in determination of the profits of the family business. The facts and the issues arising in that case are totally beside the points which are under our consideration. In the case of Goswami Vrajraiji Ranchhodlalji Maharaj v. CED [1978] 112 ITR 851 (Guj) one Ranchhodlalji had died in 1961 leaving behind his wife, Smt. Vraj Priya (the deceased) his son, Vraj Raj, and his mother, Smt. Tati. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the widow of a member of a coparcenary with the interest which the member had at the time of his death has introduced changes which are alien to the structure of a coparcenary. The interest of the widow arises not by inheritance, nor by survivorship, but by statutory substitution." His Lordship further pointed out : 'A Hindu coparcenery under the Mitakshara school consists of males alone ; it includes only those members who acquire by birth or adoption interest in the coparcenary property. The essence of coparcenary property is unity of ownership which is vested in the whole body of coparceners. While it remains joint, no individual member can predicate of the undivided property that he has a definite share therein. The interest of each coparcener is fluctuating, capable of being enlarged by deaths, and liable to be diminished by the birth of sons to coparceners ; it is only on partition that the coparcener can claim that he has become entitled to a definite share. The two principal incidents of coparcenary property are : that the interest of coparceners devolves by survivorship and not by inheritance ; and that the male issue of a coparcener acquires an interest in the copar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rights so given to the Hindu widow under the said two Acts also materially affected the doctrine of "relating back" which by a legal fiction made a posthumously adopted son as living at the time of the death of the deceased adoptive father and also made him entitled to have his share in the notional partition which was to be assumed to take place just before the death of the adoptive father. In fact with the allowing of a girl, as being capable of being given and taken in adoption by the Hindu Adoption Act, the very concept of continuity of the male line of the deceased person has been substantially and materially affected and accordingly the very object and purpose behind the doctrine of " relating back" stands adversely affected. It is particularly so in the presence of section 14 of the Hindu Succession Act, 1956, when the said provision is read in the context of the well settled principle that inheritance does not remain in abeyance and property once vested cannot be divested. In other words, section 14 of the Hindu Succession Act, 1956, gives a death blow to the very concept of "Hindu women's life estate" and reversioners" as known under ordinary Hindu law. After keepin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal was justified in holding that section 6 of the Estate Duty Act, 1953, is not applicable in so far as the interest of the deceased in the properties of the bigger Hindu undivided family passing on his death is concerned. However, we further hold that the Tribunal was not justified in holding that section 6 of the Estate Duty Act, 1953, is not applicable to the passing of the interest of the deceased in the properties of the smaller Hindu undivided family. Question No. 2 : The Tribunal was not right in holding that the cesser of interest deemed to pass on the death of the deceased in respect of property held by the smaller Hindu undivided family was to be one-half. We hold that the entire property, held by the smaller Hindu undivided family, passed on the death of the deceased under section 6 of the Act and is liable to pay duty under the Estate Duty Act. Question No. 3 : The Tribunal was not justified in holding that the share of the deceased in the larger Hindu undivided family was one-sixth and his share to that extent only passed on his death. We hold that the share of the deceased in the properties of the bigger Hindu undivided family was one-third and such one-th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is he alone who owns the entire property. It is true that for purposes of assessment of income-tax, the status of the deceased was that of an Hindu undivided family, as he and his wife constituted a family but different considerations prevail for finding out as to whether the entire property of the family or a share in it passed on the death of the deceased. As the entire ownership in the property vested in the deceased and as no part of it was shared by the wife who was the only other member in the family, the entire property passed on the death of the deceased within the meaning of section 5 of the Act. The deceased being the sole coparcener had a disposing power under the Hindu law in respect of the entire property and even under section 6 of the Act the entire property would be deemed to have passed on his death for purposes of estate duty. Section 7 which applies when a coparcenary interest in a joint family property ceases on death and section 39(1) which lays down the mode of valuation of such interest, can apply only when the joint family property is vested in more than one person. It is only then that an interest in the joint family property ceases on the death of a c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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