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TMI Blog1980 (10) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... al property belonging to the HUF. He released this interest in movable property in favour of other members of the HUF without any consideration whatsoever. In the document he made it clear that he had not released his interest so far as the immovable properties of the joint family were concerned. In the recitals, he made it clear that he was desirous of releasing his rights, title and interest and all other interest in the movable property of the said joint family including the business of B. Trikamlal Company and goodwill thereof and the persons in whose favour the interest was being released were to keep all movable properties and the said business subject to the payment of debts and liabilities of the said joint family including that of the business. In the operative part, the document mentioned: "..... releasor hereby without any consideration whatsoever, releases, relinquishes and assigns unto the said releasees, their executors, administrators all the rights, titles and interest, claims and demands of him in all the movable properties including business belonging to the said joint family to the intent that all the movable properties including the business of the said join ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in these words: " The extinguishment at the expense of the deceased of a debt or other right shall be deemed to have been a disposition made by the deceased in favour of the person for whose benefit the debt or right was extinguished, and in relation to such a disposition the expression 'property' shall include the benefit conferred by the extinguishment of the debt or right. " Under s. 27(1) of the Act: "Any disposition made by the deceased in favour of a relative of his shall be treated for the purposes of this Act as a gift unless (a) the disposition was made on the part of the deceased for full consideration in money or money's worth paid to him for his own use or benefit; or (b) the deceased was concerned in a fiduciary capacity imposed on him otherwise than by a disposition made by him and in such a capacity only; and references to a gift in this Act shall be construed accordingly ...... .." The rest of the provisions of s. 27 are not material for the purposes of this judgment. Section 9 is one of the group of sections which deal with property which is deemed to pass on the death of the deceased. Under s. 9: " Property taken under a disposition made by the decea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the difference was includible in the principal value of the estate of the deceased in view of Expln. 2 to s. 2(15) and ss. 9 and 27 of the E.D. Act, 1953. The death had taken place in that case within two years of the execution of the release deed. The Supreme Court there held that the term " disposition " was not a term of art nor legalese but a plain English word of wide import. What was more, the word had acquired, beyond its normal ambit, an extended meaning on account of the special definition in s. 2(15) with Expln. 2 superseded. Explanation 2 was deliberately designed to take into its embrace what otherwise might not be disposition or conform to its traditional concept, and the expression " other right " in Expln. 2 to s. 2(15) was of the widest import and could not be constricted by reading it ejusdem generis with debt ". The Supreme Court has pointed out at p. 99: " We will first unlock Explanation 2 to section 2(15), discover the signification of 'property' expanded by the deeming clause and then read it in that wider sense along with the comprehensive provisions of sections 9, 27, and 5. The key concept that underlies this fasciculus of sections is property, the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition falling within Explanation 2 to section 2(15)..... " The Supreme Court in the case of Kantilal Trikamlal [1976] 105 ITR 92 overruled the decision of the Gujarat High Court Kantilal Trikamlal v. CED [1969] 74 ITR 353 and confirmed the decision of the Madras High Court in Ranganayaki Ammal v. CED [1973] 88 ITR 96. The Supreme Court also distinguished the cases of CGT v. Getti Chettiar [1971] 82 ITR 599 (SC) and CED v. Kancharla Kesava Rao [1973] 89 ITR 261 (SC), both being decisions of the Supreme Court. But the principal point which the Supreme Court laid down in Kantilal Trikamlal's case [1976] 105 ITR 92 was that though ordinarily no transfer of property takes place under the principles of Hindu law when a partition is effected between coparceners, yet, from the point of view of estate duty, by virtue of the special definition set out in s. 2(15) read with ss. 27 and 9, there was a disposition within the meaning of the E.D. Act so as to attract the provisions of s. 27(1) and s. 9 if other conditions were satisfied, in case one of the coparceners received a lesser share than what was due to him at the time of partition. The Supreme Court also approved the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, it is clear that unless there is a specific provision in the E.D. Act, like s. 39(1), making a departure from the general principles of Hindu law, the principles of Hindu law would continue to apply. In Attorney-General of Ceylon v. A. R. Arunachalam Chettiar [1958] 34 ITR (ED) 20, the Privy Council dealt with the basic principles of Hindu law regarding coparcenary property. In that case, a father and son, who died domiciled in India on February 23, 1938, and July 9, 1934, respectively, were immediately before the son's death, the only living coparceners of a Hindu joint family, governed by the Mitakshara system of Hindu law, which had extensive trading and other interests in India, Ceylon, and other far eastern countries. The father, on the son's death, became the sole surviving coparcener, but there were also female members of the HUF who were entitled to maintenance out of the joint family property. Moreover, it was competent for the surviving widow of the son to adopt son who would thus become a coparcener with the father and the father himself, and, after his death, his surviving widow had a similar power of adoption. On a claim by the revenue that the son's " half sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable there must be not only a cesser of interest in property, but also a benefit arising by such cesser; and, further, the benefit as provided by s. 17(6) of the Ordinance, must be capable of valuation by reference to the income of the property which the deceased had enjoyed. In that particular case, the son, merely had a right to be maintained by the karta out of the common fund to an extent in the karta's absolute discretion, and there was no basis of valuation which in relation to such an " interest " would conform to the scheme prescribed by s. 17(6). Nor upon a cesser of that " interest " could a " benefit " of any value be said to have accrued to the surviving coparcener when the son's interest lapsed. It may be pointed out that in the second case of AttorneyGeneral of Ceylon v. AR. Arunachalam Chettiar (No. 2) [1958] 34 ITR (ED) 42, the earlier decision in AR. Arunachalam Chettiar (No. 1)'s case [1958] 34 ITR (ED) 20 was approved and the second case of AR. Arunachalam Chettiar [1958] 34 ITR (ED) 42 was approved by the Supreme Court in Gowli Buddanna v. CIT [1966] 60 ITR 293. It is true that in Kantilal Trikamlal's case [1976] 105 ITR 92 (SC), the Supreme Court approve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an inchoate right of the type with which we are concerned in the present case, namely, the right of a Hindu coparcener in the movable property of the HUF, the question that we have to ask ourselves is, how can such a right be valued at all ? As the Privy Council has pointed out in Arunachalam Chettiar's case, it is a misuse of the language to say that the coparcener had any such right or share in the HUF property. His right is to demand partition and on such demand to obtain his due share. Until such a demand is made, it is not possible for anyone to predicate what his exact share is or what the value of his share in a Hindu coparcenary property is. There is no notional partition provided for in Expln. 2 to s. 2(15) as has been provided in s. 39(1) of the E.D. Act. In the absence of any provision enacting either expressly or by necessary implication such notional partition, it must be held that though there is a release of an inchoate right inasmuch as it cannot be predicated that the disclaimer or the release was at the expense of the deceased or that there was a corresponding benefit to the other coparceners, there cannot be said to be disposition of property within the meani ..... X X X X Extracts X X X X X X X X Extracts X X X X
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