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TMI Blog1980 (9) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... governed by the rule of primogeniture. He further found that there was a clear bar in Hindu law from making a gift by a coparcener till the individual coparcener's interest was determined by means of partition and the very fact that the assessee had made a gift in favour of his brother on the 17th October, 1958, to the detriment of the existing HUF proved that the claim for partition was not enforceable. The ITO also rejected the contention of the assessee that the gift should be considered as partial partition. He also held that the entire property had not been divided. He rejected the assessee's contention that the partition was unequal in view of the assessee's position as also in order to discharge the liabilities and for meeting the expenses of pending litigation. Thus, he did not accept the partition and included the entire income in the hands of the assessee as an individual. There was an appeal before the AAC. The AAC was of the view that after the coming into force of the Hindu Succession Act, 1956, the impartible estate vested in the hands of the joint family. He, further found that the impartible estate ceased to exist after the Hindu Succession Act, 1956, came into f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily. According to the Tribunal, by the passing of the Hindu Succession Act, 1956, the law in respect of the impartible estate had radically changed and the impartible estates were abolished except those saved by s. 5(ii) of the said Act, viz., the Hindu Succession Act, 1956. Under s. 4 of the Hindu Succession Act, the law of succession hitherto applicable to the Hindus, either by virtue of any text, rule, custom or usage, ceased to have effect in respect of matters dealt with under the said Act. All impartible estates except those saved under ss. 5(ii) and 5(iii) would now have the ordinary incidents of property and the provisions of the Hindu Succession Act, 1956. It was further held that the instant case, did not come within the exception of s. 5(ii) or s. 5(iii) of the said Act. Thus, according to the Tribunal, the rule of primogeniture was no longer enforceable and the impartible estate was abolished. It was further held that s. 27(ii) of the I.T. Act, 1961, would be applicable, if at all, to those estates saved by s. 5(ii) or s. 5(iii) of the Hindu Succession Act, 1956, but not to other impartible estates which no longer existed. Since the estate, in the instant case, was no l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, for the purposes of s. 9 of the Indian I.T. Act, 1922, the income of an impartible estate to which the assessee had succeeded by the rule of primogeniture prevailing in his family governed by the Mitakshara law was chargeable in his hands as that of the HUF and not as that of an individual, inasmuch as under the Hindu law the estate was owned by the joint family. But, as regards the interests for the purpose of ss. 8 and 12 of the Act, income of such an estate was chargeable in the hands of the assessee as that of an individual and not as that of an HUF, as such the income was not the income of the HUF but was the income of the assessee notwithstanding the fact that he had sons from whom he was not divided. The judicial Committee observed that the word " property of which he was the owner " in s. 9 of the Indian I.T. Act, 1922, as it stood then could not be, urged to mean as " of which the annual value he is the owner ". The judicial Committee expressed doubt as to whether an income from house property could be charged in the assessee's hands as the income of an individual under s. 12 of the Indian I.T. Act, 1922, on the ground that though the HUF owned the property, the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re we do that, it would be instructive to refer to the decision of the Patna High Court, out of which decision, it went to the Supreme Court. The Division Bench of the Patna High Court in the case of Maharaj Kumar Kamal Singh v. CIT [1968] 67 ITR 725 had occasion to consider the situation under the Indian I.T. Act, 1922, though they took into consideration also the provisions of ss. 27(i) and 27(ii) of the I.T. Act, 1961, with which, in the instant case, we are concerned. It will be necessary to set out cl. (ii) of s. 27 of the I.T. Act, 1961, which runs as follows: "27. 'Owner of house property', ' annual charge',etc.,defined.-For the purpose of sections 22 to 26-... (ii) the holder of an impartible estate shall be deemed to be the individual owner of all the properties comprised in the estate." This is in terms identical with sub-s. (4) of s. 9 of the Indian I.T. Act, 1922, after its amendment in 1948. The Division Bench of the Patna High Court in the aforesaid decision was concerned with the question whether where income from assets transferred to the wife were sought to be included in the total income of the husband under the provisions of s. 16(3), would it necessarily m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holder of an impartibie estate assessed as an individual, had granted two house properties to his wife for life. It was held by the Supreme Court that the provisions of s. 16(3)(a)(iii) of the Indian I.T. Act, 1922, applied and the income from the two house properties transferred to the wife had to be included in the total income of the respondent. Prior to the transfer, the respondent would have been considered to be the owner of the house properties under s. 9(4)(a) for the purpose of ascertaining his income from the house property and the income from that house properties would have been taken into account in computing his total income. The words for the purpose of this section " in s. 9(4)(a) really meant for the purpose of determining the taxable income of the assessee. The Supreme Court further observed that it was true that the legal fiction should not be extended beyond the purpose for which it was enacted but that did not mean that the court should not give effect to that fiction. Section 27(ii) of the I.T. Act, 1961, which took the place of s. 9(4)(a) of the Indian I.T. Act, 1922, merely made explicit what was implied in s. 9(4) and this did not effect any change in law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is in existence from before the coming into operation of the Hindu Succession Act, 1956. The Tribunal had referred to the fact that s. 9(4) of the Indian I.T. Act, 1922, might be applicable to those classes of property which are mentioned in s. 5(i) and s. 5(ii) of the Hindu Succession Act, with which we are unable to agree. Section 5(i) and s. 5(ii) dealt with certain specific classes of properties, i.e., properties, succession to which was regulated by the Indian Succession Act, 1925, by reason of the provisions contained in s. 21 of the Special Marriage Act, 1954, and any estate which descended to a single heir by the terms of any covenant or agreement entered into by the Ruler of any Indian State with the Govt. of India or by the terms of any enactment passed before the commencement of the Act. As we have mentioned before, the Hindu Succession Act, 1956, only regulated and abrogated those portions of the Hindu law which related to succession after the coming into operation of the Hindu Succession Act and did not modify or amend the existence of joint or composite ownership of properties under the Hindu joint family law. Reliance was placed on behalf of the assessee on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sons, in view of s. 45 of the Act. The Supreme Court cautioned itself that s. 45 proceeded on the basis that the holder and his sons constituted a joint family and the estate belonged to the joint family, but that was only for the purpose of that Act. The said authority, in our opinion, should not be relied on in support of the proposition that after the coming into operation of the Hindu Succession Act, 1956, the impartible estate was no longer there. On behalf of the revenue, reliance was placed on the decision of the Supreme Court in the case of Chinnathayi v. Kulasekara Pandiya Naicker, AIR 1952 SC 29. But that case dealt with an entirely different position and not with the position with which we are concerned and we do not think that it will be of any assistance for us to refer to the said decision in detail. Learned advocate for the assessee also relied on the decision of the Patna High Court in the case of Bhaiya Ramanuj Pratap Deo v. Lalu Maheshanuj Pratap Deo, AIR 1968 Pat 463. There, at page 465 of the report, the Division Bench of the Patna High Court noted that the original plaintiff had died in September, 1957, and his two sons and four widows (of whom the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouse properties which are taxable under s. 27 could be included in the income of the joint family. The source of the income is very much material unlike the position as was held in that case under the Expenditure-tax Act. This position was also not disputed before the Division Bench by the revenue. On that basis of the finding and that concession, the Division Bench observed that the answer was obvious. But the Division Bench was cautious to realise that the consequence of this decision might be disastrous if the ratio of this decision was applied in other fields. There, the Acting Chief justice, P. B. Mukharji, observed as follows: " Normally, proverbial judicial timidity prevents a court from looking into the consequences of its order. But we can well imagine what the aftermath will be when the assessment does take place. The situation might be quite Gilbertian in many respects. This will relate to the question of apportioning the expenditure of the assessee as an individual and as a member of a Hindu undivided family. The expenditure will have to hop between Dr. Jekyl and Mr. Hyde all along the line. When the assessee, the Maharaja here, takes his food or drinks, does he do so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate and there was no evidence of treating these properties as part of the impartible estate. In this connection, our attention was drawn to the observations in the Treatise in Hindu Law by Gopal Chandra Sarkar Shastry (1924 Edn.), at page 741. Learned advocate for the assessee also drew our attention to the observations of the judicial Committee in the case of Rani Parbati Kumari Debi v. Jagadis Chander Dhabal [1902] LR 29 IA 82; ILR 29 Cal 433, where the judicial Committee held that Hindu family migrating from one part of India to another was presumed to continue to observe the Shastras (and in that case, the Mitakshara) by which it had been governed and it was further held that on the evidence especially as to ceremonies at marriages, births and shradas that this presumption had not been displaced. Consequently, the Privy Council was of the opinion that the ancestral estate in that case had descended to the half-brother of the deceased in preference to his widows. It was further held that four mouzas in suit, purchased by the deceased out of his savings of his impartible estate, were his self-acquired estate and there was no intention on his part to incorporate these with the an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to exist or not. Now, we have held, as we have mentioned hereinbefore, that so far as the properties in respect of the impartible estate and the income in respect of which is included under s. 27, cl. (ii), of the I.T. Act, 1961, are concerned, the Hindu Succession Act would not affect to the extent we have indicated in our judgment, but we need not go into that aspect of the matter because that question has not been referred to us nor it appears out of the statement of the case that any such contention was raised before the Tribunal. Mr. Sen also sought to urge that under sub-s. (2) of s. 171 a notice was required to be given when a claim had been made, and in this case, a claim had been made before the ITO that there was a partition of all the members of the family before deciding whether there was any partition or whether the properties could be partible or not. This aspect again was not urged before the AAC or the Tribunal and no question of law has been referred to us. In that view of the matter, we cannot go into this aspect of the matter, at this stage, but the assessee would be at liberty, to urge before the Tribunal when it disposes of the matter under s. 260(1) of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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