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TMI Blog1973 (1) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of net wealth by the assessee and it was contended by him that the jagir was the ancestral property and it pertained to the Hindu undivided family consisting of himself, his wife and minor sons. Accordingly, it was urged that it was not taxable as individual in his hands. It was also asserted that the compensation was not ascertained on the valuation dates and it became quantified only in 1961. Thus, there being no ascertained wealth, it could not be included in the assessee's net wealth. These contentions did not find favour with the Wealth-tax Officer. He held that, in view of the fact that the rule of primogeniture was applicable, the jagir was the absolute property of the assessee and the compensation awarded to him in lieu of jagir will be treated as his assets and will be liable to wealth-tax. As regards the second contention, he was of the opinion that the compensation was ascertainable in view of the provisions of the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952, though it was payable in instalments. It cannot, therefore, be said that the property had no value on the valuation dates. The assessment for the year 1957-58 was thus made by the Wealth-tax Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as some value in regard to the jagir which was resumed. According to it, the market value on the date of the valuation has to be taken note of while computing the net wealth of the assessee. It, therefore, remanded the case to the Wealth-tax Officer to ascertain the worth of the compensation amount on the date of the valuation. The appeals were decided by separate orders on November 19, 1963. The assessee submitted separate applications with regard to both the assessments and requested the Appellate Tribunal to refer the questions of law arising out of its order to this court. Both the applications were consolidated and the following question was referred to this court : " Whether, on the facts and in the circumstances of the case, the present worth on the valuation dates in question of the compensation payable under the Rajasthan Land Reforms and Resumption of Jagirs Act, 1952, for the jagir of Badnore and the immovable properties comprised in the said jagir were includible in the net wealth of the assessee in his individual status ? " The reference under the Gift-tax Act arises out of the following facts : The Garh situated at Badnore was a part of the jagir of Takur Gopals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, the department made an application to the Tribunal for making a reference to this court, but it was rejected. The Commissioner of Gift-tax then moved this court under section 26(3) of the Gift-tax Act, 1958, requesting the Appellate Tribunal to state the case. This court, by its order dated 16th December, 1968, directed the Appellate Tribunal (Delhi Bench C), to refer the following question to this court and to submit the statement of the case : " Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal, Delhi Bench C, was right in holding that the Garh at Badnore was the property of the Hindu undivided family of which the assessee was the karta and that the distribution of a sum of Rs. 2 lakhs received by the assessee as the sale proceeds thereof amongst his sons, his wife and himself was not a transfer of assets within the meaning of the Gift-tax Act, 1958, and hence was not liable to gift-tax ? " In compliance with the above direction, the Income-tax Appellate Tribunal submitted the statement of case and referred the question stated above for answer of this court by its order dated 17th May, 1969. Thus, in both the references, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot make it, separate or self-acquired property; a raj, though impartible, may in fact be self-acquired or it may be family property of a joint undivided family; if it is the latter, succession will be regulated according to the rule which obtains in an undivided joint family, so far as the selection of the person entitled to succeed is concerned, i.e., the person will be designated by survivorship, although then, according to the custom of impartibility, he will hold the raj without the others sharing it. The eldest of the senior branch would be the head of a joint family and he is entitled to succeed by survivorship. Their Lordship quoted with approval the following observations of Sir Barnes Peacock : "The impartibility of the property does not destory its nature as joint family property or render it the separate estate of the last holder, so as to destroy the right of another member of the joint family to succeed to it upon his death in preference to those who would be his heirs if the property were separate." In another Privy Council case, Komammal v. Annadana Jadaya Gounder, their Lordships observed : " Impartible estates are the creatures of custom, and where no spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... versioner succeeding on the death of a Hindu widow to her husband's estate. It is a right which is capable of being renounced and surrendered. Such being their Lordships' view, it follows that in order to establish that a family governed by the Mitakshara in which there is an ancestral impartible estate has ceased to be joint, it is necessary to prove an intention, express or implied, on the part of the junior members of the family to renounce their right of succession to the estate. It is not sufficient to show a separation merely in food and worship. Admittedly, there is no evidence in this case of any such intention. The plaintiffs, therefore, have failed to prove separation, and the defendant is entitled to succeed to the impartible estate. Being entitled to the estate, he is also entitled to the improvements on the estate, being the immovable properties specified in items 9 to 19 of Sch. kha. These improvements, in fact, form part of the impartible estate. " The last decision of the Privy Council in Shiba Prasad Singh v. Rani Prayg Kumari Debi has been quoted with approval by their Lordships of the Supreme Court in Pushpavathi Vijayaram v. P. Visweswar. According to their L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enance; and (4) the right of survivorship. It is obvious from the very nature of the property which is impartible that the first of these rights cannot exist. The second is also incompatible with the custom of impartibility as was laid down by the Privy Council in the case of Rami Sartaj Kuari v. Deoraj Kuari and the First Pittapur case . The right of maintenance and the right of survivorship, however, still remain and it is by reference to these rights that the property, though impartible, has, in the eye of law, to be regarded as joint family property. The right of survivorship which can be claimed by the members of the undivided family which owns the impartible estate should not be confused with a mere spes successionis. Unlike spes successionis the right of survivorship can be renounced or surrendered. It was held by the Judicial Committee in Collector of Gorakhpur v. Ram Sunder Mal that the right of maintenance to junior members out of an impartible estate was based on the joint ownership of the junior members of the family. In that case Lord Blanesburgh, after stating that the judgment of Lord Dunedin in Baijnath Prasad Singh v. Tej Bali Singh had definitely negatived the vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not possible to hold that the transfer of the properties in the gujaranama deed was a transfer by way of gift. It is also not possible to contend that it was a sale of the properties for there is no money consideration. It is manifest that the transaction is by way of a settlement to the respondent by Raja Anand Brahma Shah in lieu of the right of maintenance of the respondent which is obligatory upon the holder of impartible estate. In our opinion, the gujaranama deed dated October 5, 1949, is not hit by the provision of section 23 of the Act and the argument of the appellant on this aspect of the case must be rejected. " In view of the law referred to above and the facts of this case as already noticed, the argument that the jagirdar was the absolute owner of the jagir is not acceptable. There is no manner of doubt left in our mind that the jagir of Badnore was not the absolute property of the jagirdar and it belonged to the Hindu undivided family. In our opinion, the order passed by the Appellate Tribunal in the wealth-tax case is not correct and the view taken by the Appellate Tribunal in the gift-tax case is the right one. Mr. Bhandari, learned counsel for the departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the adoption of Bhagwati Singh and the Rajpramukh of Rajasthan in exercise of the same right recognized him as an heir to the last jagirdar. Even if the jagir was of a hereditary nature, it seems clear that the Maharao of Kotah was admittedly the sole arbiter for determining the question of succession to the gaddi according to law and custom and that exclusive power, by the binding force of the covenant, has passed to the Rajpramukh of Rajasthan. In this view of the case the rule laid down by their Lordships of the Privy Council in Sultan Sami v. Ajmodin is attracted to this case. Therein their Lordships expressed the opinion that the question to whom a saranjam or jagir shall be granted upon the death of its holder is one which belongs exclusively to the Government, to be determined upon political consideration, and that it is not within the competency of any legal tribunal to review the decision which the Government may pronounce." The facts of this case are distinguishable and, in our opinion, this authority has no application to the present case. In that case the plaintiff himself came forward with the plea that the succession to the gaddi of Indergarh was determined by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new Act) the holder of the impartible estate has to be deemed to be the individual owner of all the properties comprised in the estate. There was no corresponding provision in the Wealth-tax Act of 1957 in the relevant assessment years. Corresponding to section 9(4) of the Indian Income-tax Act, 1922, section 4(6) was introduced in the Wealth-tax Act with effect from April 1, 1965. Thus the position under the Wealth-tax Act during the relevant assessment year was similar to the one that existed in regard to the income-tax law prior to the introduction of section 9(4). The Privy Council case, Commissioner of Income-tax v. Dewan Bahadur Krishna Kishore will apply with full force to the present case. Their Lordships held that where in a family governed by the Mitakshara, by custom, the rule of primogeniture controls the devolution of impartible property, the custom of impartibility does not touch the succession since the right of survivorship is not inconsistent with the custom; hence the estate retains its character of joint family property and devolves by the general law upon that person who being in fact and in law joint in respect of the estate, is also the senior member in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case above referred to. Our answer to the second part of the question is, therefore, in the negative. Next question that arises is whether the distribution of the sum of Rs. 2,00,000 received by the assessee as the sale proceeds of the garh sold by him to the Government of Rajasthan amongst his sons, his wife and himself was or was not a transfer of assets within the meaning of the Gift-tax Act, 1958. We have held above that the jagir held by the assessee belonged to the Hindu undivided family of the holder of the estate though, by rule of primogeniture, he held it in his hands without sharing it with the others. His sons and his wife constituting the joint Hindu family with him had rights and interest in the jagir, though limited. The fort at Badnore was a part of the jagir and, as such, it was also the property of the Hindu undivided family. The assessee had partitioned this amount among five persons including himself. After the resumption of jagir the garh had been held to be the private property of the assessee under section 23 of the Act but it continued to remain the property belonging to the Hindu undivided family. The character of this property in the hands of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not constitute a transfer. In the present case, the relinquishment is for the benefit of all the members of the family. The only person interested in retaining the impartible character of the garh or the price received by the sale of it is Thakur Gopal Singh, the former jagirdar. For, as has been pointed out above, on his death his wife and his sons will inherit the property equally as it is joint family property. None of the sons is entitled to inherit the whole of the property as it will lose its impartible character on the death of the present holder. In the instant case, therefore, there is no question of the son entitled to succeed to the impartible estate giving his consent to the partition. Thakur Gopal Singh having relinquished his right of keeping the sale price obtained by the sale of the garh as impartible property it became open to the partitioned amongst the members of the joint family. We accordingly agree with the view taken by the Appellate Tribunal that the partition of Rs. 2,00,000 did not involve any transfer and the provisions of the Gift-tax Act were not attracted. Our answer to the question posed in the gift-tax case is, therefore, in the affirmative. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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