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TMI Blog1987 (10) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... a Notification under section 4 of the Land Acquisition Act on 18-5-1955. Subsequently, the HUF entered into an agreement with Standard Vacuum Refining Oil Co. (India) Ltd. and pursuant thereto, possession of the land was taken on 23-4-1958. The lands were not acquired under the provisions of the Land Acquisition Act, but by means of a transfer upon agreed terms as a result of negotiations. According to the agreement, Ramrao K. Rupji, as Karta of the HUF, agreed to sell the land to Esso Company (Standard Vacuum Oil Company had come to be Esso by that time) for a price of Rs. 4,72,626. The agreement also provided that the HUF should be paid a sum of Rs. 1,49,665, as compensation, for use and occupation for the period from 23-4-1958 till the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the deceased Ramrao K. Rupji had passed on to his class I heirs in specific shares and that the said one-third share was not includible in the HUF assessment. The Tribunal accepted the assessee's submission and held that only two-third share in the HUF property could be considered for the purpose of capital gains and that the one-third share of the deceased Ramrao K. Rupji was not includible. Reliance upon section 171, made by the revenue, was held to be misplaced. Suffice it to say that the tribunal followed the decision of the Kerala High Court in the case of ITO v. Smt. N. K. Sarada Thampatty [1976] 105 ITR 67. This finding has become final in as much as no reference was preferred by the revenue. Subsequent to the Tribunal's order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heirs of late Sri Ramrao K. Rupji because accepting the appellant's own arguments, nothing survived for consideration in the assessment year 1971-72 as far as the deceased Sri Ramrao K. Rupji's share in capita gains concerned." In the result, the appeal by the heirs came to be allowed. 6. The revenue is in appeal objecting to the said order and it is contended that capital gains in respect of one-third share of the deceased Ramrao K. Rupji is not taxable in the hands of the HUF as remarked by the CIT (A) and that the heirs are liable to be assessed jointly as the ITO has done. 7. For the assessee, Sri. A. P. Sathe contended that the undivided share of Ramrao K. Rupji was inherited by his class I heirs in definite shares and that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed was assessable in the hands of the heirs, as HUF and that the revenue should have preferred a reference from the Tribunal's order passed in the HUF case for assessment year 1971-72. This observation, as we presently point out, is not correct. 10. In the case of Gurupad Khandappa Magdum, the Supreme Court has ruled that on the death of a coparcener, his undivided share in the coparcenery property would vest in the class I heirs (if any) and to determine their shares, a notional partition should be effected, that is a partition which could have taken place just before the death of the coparcener. In other words, to ascertain the share, a partition must be assumed to have taken place immediately before his death. This has been followed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r intestate succession, as the case may be, under the Hindu Succession Act. In the case of intestate succession not covered by section 6, the undivided interest of the male will pass on under section 8 of the Hindu Succession Act upon class I heirs. 12. In the case of Chander Sen, the Supreme Court has pointed out that in regard to the property that devolves under section 8 of the Hindu Succession act, it would be difficult to hold that the same could be HUF property in the hands of the heirs. The ratio laid down in this decision is that if a sob who inherits as a class I heir will hold it in his individual capacity and not as Karta of his own undivided family. 13. The undivided share of a male which passes on class I heirs under the Hind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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