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Commissioner of Income-tax, Bombay City-v, Bombay Vs. Anil. J. Chinai - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Application No. 8 of 1983
Judge
Reported in[1984]148ITR3(Bom); [1984]17TAXMAN181(Bom)
ActsIncome Tax Act, 1961 - Sections 256(2)
AppellantCommissioner of Income-tax, Bombay City-v, Bombay
RespondentAnil. J. Chinai
Excerpt:
- - 257 of mulla's commentary on principles of hindu law (15th edition at page 345), it has been clearly observed that a person who for the time being is the sole surviving coparcener is entitled to dispose the coparcenary property as if it were his separate property......on the facts and in the circumstances of the case, the tribunal was justified in holding that a sole surviving coparcener can dispose of the coparcenary property as if it were his separate property ?(2) whether, on the facts and in the circumstances of the case, the tribunal was justified in holding that the gifts made by the assessee in the capacity of a sole surviving coparcener out of the huf immovable property to his minor daughters and wife were valid gifts ?(3) whether, on the facts and in the circumstances of the case, the tribunal was justified in deleting the capital gains arising in the hands of trustees of arti trust, anjana trust and smt. jayantika a chinai and which were taxed in the hands of the assessee from the total income of the assessee ?'2. certain uncontroverted.....
Judgment:

Kania J.

1. This is an application by way of a petition under s. 256(2) of the I.T. Act, 1961, for directing the Tribunal to refer certain question of law to this court for its opinion and to draw up a statement of case for that purpose. The question which are sought to be referred are as follows :

'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that a sole surviving coparcener can dispose of the coparcenary property as if it were his separate property ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the gifts made by the assessee in the capacity of a sole surviving coparcener out of the HUF immovable property to his minor daughters and wife were valid gifts ?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the capital gains arising in the hands of trustees of Arti Trust, Anjana Trust and Smt. Jayantika A Chinai and which were taxed in the hands of the assessee from the total income of the assessee ?'

2. Certain uncontroverted facts emerge from the order of the Tribunal rejecting the application made by the petitioners here for making a reference to this court. Anil Chinai was the karta of a Hindu undivided family (referred to hereinafter as 'the HUF') consisting of himself, his wife, Jayantika, and their two minor daughters, Arti and Anjana. The respondent before us is the said HUF during the year under assessment, namely, assessment year 1973-74 and as the karta of the assessee-HUF made gifts of certain shares of its undivided share in certain immovable properties to Smt. Jayantika A. Chinai, the wife of Anil Chinai and to two trusts in favour of their minor daughter, Arti and Anjana, respectively. These gifts were made by Anil Chinai in his capacity as the karta and sole surviving members of the said HUF as aforesaid. It appears that the said donees sold the gifts received by them and made capital gains. The ITO took the view that the aforesaid three gifts were not valid and the assessee-HUF continued to be the owner of the gifted properties and hence he taxed the aforesaid capital gains in the hands of the assessee.

3. On an appeal to the Commissioner (Appeals), the assessee succeeded and it was held by the Commissioner (Appeals) that the gifts made by Anil Chinai as the sole surviving coparcener were valid gifts and the action of the ITO was not sustainable in law. It was directed that the capital gains arising to the donees be excluded from the total income of the assessee. An appeal was then preferred by the Department to the Income-tax Appellate Tribunal, but that was also dismissed. The Department then made an application to the Income-tax Tribunal for referring the aforesaid questions to this court, but that application was also rejected. What is set out above makes it quite clear that the only question which arises is whether Anil Chinai, as the sole surviving coparcener of the said assesses-HUF comprising of himself, his wife and two minor daughters, was entitled to make these two gifts without having proved that these were justified by legal necessity or pious purpose.

4. In this case, the law appears to the fairly clear. In art. 257 of Mulla's Commentary on Principles of Hindu law (15th edition at page 345), it has been clearly observed that a person who for the time being is the sole surviving coparcener is entitled to dispose the coparcenary property as if it were his separate property. He may sell of mortgage the property without legal necessity or he may make a gift of it. If a son is subsequently born to him or adopted by him, the alienation, whether it is by way of sale, mortgage or gift, will nevertheless stand, for a son cannot object to alienations made by his father before he was born or begotten. The same position emerges from the decision of a Division Bench of the Gujarat High Court in Anilkumar B. Laskari v. CIT : [1983]142ITR831(Guj) . It has been held there that under the Hindu law, it is the settled legal position that the existence of a female member does not in any way curtail or restrict the right of the sole surviving coparcener to alienate the coparcenary property as if it were his separate property. We are in respectful agreement with this conclusion. Reference may now be made to the decision of the Supreme Court in Surjit Lal Chhabda v. CIT : [1975]101ITR776(SC) . In that case, the HUF consisted of a sole member who was the appellant before the Supreme Court, his wife and his married daughter. The Supreme Court held, as far as, the wife and minor daughter were concerned, they not being coparceners of the appellant, had neither a right by birth in the property nor the right to demand its partition nor indeed the right to restrain the appellant from alienating the property for any purpose what soever. It is true that, in that case, it so happened that the property question had been thrown by the sole surviving coparcener into the family hotchpot which had no other property, but the principle laid down which we have pointed out above, was not limited to those facts but was of general application.

5. The question aforesaid admit of only one answer and that is in favour of the assessee and against the Department. There would be no purpose in referring such question to the High Court.

6. In the result, rule is discharged with costs.


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