1. In all these references, a common question of law is involved under the Income-tax Act as well as the Wealth-tax Act. One Majeti Subba Rao executed a will on September 22, 1954. It appears, he was carrying on business in the name of Sri Panduranga Engineering Company in the manufacture and sale of cement articles. Under the will executed by him, he bequeathed the business carried on in the above mentioned name in favour of his three grandchildren, viz., M. Subba Rao, Balarama Krishna and Ramachandra Srinivasa Rao 'with equal rights and with absolute rights'. It is further stated in the will that the above grandchildren were empowered to take possession and enjoy the same with absolute rights after the lifetime of the testator. Majeti Subba Rao died in 1957 and later the bequests had come into effect. It is common ground that for the assessment years 1959-60 to 1975-76 (both years inclusive) returns were filed by the grandchildren describing their status as 'individual' for the purpose of taxation. In the returns filed, they declared the income derived from the above mentioned business bequeathed by the late M. Subba Rao and assessments under the Income-tax Act as well as Wealth-tax Act were, accordingly, made on the three grandchildren as individuals. For the assessment year 1976-77, a claim was made, for the first time, that the correct status is that of a 'Hindu undivided family' and the bequests were made by the testator under the will dated September 22, 1954, not to the three grandchildren in their individual capacity, but to the three grandchildren for the benefit of their respective families. The income-tax authorities rejected the claim for determination of the status as 'Hindu undivided family' on the ground that under the will, bequests were made to the three grandchildren in their individual capacity, and there was nothing in the will to establish the contention that the bequests were for the benefit of the joint families of the three grandchildren.
2. Appeals were filed before the Appellate Assistant Commissioner against the rejection of the above claim. The Appellate Assistant Commissioner accepted the assessee's claim that the correct status should be that of 'Hindu undivided family' as, in his opinion, the bequests were meant for the benefit of the joint families of the three grandchildren. The Income-tax Officer filed appeals before the Income-tax Appellate Tribunal, which affirmed the view of the Appellate Assistant Commissioner. The Commissioner of Income-tax then asked for a reference and the following question of law is referred for the opinion of this court :
'Whether, on the facts and in the circumstances of the case, and on proper interpretation of the will dated September 22, 1954, executed by the grandfather, the Income-tax Appellate Tribunal was correct in law in holding that the bequest was to the Hindu undivided families of the respective grandsons and not to these individuals ?'
3. The question referred in all the references is almost identical.
4. The learned standing counsel for the Revenue contended that the Tribunal was in error in coming to the conclusion that under the will dated September 22, 1954, the testator made bequests in favour of the respective joint families of the three grandchildren. It is pointed out that there was nothing in the will to justify any such conclusion. Sri M. J. Swamy, learned counsel for the assessee, has taken us through the order of the Tribunal and reiterated the plea that a reasonable construction of the will is that the testator made the bequests in favour of the joint families of the three grandchildren and not to the three grandchildren in their individual capacity. We have gone through the will and we are unable to accept the contention of the learned counsel for the assessee. There is nothing in the will even remotely suggesting that the testator intended to bequeath the property in favour of the joint families of the three grandchildren. The recitals in the will are unequivocal. The testator categorically stated that the business carried on in the name of Sri Panduran, a Engineering Company shall vest in his three grandchildren with equal rights and with absolute rights and the grandchildren were empowered to take possession and enjoy the same with absolute rights after the lifetime of the testator. These averments in the will do not lend support to the plea that the testator had in mind conferring benefits to the respective families of the three grandchildren and not to the three grandchildren in their individual right. Out of the three grandchildren, Balarama Krishna and Ramachandra Srinivasa Rao were minors at the relevant time and the eldest grandson, Subba Rao, was a major who was appointed under the will as guardian of the remaining two minors. It is inconceivable that at the relevant time when the will was executed, that is on September 19, 1954, the testator could have contemplated conferring benefits on the Hindu undivided families of the grandchildren, who were still young. The Tribunal referred to the decision of the Supreme Court in Arunachala Mudaliar v. Muruganatha Mudahiar : 1SCR243 , as lending support to the proposition that what in reality the testator did was a partition of the property and not a simple bequest. In the first place, the will executed by the testator on September 22, 1954, does not lend support to the view that the testator was partitioning any of his properties among his relations. The business was obviously the self-acquired property of the testator. Even if he meant to partition that business among the three grandchildren in equal shares, it does not amount to a partition of joint family properties. It is a division of selfacquired property among the testator's relations and in the hands of the relations, the property does not acquire the character of Hindu undivided joint family property. Reference was also made by the Tribunal to the judgment of the Supreme Court in Periakaruppan Chettiar v. CIT : 99ITR1(SC) . There is nothing in the decision in Periakaruppan Chettiar's case : 99ITR1(SC) , to support the view that in the present case the objects of bounty were not the three grandchildren in their individual capacity but as heads of their respective families. Notwithstanding the views contained in certain words conveying the gift in Pseriakaruppan Chettiar's case : 99ITR1(SC) , which gave rise to the plea that the property was gifted to the sons as heads of their respective families, the Supreme Court rejected the contention that there was anything, in the document or in the surrounding circumstances to suggest that the interest transferred to the sons was limited in any way or that the objects of the bounty were the sons as heads of their respective families. In the present case also, there is nothing in the will or in the surrounding circumstances which would suggest that the interest transferred by the testator to the grandchildran was limited in any way or that the objects of the bounty were the grandchildren as heads of their respective families.
5. The Tribunal referred to the so-called subsequent conduct of the parties to justify the conclusion that they held the property for the benefit of their respective joint families. We consider that the subsequent conduct is totally irrelevant for construing the real legal effect of the will executed by the testator. If the subsequent conduct indicated a different treatment of the properties, it cannot follow that the testator gifted the properties under the will to the three grandchildren as heads of their respective joint families. In our opinion, the subsequent conduct is totally irrelevant for the purpose of determining the question. It seems to us that the assessees correctly understood their status as 'individual' when they filed the returns up to and including the assessment year 1975-76. The modification of the claim for the assessment year 1976-77 is not supported by their own understanding of the real effect of the requests made by the testator under the will, for the earlier assessment years.
6. We are, therefore, unable to accept the contention that the assessees are liable to be assessed in the status of Hindu undivided family for the purpose of income-tax and wealth-tax relating to the business bequeathed by the testator under the will above referred to. The Tribunal was in error in accepting the assessee's claim.
7. For the aforesaid reasons, we answer the question referred in the negative, that is, in favour of the Revenue and against the assessee. No costs.
8. Mr. Swamy, learned counsel for the assessees, makes an oral application for leave to appeal to the Supreme Court. We do not think this is a fit case for granting leave to appeal to the Supreme Court. The oral application for leave is, accordingly, rejected.