Krishna Rao, J.
(1) This is a reference under S. 27(1) of the Wealth Tax Act (27 of 1957) in respect of the assessment of the respondent for the assessment years 1957-58, 1958-59 and 1959-60. The question of law referred to us is 'Whether the status of the assessee was rightly determined as Hindu undivided family.'
(2) The material facts are briefly these: The respondent, Shri N. V. Narendranath, furnished returns setting forth his net wealth for all the three years claiming the status of a Hindu undivided family. The other members of his undivided family and his wife and his two minor daughters, Pratima Devi and Manjula Devi. His father, N. V. Rangarao, was the holder of an impartible estate called 'Munagala Estate' in the District of Krishna in the State of Andhra Pradesh. The father had also inherited certain agricultural lands in the districts of Warangal and Nalgonda in the erstwhile State of Hyderabad. Between the years 1928 and 1938, the father purchased some agricultural lands in the names of the respondent and the respondent's brothers. The Munagala estate was abolished under the Madras Estates (Abolition and Conversion into Ryotwari) Act, 1948. The compensation in respect of this impartible estate was paid to the respondent' father, to the respondent and to the respondent's brothers as contemplated under S. 45 of the 1948 Act. The lands situated in the erstwhile Hyderabad State were partitioned in the year 1950, and in 1954 the home farm lands were also divided.
The assets forming the subject-matter of the reference consist of the respondent's investments in securities, shares, partnership building, deposits in banks and agricultural produce from his lands. Their source was the compensation paid to the respondent under S. 45 and the property that he obtained from his father. The rates of wealth tax are less in the case of a Hindu undivided family than in the case of an individual. Both the Wealth Tax Officer and on the appeals of the respondent, the Appellate Assistant Commissioner of Wealth Tax, negatived the respondent's claim to be assessed as a Hindu undivided family and assessed him as an individual. They bases their decision on Kalyanji Vithaldas v. Commr. of Income-tax, Bengal, . The respondent took further appeals to the Appellate Tribunal. The Appellate Tribunal held that the status of the respondent assessee is a Hindu undivided family and not an individual. Upon the application of the Commissioner of Wealth Tax, they stated the case for the opinion of this Court.
(3) Before proceeding further, it may be useful to read some of the provisions of the Wealth Tax Act, which have a material bearing on the question before us.
2. 'Definitions:- In this Act, unless the context, otherwise requires, .............................
(e) 'assets' includes property of every description, movable or immovable, but does not include-
(v) any interest in property where the interest is available to an assessee for a period not exceeding six years;
(m) 'not wealth' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than-
(3) Charge of Wealth Tax: Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the first day of April, 1957, a tax (hereinafter referred to as wealth tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule.
5. Exemption in respect of certain assets:- (1) Wealth tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee-
(ii) the interest of the assessee in the coparcenary property of any Hindu undivided family of which he is a member .......................................
(7) Value of assets how to be determined :-(1) The value of any asset, other than case, for the purpose of this Act, shall be estimated to be the price which in the opinion of the Wealth Tax Officer it would fetch if sold in the open market on the valuation date.
The valuation date in relation to an assessment year is defined in S. 2, cl. (q) as meaning the last day of the previous year. It will be seen that in order to constitute net wealth chargeable under S. 3, the assets must be property belonging to the assessee, who may be either an individual or a Hindu undivided family or a company. A person may hold some property in his individual right and other property in his right as the karta of a Hindu undivided family. His status need not be the same in relation to all property held by him. Thus the point of the question referred to us is whether the assets comprised in the respondent's returns belonged to him alone or to a Hindu undivided family of which he is a member.
(4) In , the question arose whether the income from ancestral property in the hands of Kanji and Sewdas, two of the appellants, consisting of their interest in a partnership business should be treated for the purpose of the Indian Income tax Act (XI of 1922) as the income of their respective Hindu undivided families or their individual income. Kanji's undivided family comprised himself, his wife and his daughter; and Sewda's undivided family comprised only himself and his wife. Neither had a son. The Judicial Committee held that the ancestral property belonged respectively of Kanji and Sewdas alone and the income should not be treated as the income of their Hindu undivided families. Sir George Rankin said at pp. 94-96 (of ITR) : (at pp. 37-39 of AIR):
'Does then the existence of a wife, or of a wife and daughter make it income of a Hindu undivided family rather than income of the individual partner? Their Lordships think not. A man's wife and daughter are entitled to be maintained by him out of his separate property as well as out of property in which he has a coparcenary interest, but the mere existence of a wife or daughter does not make ancestral property joint. 'Interest' is a word of wide and vague significance, and no doubt it might be used of a wife's or daughter's right to be maintained, which right accrues in the daughter's case on birth; but if the father's obligations are increased his ownership is not divested, divided or impaired by marriage or the birth of a daughter. This is equally true of ancestral property belonging to himself alone as of self-acquired property ..................
In an extra legal sense, and even for some purposes of legal theory, ancestral property may perhaps be described and usually described as family property; but it does not follow that in the eye of the Hindu law it belongs save in certain circumstances to the family as distinct from the individual. By reason of its origin a man's property may be liable to be divested wholly or in part on the happening of a particular event, or may be answerable for particular obligations, or may pass at his death in a particular way; but if, in spite of all such facts, his personal law regards him as the owner, the property as his property and the income therefrom as his income, it is chargeable to income-tax as his, i.e., as the income of an individual. In their Lordships' view it would be in consonance with ordinary notions or with a correct interpretation of the law of Mitakshara, to hold that property which a man has obtained from his father belongs to a Hindu undivided family by reason of having a wife and daughters.'
In the conception of Hindu lawyers, the subordinate rights of a wife or daughter to be maintained out of their husband's or father's property were regarded as rights of co-ownership. But this view was negatived by the Judicial Committee on the ground that a man's ownership of property is not divided, divided or impaired by marriage or by the birth of a daughter. Although the pronouncement was made by the Judicial Committee more than twenty years prior to the passing of the Wealth Tax Act, there is no provision in the Wealth Tax Act defining a 'Hindu undivided family' in a different sense.
(5) The principle of Kalyanji Vithaldas's case, (1937) 5 ITR 90 : AIR 1957 PC 36, was applied by a Division Bench of the Madras High Court in K. R. Ramachandrarao v. Commr. of Wealth Tax, Madras : 48ITR959(Mad) , and by a Division Bench of the Rajasthan High Court in Mukat Beharilal Bhargava v. Commr. of Income-tax . In : 48ITR959(Mad) (supra), the assessee became the sole surviving coparcener of a Hindu undivided family and was an issueless widower with the result that no other persons such as widows or other female members of the family were entitled to any claims upon the estate. It was held that he was not a Hindu undivided family for wealth tax assessment under the Wealth Tax Act. In , the assessee became the sole surviving coparcener upon his adoptive father's death and his Hindu undivided family consisted of himself, his wife and a daughter. It was held that he was the absolute owner of the ancestral property in his hands and it did not belong to a Hindu undivided family.
(6) In Mulla's Principles of Hindu Law, Twelfth Edition, (1959), paragraph 223 (4) at p. 327, the position of law applicable to the respondent is summarised thus :
'(4) Share allotted on partition:- The share which coparcener obtains on partition of ancestral property is ancestral property as regards his male issue. They take an interest in it by birth, whether they are in existence at the time of partition or are born subsequently. Such share, however, is ancestral property only as regards his male issue. As regards other relations, it is separate property, and if the coparcener dies without leaving male issue, it passes to his heirs by succession.'
(7) As the respondent has no male issue, his share of ancestral property vis-a-vis his wife and daughters is only his separate property. No question under S. 2 cl. (e), sub-cl. (v) of the Wealth Tax Act arises for consideration because it is stated that the respondent has no male issue even in 1964. It follows from Kalyanji Vithaldas's case, , that the net wealth forming the subject-matter of the reference belongs to the respondent alone and not to the Hindu undivided family consisting of himself, his wife and two daughters.
(8) The appellate Tribunal was of the view that as the source of the respondent's assets was joint Hindu family property, the property in his hands retained that character even after he divided from the other coparceners of the family. They said :
'We do not think the assessee does not constitute a Hindu undivided family with his wife and minor daughters. The character of the property in his hands is not changed by the mere fact he has no male coparcener.'
(9) In this view, they determined the respondent's status as a Hindu undivided family. But the question is whether the assets belonged to him alone or whether they belonged jointly to himself, his wife and his daughters. If, as is clear, his wife and daughters are not joint owners of the assets, the fact that himself, his wife and his daughters constitute a Hindu undivided family would be immaterial.
(10)The learned counsel for the respondent has argued that even if a Hindu undivided family consists of only one male member, the property held by him can be joint property proposition so stated. In Attorney-General of Ceylon v. Arunachalam Chettiar, (1958) 34 ITR 20, the question arose whether the property of a Hindu undivided family held by a sole surviving coparcener was the joint property of that Hindu undivided family for the purpose of S. 73 of the Ceylon Estate Duty Ordinance No. 1 of 1938. A number of females belonged to the Hindu undivided family of the sole surviving coparcener, including his deceased son's widow who exercised her power of adoption after his death. Viscount Simonds Court in Ceylon that the property was the joint property of the Hindu undivided family. It may be noted that a coparcener's widow with a power of adoption was a member of that family at all material times.
(11) In Krishnamurthi Vasudeorao Deshpande v. Dhruwaraj, : 2SCR813 , his Lordship Raghubar Dayal, J. summarised the principles deduced from Srinivas Krishnarao v. Narayana Devji, : 1SCR1 , and said :
'A coparcenary continues to subsist so long as there is in existence a widow of a coparcener capable of bringing a son into existence by adoption ; and if the widow made an adoption the rights of the adopted son are the same as if he had been in existence at the time when his adoptive father died and that his title as a coparcener prevails as against the title of any person claiming as heir to the last coparcener.
(12) The facts there were that one Narasappagouda was the sole surviving coparcener from 1882, his son Bandegouda having predeceased him leaving a widow Tungabai. Narasappagouda died in 1892 leaving two daughters, Krishnabai and Shyamabai, who succeeded to his property in equal shares. In 1945, Tungabai adopted Dhruwaraj as her son. One of the questions decided was whether Dhruwaraja's title as a coparcener of Narasappagouda retrospectively, prevailed against Krishnabai's title as the heir to a half share of her father's property. His Lordship, Raghubar Dayal, J. , observed at p. 585 (of SCJ) : (at p. 62 of AIR ) :
'The character of the property does not change as suggested for the appellants, from coparcenary property to self-acquired property of Krishnabai so long as Tungabai, the widow of the family, exists and is capable of adopting a son, who becomes a coparcener.'
(13) It follows that the estate in the hands of a sole surviving coparcener retains the character of coparcenary property so long as there is a widow in his joint family who is capable of bringing into existence another coparcener by adopting a son. In such a case, the character, of the property would determine the character of the assessee or the interest of the coparcener may have to be excluded from the assets under clause (ii) of S. 5(1) of the Wealth Tax Act.
(14) But the legal position when a coparcener obtains ancestral property as his share on partition is different from property held by a sole surviving coparcener. The partition cuts off the claims of the other dividing coparceners. In the absence of any coparceners in his own branch, the share of the erstwhile coparcener would not be coparcenary property but would be his separate property belonging to him alone.
(15) The learned counsel for the respondent strongly relied on Commr. of Wealth Tax, Mysore Bangalore v. D. C. Basappa, : 51ITR790(KAR) . There the assessee received on partition a portion of ancestral property for his share and his undivided family, after the partition consisted of his wife and two daughters. It was held by a Division Bench of the Mysore High Court that the assessment under the Wealth Tax Act in respect of the property which the assessee had received on partition must be made on his as the karta of his undivided family and not as an individual. No doubt, this decision supports the respondent. But the learned Judges based themselves on the decision of the Bombay High Court in Commissioner of Income-tax, Bombay v. Lakshminarayan, (1935) 3 ITR 367: AIR 1935 Bom 412, which was disapproved in Kalyanji Vithaldas's case , and was reversed by the Privy Council in Commissioner of Income-tax, Bombay v. A. P. Swamy Gomedalli , With great respect, we are unable to give effect to the view taken in : 51ITR790(KAR) .
(16) It is true that a person like the respondent can be described as the karta of his undivided family consisting of himself and his wife and daughters. But the question for the purpose of the Wealth Tax Act is whether the assets in his hands belonged to him alone or to a different entity, viz., his undivided family. As the wife and daughters constituting the other members of his undivided family did not have any rights of ownership over the assets, the assets belonged to him alone on the material dates. It may be that if the rights of maintenance of the assessee's wife and daughters take the form of debts owed by the assessee. the amount of net wealth would be affected. But this question does not arise for our consideration in this reference. The assets forming the subject-matter of the returns belonged to the assessee as an individual and not to his undivided family.
(17) We accordingly answer the reference in the negative. As there was a difference of opinion between the different High Courts on the difficult point of law involved, the parties will bear their own costs. Advocate's fee is fixed at Rs. 250 (Rupees two hundred and fifty only).
(18) Reference answered in the negative.