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Commissioner of Income-tax, U. P. Vs. Ram Rakshpal, Ashok Kumar. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 95 of 1963
Reported in[1968]67ITR164(All)
AppellantCommissioner of Income-tax, U. P.
RespondentRam Rakshpal, Ashok Kumar.
Excerpt:
.....:the rule of hindu law is well settled that the property which a man inherits from any of his three immediate paternal ancestors, namely, his father, fathers father and fathers fathers father is ancestral property as regards his male issue, and his son acquires jointly with him an interest in it by birth. our attention was drawn, in particular, to the following observations in the introductory note on the hindu succession act in mullas commentary (13th edition, pages 762 to 763) on hindu law :probably the best solution would have been to abolish the ancient legal formulae of right by birth and devolution by survivorship since the logical way was to assimilate the mitakshara to the dayabhaga in this respect. it is of course possible for ram rakshpal to enjoy a dual capacity so as to..........undivided family until the 11th of october, 1948, when there was a partition in the family so that durga prasad separated. after that, durga prasad carried on his own business in the name of messrs. murli dhar mathura prasad until his death on 29th of march, 1958, and ram rakshpal and his son, ashok kumar, carried on their own separate business under the name and style of messrs. ram rakshpal and ashok kumar, the assessee before us. durga prasad also left behind a widow, jai devi, and a daughter, vidyawati. upon his death, vidyawati took her 1/3rd share of the property left by durga prasad, but his widow, jai devi, and his son, ram rakshpal, entered into a partnership with 2/3rd of the assets of the business known as murlidhar mathura prasad which was, as already indicated, the separate.....
Judgment:

M. H. BEG J. - This reference made to us under section 66(1) of the Indian Income-tax Act arises in the following circumstances : One Durga Prasad and his son, Ram Rakshpal, and his grandson, Ashok Kumar, constituted a Hindu undivided family until the 11th of October, 1948, when there was a partition in the family so that Durga Prasad separated. After that, Durga Prasad carried on his own business in the name of Messrs. Murli Dhar Mathura Prasad until his death on 29th of March, 1958, and Ram Rakshpal and his son, Ashok Kumar, carried on their own separate business under the name and style of Messrs. Ram Rakshpal and Ashok Kumar, the assessee before us. Durga Prasad also left behind a widow, Jai Devi, and a daughter, Vidyawati. Upon his death, Vidyawati took her 1/3rd share of the property left by Durga Prasad, but his widow, Jai Devi, and his son, Ram Rakshpal, entered into a partnership with 2/3rd of the assets of the business known as Murlidhar Mathura Prasad which was, as already indicated, the separate business of Durga Prasad. A partnership was entered into between Jai Devi and Ram Rakshpal and its terms were incorporated in a deed which was duly registered on 23rd April, 1958. In the assessment year 1959-60, immediately following the death of Durga Prasad, the question arose whether the income from the one-third share which had come to Ram Rakshpal from Durga Prasad should be assessed as part of the income of the Hindu undivided family of Ram Rakshpal Ashok Kumar, the assessee before us, or as the separate property of Ram Rakshpal. The Income-tax Officer assessed it as the income of the Hindu undivided family applying the well recognized principle of Hindu law that the property left by the grandfather in the hands of the father is ancestral property in which the grandson has a right by birth. On an appeal, the Appellate Assistant Commissioner maintained the decision of the Income-tax Officer, but, on a second appeal, the Appellate Tribunal allowed the appeal with regard to the income from the share inherited by Ram Rakshpal from Durga Prasad on the ground that it was the separate property of Ram Rakshpal which had devolved upon him by succession under section 8 of the Hindu Succession Act. It was held that, until Ram Rakshpal himself decided to merge it with the property of the Hindu undivided family, of which he was the karta, it would continue to be his separate property. Hence, the question which has been referred to us is framed as follows :

'Whether the 1/2 share held by Ram Rakshpal in the partnership firm of Messrs. Murli Dhar Mathura Prasad is held by him as a karta of the assessee Hindu undivided family or in his individual capacity ?'

It has been contended, on behalf of the department, that the Hindu Succession Act (hereinafter referred to as the Act) does not modify the rule thus stated in Mullas Hindu Law (13th edition, page 248, paragraph 223) : 'All property inherited by a male Hindu from his father, fathers father, or fathers fathers father, is ancestral property. The essential feature of ancestral property according to the Mitakshara law is that the sons, grandsons, and great-grandsons of the person who inherits it, acquire an interest in it by birth. Their rights attach to it at the moment of their birth. Thus, if A inherits property, whether movable or immovable, from his father or fathers father, or fathers fathers father, it is ancestral property as regards his male issue. If A has no son, sons son, in existence at the time when he inherits the property, he holds the property as absolute owner thereof, and he can deal with it as he pleases. But, if he has sons, sons sons, or sons sons sons in existence at the time, or if a son, sons son or sons sons son is born to him subsequently, they become entitled to an interest in it by the mere fact of their birth in the family, and A cannot claim to hold the property as absolute owner nor can he deal with the property as he likes.'

In the above-mentioned statement of the law, the basic proposition is that the grandson acquires a right in the property of his grandfather at his birth and has a right of inheritance jointly with his father at the time of succession. This is described as 'unobstructed heritage'. It has been observed in Mulls Hindu Law (13th edition, 1966, page 245) :

'(1) The Mitakshara divides property into two classes, namely, apratibandha daya or unobstructed heritage, and sapratibandha daya or obstructed heritage. It is called unobstructed, because the accrual of the right to it is not obstructed, because the accrual of the right to it is not obstructed by the existence of the owner... Property, the right to which accrues not by birth but on the death of the last owner without leaving male issue, is called obstructed heritage. It is called obstructed, because the accrual of the right to it is obstructed by the existence of the owner.'

All the cases which have been cited in Mullas Commentary on Hindu Law in support of the proposition put forward by Mr. Gulati, on behalf of the department, relate to the law as it stood before the Hindu Succession Act, 1956. There is no doubt whatsoever about the position under the Hindu law as it then stood.

Mr. Gulati also relied on the following passage from Dr. Derretts 'Introduction to Modern Hindu Law' (paragraph 411, at page 252) :

'Since on the death of a father his separate property (or divided share passes to his sons as ancestral property between them and the sons and grandsons of each of them (the male issue) - a position which persists notwithstanding the reforms of the Hindu Succession Act -it is not uncommon, where a father dies in the lifetime of the grandfather, to find a grandson who is a member of a coparcenary in two distinct capacities.'

He also directed our attention to another passage from this work :

'Under the Hindu Succession Act the sons, along with other intestate heirs indicated in Class I of the Schedule must take the property of their intestate father as tenants-in-common in all circumstances, but their male issue will have a birth-right as before.'

Now, the opinion expressed by Dr. Derrett is not supported by any reasons given or by an analysis of the provisions of the Hindu Succession Act. It is true that, deviating from the practice of English courts, we take notice of the opinions expressed by even modern jurists and scholars and not only of judicial pronouncements. But, these opinions cannot be given more weight than judicial pronouncements. In other words, the weight of an opinion depends upon the reasons advanced in support of it. As regards the views quoted above, there being no discussion of the particular provisions of the Indian Succession Act with which we are concerned here, and there being no reasons given by Dr. Derrett to support opinions expressed by him, we are unable to attach much weight to the view expressed.

Reliance was then placed upon a passage in C. N. Arunachala Mudaliar v. C. A. Muruganatha Mudaliar, where B. K. Mukherji J. observed :

'It is obvious, however, that the son can assert this equal right with the father only when the grandfathers property has devolved upon his father and has become ancestral property in his hands. The property of the grandfather can normally vest in the father as ancestral property if and when the father inherits such property on death of the grandfather or receives it, by partition, made by the grandfather himself during his lifetime. On both these occasions, the grandfathers property comes to the father by virtue of the latters legal right as a son or descendant of the former and, consequently it becomes ancestral property in his hands.'

The question under consideration before the Supreme Court in the Mudaliars case was whether the bequeathed property was ancestral over which the testator had full powers of disposition or not. It could not be inferred from the passage, quoted above, which mentions that 'the property comes to the father by virtue of the latters legal right as a son' and then gives the result - 'consequently, it becomes ancestral in his hands' - that there is any question of the property first vesting in the father and then vesting again in the father and the son (i.e. the son and grandson of the deceased). There cannot possibly be a double devolution or a vesting in a son followed by a divesting and a revesting in the son and grandson. Such proposition would contradict the basic principle of Mitakshara law that the grandsons arise at his birth in ancestral property and not subsequently. The grandsons rights, at the death of his grandfather, devolve upon him, under the Mitakshara law, prior to its modification by the statutory law, simultaneously with those of his father. The basic rule of the law of succession, applicable both to Hindus and Muslims, is that the vesting in the successor takes place at the moment of the death of the previous owner. If the intention of the statutory law, as found in section 8 of the Hindu Succession Act, was that the right of a grandson whose father is living should also be recognised at the time of succession to the property of the grandfather, the result could only be achieved by a specific mention of it in the Act. The right of the grandson cannot be conceived of, as is contended for the department, as an automatic limitation attaching itself to an inheritance in the hands of the son after the succession has taken place because the Mitakshara law does not view it as a subsequent attachment or limitation. It regards it as a pre-existing limitation operating at the time of devolution. If any property is to devolve subject to any limitation or qualification which takes effect upon and at the moment of devolution, the qualification must necessarily be specifically stated in the form of a rule, subject to which the devolution or succession takes place, in any set of rules meant to constitute a comprehensive and self-contained code on all matters relating to succession. The Hindu Succession Act seems obviously and expressly intended to provide such a codification on all matters relating to succession amongst Hindus of every school and sect.

In the Mudaliars case their Lordships of the Supreme Court were not considering the effect of any provision of the Hindu Succession Act which had not even been passed by that time. The above-mentioned observation, relied upon on behalf of the department, occurs after their Lordships had pointed out the basis of the rule that the property left by the grandfather is ancestral in the hands of the father and held for the benefit of the grandsons also who acquire equal rights with their father. Their Lordships said : '..... the foundation of the doctrine of equal ownership of father and son in ancestral property is the well-known text on Yagnavalkya : vide Yagnavalkya book 2, 129, which says : The ownership of father and son is co-equal in the acquisitions of the grandfather, whether land, corody or chattel. It is to be noted that Vijnaneswar invokes this passage in Chap. I, sec. 5 of his work, where he deals with the division of grandfathers wealth amongst his grandsons. The grandsons, it is said, have a right by birth in the grandfathers estate equally with the sons and consequently are entitled to shares on partition, though their shares would be determined per stirpes and not per capita.' In the Mudaliars case, the Supreme Court held that, although the grandson has an equal right with the father in the property left by the grandfather, yet, he has an unequal right in the property of his own father. According to the Mitakshara law, the nonancestral acquisitions of a father are capable of being disposed of by him untrammelled by any right of won son. This power of a man over the property acquired by himself or non-ancestral property is deduced from equally clear texts of Hindu law quoted by their Lordships of the Supreme Court. The distinction was important there because the question under consideration before the Supreme Court in that case was whether the father could dispose of non-ancestral property by will and gift to whomsoever he liked. It was held there that the father had such a right. In other words, that was a case in which the rule, that the grandsons vested right by birth in the grandfathers property would operate as a restriction on the powers of the father, did not apply. One of the reasons given in support of this conclusion was that, technically speaking, the term 'ancestral property' was restricted to property which comes from an ancestor in the male line. This rule was also explained by Sir Shadi Lal in Muhammad Husain Khan v. Babu Kishva Nandan Sahai, where his Lordship observed :

'The rule of Hindu law is well settled that the property which a man inherits from any of his three immediate paternal ancestors, namely, his father, fathers father and fathers fathers father is ancestral property as regards his male issue, and his son acquires jointly with him an interest in it by birth. Such property is held by him in coparcenary with his male issue, and the doctrine of survivorship applies to it.'

The question before us is whether the rule of Hindu law, as stated above, was altered by the provisions of the Act. Section 4 of the Act provides as follows :

'4. (1) Save as otherwise expressly provided in the Act -

(a) any text, rule or interpretation of Hindu law or any custom or usage as part of that law in force immediately before the commencement of this Act shall cease to have effect with respect to any matter for which provision is made in this Act;

(b) any other law in force immediately before the commencement of this Act shall cease to apply to Hindus in so far as it is inconsistent with any of the provisions contained in this Act.'

This means that so far as any text, rule, or interpretation of Hindu law or any custom or usage appertaining to that law is concerned, the provisions of the Act replace the pre-existing rule of Hindu law if the subject-matter of such rule or law must be held to be necessarily covered by the Act. So far as any law contained elsewhere is concerned, the Act will abrogate it only to the extent of inconsistency as provided by section 4(1)(b) of the Act. In other words, as regards the subject dealt with by the provisions of the Act itself, which provides a self-contained and comprehensive code relating to both testate and intestate succession of persons defined as 'Hindu' in the Act, is wide and includes Buddhists, Jains and Sikhs by religion. The purpose behind the Act was obviously to introduce uniformity in the law relating to succession. One may perhaps observe that the Act seems to be a step towards the uniform civil code which is one of the objectives set out in the Directive Principles of State policy in article 44 of the Constitution.

In an attempt to induce us to hold that the rule of Mitakshara law, giving the grandson an equal right by birth with his father with his father in the property of the grandfather, was to be read into the provisions of the Hindu Succession Act, some arguments of very general character, about the nature of the solution sought by the Hindu Succession Act, were addressed to us. Our attention was drawn, in particular, to the following observations in the Introductory Note on the Hindu Succession Act in Mullas Commentary (13th edition, pages 762 to 763) on Hindu law :

'Probably the best solution would have been to abolish the ancient legal formulae of right by birth and devolution by survivorship since the logical way was to assimilate the Mitakshara to the Dayabhaga in this respect. This would also have the merit of equable treatment of the nearest female heirs of a coparcener and of bringing about uniformity in the law in all parts of India. Sentiment in favour of retention of the Mitakshara coparcenary even in an attenuated form seems to have been respected and the rules laid down in section 6 are a compromise having some of the merits and all demerits which attend such adjustive legislation.'

There seems to be no scope for considerations of a wide and general nature about the objects attempted to be achieved by a piece of legislation when interpreting the clear words of the enactment. As has been repeatedly laid down by courts, both Indian and English, the intent and object have to be gathered primarily from the plain words of the statute. It is clear that the observations in Mullas Commentary on Hindu Law, quoted above, relate only to what was attempted to be achieved by section 6 of the Act. Section 6 of the Act is the only provision of the Act which deals with the devolution of interest in a Mitakshara coparcenary property on the death of a male Hindu after the commencement of the Act. The other sections apply equally to all Hindus as defined in the Act whether governed by the Mitakshara or Dayabhaga law. They also apply to Jains and Sikhs who are, as already observed, Hindus according to the definition of the term 'Hindu' found in the Act. It is not possible to conceive of separate intents of a general provision of the Act with regard to separate groups of persons governed by separate schools of Hindu law. The only way of indicating any such separate intention is to make a special provision for a separate school of law as we find in section 6 of the Act or in section 17 of the Act, which contain special provisions respecting persons governed by special branches of personal law. Section 8 of the Act, which is invoked on behalf of the assessee, is one of the general provisions applicable to all Hindus. Therefore, observations made about the provisions of section 6 of the Act cannot be appropriately used in interpreting section 8 of the Act at all.

Section 6 of the Act contains the extent to which sentiment in favour of the retention of the original Hindu law relating to succession to or devolution of the Mitakshara coparcenary property found legislative expression. It confines the operation of the original law of Mitakshara coparcenary property to cases where the deceased governed by the Mitakshara law had an interest in a Mitakshara coparcenary property and regulates only the devolution of such interest in that property. We do not think that any support can be sought from the provisions of section 6 of the Act in interpreting the very different provisions of section 8 of the Act. The two sections deal with different subject-matter. One deals with the devolution of an 'interest' in a Mitakshara coparcenary property and the other with the devolution of 'property' itself of a male Hindu, falling outside the purview of section 6 of the Act upon the death of a male Hindu intestate.

If general considerations as to the character of ancient and pre-existing law, as contained in the texts of the Mitakshara, as contrasted with the Hindu law found in the Hindu Succession Act, were to be taken into account one may refer to Sri Henry Maines Ancient Law, where the evolution of the concept of corporate property as a necessary adjunct of the undying corporate entity of the family is shown to have been replaced by the concept of individual rights in separate property which characterises the modern industrial society. As Sir Henry Maine pointed out, corporate rights in property had been split up and resolved into individual rights over property in the course of social evolution. It is pointed out in John D. Maynes Treatise on Hindu Law and Usage that, under the law relating to the Mitakshara coparcenary property, there can be no succession to property strictly speaking. As indicated there (11th edition, page 324), the rights of individuals by births. The process may be described as succession to the beneficial interests in a permanent stock of corporate property, subject to the division of the stock by partition and its diminution by alienations for legal necessity, but it cannot strictly be described as succession to rights of ownership to corporate property. In such a system, succession is only of the representatives of the corporation who deal with the corporate property on behalf of the undivided Hindu family considered as a corporate entity and not of absolute owners.

Section 8 of the Act obviously embodies the concept of individual owners of property succeeding each other as owners of that property. The word 'succession' is ordinarily understood to mean a stepping into the shoes of the previous owner or holder of property. Section 8 lays down a line of devolution of property upon heirs who are divided into two classes mentioned in the Schedule to the Act. In class I, the son shares only with the grandson through a pre-deceased son an equal right in the inheritance together with other heirs. The grandson through a son who is alive does not find a mention at all anywhere in the Schedule. While section 8 lays down the scheme and indicates the order of succession, section 9 of the Act makes it clear that the heirs of class I take simultaneously and exclude all other heirs. Section 9 also prescribes that the heir in the first entry of class II will be preferred to the heirs in the second entry, and, similarly, the heirs in the second entry will be preferred to those in the third entry. Section 10 of the Act contains certain rules of distribution of property among the heirs in class I of the Schedule. In other words, the Hindu Succession Act makes a clear distinction between the rules regulating the succession of heirs and the rules of distribution and provides for both separately. This may be specially noticed because one of the arguments advanced, which we reject, was that the Act purports to deal only with rules relating to distribution and inheritance untouched.

In Maynes Treatise on Hindu Law and Usage (11th edition at page 586) we find the observations 'the distinction between obstructed and unobstructed heritages is that while in the former the nearer excludes the more remote, under the latter the doctrine of representation excludes this rule of reference.' In section 8 of the Act, the right of representation is confined to the grandson through a pre-deceased son and no mention is made of the grandson as an equal heir with the son and rules of exclusion are actually laid down by the Act. The clear effect is that what has been described as unobstructed heritage under the Mitakshara law was converted into an obstructed and not merely 'obstructible' heritage by the operation of section 8 of the Act inasmuch as the rights of the son, to the exclusion of the grandson whose father is alive, now obstruct what was technically described as 'unobstructed heritage' under the Mitakshara law.

If, as we find from the comprehensive provisions of the Hindu Succession Act, the object of the Act was to provide a self-contained code on all matters relating to succession to property of citizens governed by the Act, it is not possible to resist the conclusion that the particular rule relied upon by the learned counsel for the department was superseded by the provisions of the Act, unless the deceased himself had an interest in a Mitakshara coparcenary property. In the latter event only would section 6 of the Act operate and preserve devolution by survivorship under the Mitakshara law.

It was contended on behalf of the department that the interest of Durga Prasad in the divided family coparcenary property did not destroy its character as Hindu undivided family property for the purposes of the Income-tax Act. Reliance was sought to be placed upon Gowli Buddanna v. Commissioner of Income-tax for this proposition and also on Attorney-General v. Arunachalam Chettiar. After having carefully examined these cases we find that they do not deal with the question which arises before us. It is not possible to argue from these cases that the business which Durga Prasad started after partition must be stamped with the character of Hindu undivided family property and must retain that character, even on a succession by Ram Rakshpal on the death of Durga Prasad, in respect of the business carried on by Durga Prasad. These cases deal with the definition of the term 'Hindu undivided family' as used in section 3 of the Income-tax Act. They lay down that the fact that only one member of such a family is left does not deprive the property of the family of the character of coparcenary property. The principle applicable in the case before us is thus laid down in Mullas Principles of Hindu Law (page 249) : 'The share which a coparcener obtains on partition of ancestral property is ancestral property as regards his male issue. They have an interest in it by birth, whether they are in existence at the time of partition or born subsequently. Such relations it is separate property and if the coparcener dies without leaving male issue it passes to his heirs by succession.'

Thus, the position under the Hindu law is that partition takes away, qua a coparcener, the character of coparcenary property from the property which goes to the share of another coparcener upon a division, although the property obtained by a coparcener upon partition continues to be coparcenary property for him and his unseparated issue. This means that, so far as Ram Rakshpal and his issue were concerned, it was only that property which came to the share of Ram Rakshpal which could be regarded as coparcenary property. As to what would have been the position if another son was born to Durga Prasad before his death is not a matter with which we are concerned in this case. It may be observed that in that event section 6 of the Act would have operated in favour of the son who was joint with Durga Prasad. But, hypothetical positions, which may arise upon the circumstances not present in this case, need not be examined by us at all.

The result is that, after considering the provisions of the Indian Succession Act, we conclude that the case of the assets of the business left by Durga Prasad in the hands of Ram Rakshpal would be governed by section 8 of the Act.

It may also be mentioned that it was argued, on behalf of the assessee, that there is no finding that the business carried on by Durga Prasad in the name of Murlidhar Mathura Prasad was built up exclusively with the assets Durga Prasad obtained on the partition between him and Ram Rakshpal on October 11, 1948. This question, however, is unimportant in view of the conclusions reached by us on other questions. We may observe that it was open to Ram Rakshpal, as the Tribunal has pointed out, to merge the assets inherited by him from Durga Prasad with those of his won Hindu undivided family. But, so long as he has not done that, the income of his inheritance cannot be assessed as the income of the Hindu undivided family. It is of course possible for Ram Rakshpal to enjoy a dual capacity so as to own and dispose of his separate property although he is a member of a smaller Hindu undivided family also after separation from his deceased father. The view taken by a Division Bench of this court in K. K. Sinha v. Kayastha Pathshala may be mentioned if an authority was needed at all to support this proposition.

The result is that we answer the question in favour of the assessee and against the department. We assessee the costs of this reference at Rs. 250. Counsels fee is also assessed at Rs. 250.

Question answered in favour of the assessee.


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