1. By this reference under Section 27(1) of the W.T. Act, 1957 (hereinafter referred to as 'the Act'), the Income-tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that after the death of Shri Champalal on May 28, 1971, the interest of the bigger HUF of M/s. Chunnilal Champalal, Baghana, Neemuch, devolved by survivorship to the smaller HUF of Shri Kishnalal Motilal, Baghana, Neemuch, without an order being made under Section 20 of the W.T. Act, 1957, for the wealth-tax assessment years 1972-73 to 1977-78 ?'
2. The material facts giving rise to this reference briefly are as follows : The assessee is assessed in the status of an HUF. The assessment years in question are 1972-73 to 1977-78. The HUF consisted of coparceners, Kishanlal and his son, Omprakash. The WTO noticed that for the assessment years in question, value of the property of the HUF known as 'Baghana House' was not included in these assessments, even though ,as a result of the death of Shri Champalal on May 28, 1971, leaving behind him no survivor except the coparceners of the assessee-HUF, the value of 'Baghana House', was includible in the wealth of the assessee-HUF. The WTO, therefore, reopened the assessment for these years under Section 17 of the Act. On behalf of the assessee, it was urged before the WTO that there was a bigger HUF consisting of Kishanlal, his son, Omprakash, and his brother Champalal, which owned the house in question, that there was a partial partition of the bigger HUF on November 11, 1958, in which the 'Baghana House' was not partitioned and that it continued to be the property of the bigger HUE It was, therefore, urged that even after the death of Shri Champalal on May 28, 1971, 'Baghana House' continued to remain the property of the bigger HUF and the value of that property was not includible in the wealth of the assessee-HUF. The WTO, however, rejected the contention advanced on behalf of the assessee and assessed the assessee accordingly. On appeal, the AAC, however, upheld the contention of the assessee. Aggrieved by the order of -the AAC, the Department preferred appeals before the Tribunal. The Tribunal held that on the death of Shri Champalal, his interest in the coparcenary property devolved, in accordance with the provisions of Section 6 of the Hindu Succession Act, 1956, by survivorship upon the surviving members of the coparcenary, who constituted the assessee-HUF. The Tribunal, therefore, held that after the death of Champalal on May 21, 1971, the assessee-HUF, became the owner of the property inquestion. In this view of the matter, the Tribunal reversed the orders passed by the AAC, and restored the orders passed by the WTO. Aggrieved by these orders, the assessee sought a reference and it is at the instance of the assessee that the aforesaid question of law has been referred to this court for its opinion.
3. The learned counsel for the assessee contended that even after the death of Shri Champalal, the bigger HUF continued to exist till such time that a partition took place and was recorded by the WTO in accordance with the provisions of Section 20 of the W.T. Act, 1957. The learned counsel contended that the fact that the coparceners of the assessee-HUF happened to be the same as constituted the bigger-HUF after the death of Shri Champalal, should not make any difference because the same coparceners can constitute two HUFs, that is, two distinct assessable entities, just as the same partners can constitute two distinct firms which would be two distinct assessable entities. Reliance was placed on three decisions : Jesingbhai Ujamshi v. CIT : 18ITR23(Bom) , R.N. Oswal Hosiery and Mahabir Woollen Mills v. CIT and CIT v. G. Parthasamthy Naidu & Sons : 121ITR97(AP) .
4. Now, the question as to whether there is anything in law to preclude common partners constituting two separate firms for the purpose of the I.T. Act, in respect of different businesses carried on by these partners, does not arise for consideration in this case. As observed by Rankin C.J. In re Martin & Co. : AIR1929Cal753 , the proposition that the same persons in the same shares cannot for income-tax purposes be partners of two entirely separate firms is a highly abstract proposition and it would depend upon the facts of each case. It is, therefore, not necessary to deal with that question as that question does not arise in the instant case.
5. The short question for consideration in this case is whether after the death of Shri Champalal, the property in question devolved on the assessee-HUF. Now, it is true that under the W.T. Act, 1957, an HUF is a distinct taxable entity. It is, therefore, possible for a main Hindu family to be composed of a large number of branch families, each of the branches by itself being a Hindu joint family. There could thus be two or more assessable units, the bigger one and the smaller one. In the instant case, however, after the death of Shri Champalal, by virtue of the provisions of Section 6 of the Hindu Succession Act, 1956, the interest of Shri Champalal in the bigger HUF devolved on the assessee-HUF on account of the fact that the coparceners of the assessee-HUF happened to be the only surviving coparceners of the bigger HUF. As a result of this devolution, the property in question, that is 'Baghana House', became the property of the assessee-HUF. The question of partition and the applicability of Section 20 of the W.T. Act,1957, did not arise in the instant case. Therefore, the Tribunal was justified in holding that, on the facts and in the circumstances of the case, after the death of Shri Champalal on May 28, 1971, the interest of Shri Champalal in the bigger HUF devolved by survivorship on the smaller HUF, without there being an order under Section 20 of the Act.
6. For all these reasons, our answer to the question referred to this court is in the affirmative and against the assessee. In the circumstances of the case, parties shall bear their own costs of this reference.