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Commissioner of Wealth-tax Vs. Rameshwar Lal Agarwal - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Civil Case No. 315 of 1981
Judge
Reported in(1986)57CTR(MP)230; [1987]164ITR743(MP)
ActsHindu Succession Act, 1956
AppellantCommissioner of Wealth-tax
RespondentRameshwar Lal Agarwal
Appellant AdvocateB.K. Rawat, Adv.
Respondent AdvocateB.L. Nema, Adv.
Cases ReferredGurupad Kandappa Magdum v. Hirabai Kandappa Magdum
Excerpt:
- .....in law in holding that the property left by the assessee's father was the property of the hindu undivided family consisting of the assessee himself, his son and wife and not the individual property of the assessee ? (2) whether, on the facts and in the circumstances of the case, the appellate tribunal was justified in law in directing the wealth-tax officer to take the status of the assessee as hindu undivided family ?' 2. the material facts are these : for the assessment years 1972-73 to 1975-76, the assessee/respondent submitted his returns, claiming his status as hindu undivided family. the property in question originally belonged to the father of the assessee/respondent, shri mohanlal agrawal, who expired on september 30, 1971. according to the assessee/respondent, he was.....
Judgment:

K.K. Adhikari, J.

1. The following questions of law have been referred for the decision of this court under Section 27(1) of the Wealth-tax Act, 1957, at the instance of the Commissioner of Wealth-tax, by the Tribunal:

'(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that the property left by the assessee's father was the property of the Hindu undivided family consisting of the assessee himself, his son and wife and not the individual property of the assessee ?

(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in directing the Wealth-tax Officer to take the status of the assessee as Hindu undivided family ?'

2. The material facts are these : For the assessment years 1972-73 to 1975-76, the assessee/respondent submitted his returns, claiming his status as Hindu undivided family. The property in question originally belonged to the father of the assessee/respondent, Shri Mohanlal Agrawal, who expired on September 30, 1971. According to the assessee/respondent, he was married on May 8, 1970, and a son was born to him on September 26, 1971. Further, the assessee claimed that after the death of his father, which was after the Hindu Succession Act, 1956, came into force, whatever property was left, was, in fact, the property of the Hindu undivided family consisting of himself, his wife and his son, and, therefore, he could not be assessed as an individual, since all of them had a share in the said property. The Wealth-tax Officer rejected the claim of the assessee/respondent and assessed him as an individual on the ground that the concept of Hindu undivided family has been done away with after the Hindu Succession Act, 1956, has come into force and whatever property devolves on the heir, it assumes the character of individual property and this view of the Wealth-tax Officer was upheld in appeal by the Appellate Assistant Commissioner holding, inter alia, that the property which devolved on the assessee/respondent consequent upon the death of the father of the assessee definitely assumes the character of individual property and not joint family property. Being aggrieved, the assessee/respondent preferred further appeal before the Tribunal who took the view following the decision in CIT v. Dr. Babubhai Mansukhbhai : [1977]108ITR417(Guj) that in cases of Hindus governed by the Mitakshara law, where a son inherits the self-acquired property of his father, the son takes it as the joint family property of himself and his son and not as his separate property. The Tribunal further noted that the correct status for the assessment of the son in respect of such property is as representing his Hindu undividedfamily. Under the circumstances of the case, therefore, the Tribunal held that the proper status of the assessee was that of a Hindu undivided family and not an individual.

3. In our opinion, the view taken by the Tribunal, relying on CIT v. Dr. Babubhai Mansukhbhai : [1977]108ITR417(Guj) where almost similar facts were involved, is correct on the facts and in the circumstances of the present case. The main question for decision is whether the assessee should be treated as an individual or as the karta of a Hindu undivided family for the purposes of assessment. The other question is whether the Wealth-tax Officer was correct in holding that the concept of Hindu undivided family has been done away with after the coming into force of the Hindu Succession Act. Both these questions have been elaborately dealt with and answered in the aforesaid Gujarat decision with which we are in respectful agreement. The ratio of the said Gujarat decision, therefore, is that neither the provisions of Section 6 nor Section 8 nor Section 30 of the Hindu Succession Act affect the principle of Hindu law as it prevailed prior to the commencement of the Hindu Succession Act with regard to the capacity and character in which the son would receive the property from his deceased father. In Mitakshara joint family, every member has only an undivided share in the joint property and thus there is unity of ownership in the whole body. The interest of a member in joint family property is fluctuating, capable of enlargement by deaths or liable to be diminished by births in the family and thus is not definite. It is only on partition that a member of the joint family becomes entitled to a definite share, which was the case in the decision of the Allahabad High Court in CIT v. Ram Rakshpal, Ashok Kumar : [1968]67ITR164(All) , which has been distinguished by the Gujarat High Court and, in our opinion, with respect, rightly. Further support can be had from the two Full Bench decisions of this court, namely, CIT v. Krishna Kumar : [1983]143ITR462(MP) , wherein it has been held that under the Hindu law, it is not necessary for constituting a Hindu undivided family that there must be more than one male member and that such a family may consist of a male member and his wife and daughters. Hence, although the assessee had no son and the wife had no interest in the properties of the family, yet, for the purposes of status, the assessee with his wife constituted a Hindu undivided family and in CED v. Smt. Rani Bahu : [1983]142ITR843(MP) , the same principle was reiterated and the plea that there must be at least two male members to form a Hindu undivided family as a taxable entity was rejected. In a recent decision of the Supreme Court in State of Maharashtra v. Narayan Rao Sham Rao Deshmukh : [1987]163ITR31(SC) , it has been laid downthat a joint family may consist of a female member. It may consist of a male member, his wife, his mother and his unmarried daughters. The property of a joint family does not cease to belong to the family merely because there is only a single male member in the family. A joint family may consist of a single male member and his wife and daughters. It is not necessary that there should be two male members to constitute a joint family. The Supreme Court also explained its earlier decision in Gurupad Kandappa Magdum v. Hirabai Kandappa Magdum : [1981]129ITR440(SC) .

4. Taking into consideration the principles laid down in the aforesaid decisions and applying the tests to the facts and circumstances of the case wherein it cannot be disputed that the assessee/respondent formed a Hindu undivided family along with his wife and son and the property of the deceased father of the assessee/respondent (which was admittedly ancestral property in the hands of the assessee) who died after the Hindu Succession Act, 1956, came into force, the said property of the deceased father would go to his son, his wife and the grandson as joint family property. For the reasons stated above, our answers to the questions referred for our decision are in favour of the assessee and against the Revenue. Accordingly, both the questions arc answered in the following manner:

(i) That the Tribunal was justified in law in holding that the property left by the assessee's father was the property of the Hindu undivided family consisting of the assessee himself, his son and wife and not the individual property of the assessee.

(ii) That the Tribunal was justified in law in directing the Wealth-tax Officer to take the status of the assessee as a Hindu undivided family.

5. There shall be no order as to the costs.


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