1. This appeal involves an interesting and somewhat intricate issue.
The Division Bench, which heard the appeal originally, referred the matter to the President for constituting a Special Bench which was constituted under Section 255(3) of the Income-tax Act, 1961 ("the Act"). That is how this appeal has come up for hearing before the Special Bench.
2. Late Ramcshchandra Chokshi died some time in 1947 leaving behind his widow and the only son Bhai Rajen as heirs. Late Rameshchandra Chokshi died intestate and left his separate and self-acquired property only.
In or about January 1955 the widow relinquished her interest in the property left by her deceased husband as she decided to marry Shri Arvindbhai M. Shah willingly and started living with him. Income from the property inherited in the abovesaid manner was being assessed in the status of individual up to and including the assessment year 1974-75 and the income therefrom is being assessed as the income of HUF comprising of Bhai Rajen, his wife and their son with effect from assessment year 1977-78 as Bhai Rajen married on 12-5-1974 and was blessed with a son on 29-1-1977.
3. The dispute relates to the period of 12-5-1974 to 29-1-1977, i.e., for the assessment years 1975-76 and 1976-77. In other words, the dispute is whether after Bhai Rajen's marriage and before he was blessed with a son, the income from the said property is liable to be assessed as income of the HUF, consisting of Bhai Rajen and his wife, or in the status of individual.
4. It must be stated in fairness to both Shri Shah, learned counsel for the assessee, and Shri Mittal, the senior departmental representative, that they have briefly but succinctly put forward their rival arguments. Shri Shah's case is that the property in question is "ancestral property" in the hands of Bhai Rajen and that the assessee and his wife living together after marriage constituted a joint Hindu family irrespective of the fact that such a joint Hindu family holds or does not hold any property. According to him, the moment there is joint Hindu family with a potentiality to bring a coparcener into it and there is ancestral property, the status vis-a-vis, the income from such a property cannot but be that of HUF. Alternatively, he argues that the widow mother and the son were living together after the death of the late Rameshchandra Chokshi from 1947 to 1955 without partition and they naturally constituted a HUF. Once there is a past history of HUF qua the property, Shri Shah submitted that, the ratio of the Supreme Court's decisions in the cases of Gowli Buddanna v. CIT  60 ITR 293 and N.V. Narendranath v. CWT  74 ITR 190 would clearly apply.
5. Shri Mittal, the senior departmental representative, on the other hand, contended that the mother and son living together, it at all, between 1947 to 1955 as tenants-in-common and not as joint tenants and, therefore, there was no HUF qua the property in dispute. Once it is so, he argued that the Supreme Court's decision in the case of Surjit Lal Chhabda v. CIT  101 ITR 776 would apply. He also placed reliance on a recent decision of the Madras High Court in the case of CIT v. M.Balasubramanian  132 ITR 529 in support. In reply Shri Shah stated that the Supreme Court's decision in the case of Surjit Lal Chhabda (supra) was distinguishable inasmuch as the property in that case was not an ancestral property as in the present case. He also made an attempt to distinguish the Madras High Court decision in CIT v.Balasubramarrian's case (supra).
6. Having regard to the parties and after going through the decisions relied upon by the parties before us and the relevant provisions of Hindu Law, we do not find it possible to accept that the assessee and his widow mother while living together after the death of late Rameshchandra Chokshi, i.e., between 1947 to 1955, constituted a HUF.In this connection reference may usefully be made to Section 3(1) of the Hindu Women's Right to Property Act, 1937, in terms of which the widow mother was entitled, on the facts of this case, to one-half of the property left by her husband as Hindu women's estate with a right to claim partition. There being no dispute that the widow mother lived jointly with her son till her remarriage in 1955 without claiming partition and in fact relinquished her interest eventually. The question has arisen as regards their status qua the property left by the deceased. It may be stated that the mother and son living jointly will constitute a joint Hindu family and this cannot perhaps be doubted as the law in this regard is well settled, viz., (1) the normal state of every Hindu family is joint ; and (2) there is no presumption that a family, because it is joint, possesses joint property.
7. However, for the purpose of considering whether or not their status was or could be that of HUF as understood under the Income-tax Act, it is necessary to refer to Article 31 of Mullet's Hindu Law which deals with such or a similar situation. Article 31 reads as under : 31. Co-heirs.-(1) According to the Mitakshara school two or more persons inheriting jointly take as tenants-in-common (ii) except the following four classes of heirs who lake as joint tenants with rights of survivorship : (a) Two or more sons, grandsons, and great-grandsons, who are living as members of a joint family (o), succeeding as heirs to the separate or self-acquired property of their paternal ancestor (p).
(b) Two or more grandsons by a daughter, who are living as members of a joint family, succeeding as heirs to their maternal grandfather (17). The Madras High Court has held that in property inherited by two or more daughter's sons from their maternal grandmother there can be no right of survivorship and the daughter's sons take as tenants-in-common (z). The decision in Venkayyamma v. Venkataramanayyamma (q) has been held to be no longer a binding authority on nature and incidents of property inherited by daughter's sons from their natural grandfather.
(d) Two or more daughters succeeding as heirs to their father (t), except in the Bombay State where they take an absolute estate in severally (u).
(e) According to the Dayabhaga school two or more persons inheriting jointly take as tenants-in-common, except only (7) widows, and (2) daughters who take as joint tenants with rights of survivorship.
To our mind, the character of the persons inheriting jointly is governed squarely by this article. In any event no authority has been cited before us to show that the position is in any way different. Therefore, we will have to hold that the widow mother and the son lived during the said period as tenants-in-common unless the case falls within one of the four exceptions referred to in the article. This case evidently does not fall within any of the four exceptions. Accordingly, we hold that the widow mother and the son lived as tenants-in-common and not as joint tenants with rights of survivorship. In other words, the claim put forward by Shri Shah that there is a history of the property being owned by a HUF has to be rejected.
8. The correct approach, to our mind, thus, is to ignore the fact of widow mother having also inherited the Hindu Women's Estate under Section 3(1) of the Hindu Women's Right to Property Act, 1937, as she has eventually relinquished her interest in the properly in favour of her son and to proceed on the assumption that the son inherited the separate property of his father in 1947 or say in 1955 absolutely. No doubt as laid down in Article 223 of Mulla's Hindu Law such a property is an "ancestral property" in the hands of the son, i.e., the assessee Shri Rajen Rameshchandra Chokshi. However, he being the lone individual until he married in 1974, the income from the said property was rightly assessed as his income in the status of "individual" as held by the Supreme Court in the case of C. Krishana Prasad v. CIT  97 ITR 9. So far so good. Now, we come to the point at issue involved in this appeal. We have already stated that the normal status of every Hindu family is joint. Shri Rajen has been married on 12-5-1974, whereafter he and his wife are living together and, therefore, it will have to be assumed that they constituted a joint Hindu family. This, however, does not solve our problem, as the other settled law is that a joint Hindu family may or may not possess joint property. In other words, there can be a joint Hindu family without any property and the property, if any, might be owned by one of the members, including the karta, separately.
It is for this reason that it is still necessary to determine the character of Bhai Rajen and his wife, constituting a joint Hindu family, qua separate property of the father inherited by Bhai Rajen.
10. The Supreme Court's decisions in the cases of Gowli Buddanna and N.V. Narendranath (supra) relied upon by the assessee's counsel, in our view, are distinguishable inasmuch as in those cases the property came on partition of the bigger HUF and though there was only one male member in the small family, there were others who had some kind of interest in the said property along with the male member. The position herein is very much different. The Supreme Court's decision in the case of Surjii Lal Chhabda (supra) has, to our mind, analysed the above two decisions and distinguished them from another category of cases, viz.: (a) where there was no past history of the property being owned by a HUF ; (b) where the present owner had never shared the ownership of the property with any other coparcener in the past ; and No doubt the property in that case had come into being as a result of voluntary act of impressing separate property by a member with the joint family character as distinct from separate property of the father inherited in the case before us. However, that distinction will have no bearing on the character of the property so long as the aforesaid three facts continue to exist.
11. We have already held that there is no past history of the property in dispute being owned by a HUF or the present owner having shared the ownership of the property with any other coparcener. There was admittedly no other coparcener in the family during the previous year.
Under the circumstances, following respectfully the Supreme Court's decision in the case of Sitrjit Lal Chhabda (supra), we hold that the assessment made in the status of individual is correct.
12. Moreover, the Madras High Court, it may be stated, has in its latest decision in the case of CIT v. M. Balasubramanian (supra) considered almost an identical issue and has, after considering these and other decisions, held that if the self-acquired property of the father was received at a time when the assessee was not even married, though, of course, in that case it was by way of a gift to the family, the legal incidence of the property would change only on the birth of a son but until that event happened, the status of the son would have to be taken only as an individual qua the said property. In our opinion, this decision is an authority for the proposition that though the property herein is an ancestral property but, as Bhai Rajen when he received it was a lone individual and was not even married, the status of HUF qua this property would be available only on the birth of a son and not before.