1. These appeals by the revenue are directed on the common ground that the AAC was wrong in directing the WTO to grant relief under Section 5(1)(7) of the Wealth-tax Act, 1957 ('the Act'), in respect of his share in the property which he succeeded on the death of his father and held jointly by the alleged HUF, ignoring the decision of the Supreme Court in the case of CWT v. Bishwanath Chatterjee  103 ITR 536.
2. The assessee, an individual, claimed deduction under Section 5(1)(ii) in respect of a sum of Rs. 1 lakh, representing the value of his share in non-agricultural and agricultural ancestral property which was inherited by the assessee from his father and owned jointly with other co-sharers. The WTO negatived this claim of the assessee on the ground that there was no nucleus of the HUF and the assessee's share in the ancestral property was clearly ascertainable.
3. When the matter went up to the AAC, it was contended on behalf of the assessee that on the death of the assessee's grandfather, who died intestate, the properties devolved in equal shares on the assessee's father and uncle. It was contended that the assessee's father had died in June 1937 and his uncle in June 1956. Ever since the death of the assessee's father and uncle the agricultural and nonagricultural ancestral properties remained joint not only in possession but also in enjoyment and there had been no partition either by severance of interest or status or by metes and bounds. It was claimed that in settlement records also the title of the ancestral properties was clearly discernible. It was, therefore, submitted that the facts of the case would go to show that a HUF existed long since, owning common ancestral properties handed down from generation to generation. The AAC having observed that there was no doubt about the existence of nucleus of HUF, the assessee was entitled to exemption under Section 5(1)(ii).
He, therefore, directed the WTO to grant relief sought by the assessee.
4. Against the said order of the AAC, the revenue has preferred the present appeals before us and it was contended by the learned departmental representative that under the Dayabhaga School of Hindu Law," the heirs of a deceased do not constitute a HUF automatically on the death of the deceased and cannot be assessed as such in view of the decision of the Supreme Court in the case of Bishwanath Chatterjee (supra). He pointed out that in the aforesaid decision their Lordships made it clear that properties of a Hindu male governed by the Dayabhaga School of Hindu Law, held on his death by his heirs, are not assessable to wealth-tax jointly in the status of a HUF. He, therefore, wanted us to set aside the order of the AAC and restore that of the WTO. The assessee, who was present in person, strongly supported the order of the AAC.5. We have heard the submissions of both the parties and considered the facts of the case. There is no doubt about the fact that the assessee was governed by the Dayabhaga School of Hindu Law and both non-agricultural and agricultural properties held by him were inherited from his father. Under the Dayabhaga School of Hindu Law, the foundation of a corparcenary is first laid on the death of the father leaving him surviving more than one son. Strictly speaking, there is no coparcenary between a father and his sons according to the Dayabhaga law, so far as regards ancestral property, because the sons do not acquire any interest by birth in the ancestral property. The rights arise for the first time on the father's death when they take father's property, ancestral as well as separate, as heirs and not by survivorship. The heirs of a Dayabhaga deceased person do not spontaneously, by operation of law, become members of a HUF. They remain co-owners with definite ascertained shares and are to be assessed to wealth-tax individually. It has been held by the Supreme Court in the case of Bishwanath Chatterjee (supra), properties of a Hindu male governed by the Dayabhaga School of Hindu Law, held on his death by his heirs, are not assessable to wealth-tax jointly in the status of HUF. Keeping in mind the aforesaid principle of law and considering the facts of the case, we are of the opinion that the AAC was not justified in directing the WTO to allow relief under Section 5(1)(ii). We, therefore, set aside his consolidated order and restore those of the WTO.