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Assistant Controller of Estate Vs. Smt. K. Raghavamma - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Hyderabad
Decided On
Judge
Reported in(1985)14ITD123(Hyd.)
AppellantAssistant Controller of Estate
RespondentSmt. K. Raghavamma
Excerpt:
.....appeal.3. the learned departmental representative strongly urged that in view of section 12 of the hindu adoptions and maintenance act, 1956, adoption will be with effect from the date of adoption and the adopted child shall not divest any person of any estate vested in him or her before the adoption. he also submitted that in view of section 14 of the hindu succession act, 1956, any property possessed by a female hindu shall be held by her as full owner. since the widow was in possession of the property of the deceased prior to the adoption, the adopted son cannot divest her of the estate which vested in her. he strongly urged that the decision of the supreme court in the case of smt. sitabai (supra) has no application to the facts of the instant case. he placed reliance on the.....
Judgment:
1. This is an appeal by the revenue against the order of the Appellate Controller directing the Assistant Controller to assess only half share in the joint family properties in the estate of the deceased.

2. Shri Gade China Venkayya passed away on 28-4-1972 leaving behind his wife, Smt. Pitchamma, and his married daughter, Smt. Kasu Raghavamma.

Smt. Pitchamma adopted a son, viz., Shri Venkata Sivananda Reddy, on 27-6-1980 through a deed of adoption. On an earlier occasion, this matter had come up before the Tribunal in ED Appeal No. 34 (Hyd.) of 1980 wherein an additional ground was raised contending that the rights of the adopted son would be the same as if he had been in existence at the time when his adoptive father died. The Tribunal by its order dated 17-10-1980 admitted the additional ground and restored the matter to the file of the Assistant Controller for making a fresh assessment. In accordance with the above order, the Assistant Controller has made a fresh assessment order, dated 11-12-1981. In this order, he held that the adopted child would be taken into the family fold from the date of adoption and not earlier. He also held that the decision of the Supreme Court in Gurupad Khandappa Magdum v. Hirabai Khandappa Magdum AIR 1978 SC 1239, has no application since the deceased in the instant case is governed by Mitakshara Hindu law and that too by the Madras school of law where lady members are not entitled to any share at the time of partition. Thus, the entire property in the instant case passed on the death of the deceased and is liable to duty. On appeal, the Appellate Controller held that the son who was adopted was not only for the widow but for her deceased husband and, hence, the adopted son was automatically entitled to a share in the joint family property and the deceased's share would be reduced to that extent. He followed the decision of the Supreme Court in Smt. Sitabai v Ramchandra AIR 1970 SC 343. In the view he has taken, he did not consider the other contention that the widow of the deceased had half share in the estate of the deceased during his lifetime. Against the said order, the revenue has preferred this appeal.

3. The learned departmental representative strongly urged that in view of Section 12 of the Hindu Adoptions and Maintenance Act, 1956, adoption will be with effect from the date of adoption and the adopted child shall not divest any person of any estate vested in him or her before the adoption. He also submitted that in view of Section 14 of the Hindu Succession Act, 1956, any property possessed by a female Hindu shall be held by her as full owner. Since the widow was in possession of the property of the deceased prior to the adoption, the adopted son cannot divest her of the estate which vested in her. He strongly urged that the decision of the Supreme Court in the case of Smt. Sitabai (supra) has no application to the facts of the instant case. He placed reliance on the decisions in Punilhavalli Ammat v.Minor Ramalingam AIR 1970 SC 1730 and CWT v. Smt. T. Yasodamma [1984] 146 ITR 445 (AP) and an order of the Tribunal in P. Raguraman v. Second ITO [1982] 2 ITD 1 (Mad.).

4. The learned counsel for the accountable person strongly supported the order of the Appellate Controller. He .urged that the adoption relates back to the date of death of the deceased and the adopted son takes half share in the family property. The adopted son should be regarded as the son of the widow as well as her husband. In this connection, reliance was placed on the decision of the Supreme Court in Smt. Sitabai''s case (supra). Alternatively, it was submitted that the widow of the deceased had half share in the estate of the deceased.

Reliance was placed on the decision of the Supreme Court in Gurupad Khandappa Magdum's case (supra).

5. We have considered the rival submissions Section 12, which is relevant for our purpose, reads as under : An adopted child shall be deemed to be the child of his or her adoptive father or mother for all purposes with effect from the date of the adoption and from such date all the ties of the child in the family of his or her birth shall be deemed to be severed and replaced by those created by the adoption in the adoptive family : (a) the child cannot marry any person whom he or she could not have married if he or she had continued in the family of his or her birth ; (b) any property which vested in the adopted child before the adoption shall continue to vest in such person subject to the obligations, if any, attaching to the ownership of such property, including the obligation to maintain relatives in the family of his or her birth ; (c) the adopted child shall not divest any person of any estate which vested in him or her before the adoption.

Under the above provision, it is clear that the adoption takes place with effect from the date of adoption. Under Clause (c) of the proviso the adopted child shall not divest any person of any property vested in him or her before the adoption. In view of the above provision and Section 14(1) of the Hindu Succession Act the doctrine of relation of the adoption back to the date of the death of the deceased no longer holds good. Under Section 14(1), any property possessed by a female Hindu, whether acquired before or after the commencement of the said Act, shall be held by her as full owner thereof and not as a limited owner. In the instant case the widow was in possession of the property after the death of her husband on 28-4-1972. She has been the absolute owner since then. Since the property has vested in her with absolute powers, the adopted child as per Clause (c) of the proviso to Section 12 shall not divest her of the property which vested in her before the adoption. Thus, the adopted son does not get any right in the property which had vested with the adoptive mother. The rights of the adopted son in the family properties would take effect only from the date of adoption.

6. In Punithavalli Ammal's case (supra), the Supreme Court held that the doctrine of relation back of the adoption to the date of death of the husband by the Hindu law texts no longer survives in view of Section 14(1). The Supreme Court did not approve the decision of the Madras High Court in holding that the adoption must be deemed to relate back to the date of the death of the deceased adoptive father. It was observed as under : ^ ... In our opinion the rights conferred on a Hindu female under Section 14(1) of the Act are not restricted or limited by any rule of Hindu law. The section plainly says that the property possessed by a Hindu female on the date the Act came into force whether acquired before or after the commencement of the Act shall be held by her as full owner thereof. That provision makes a clear departure from the Hindu law texts or rules. Those texts or rules cannot be used for circumventing the plain intendment of the provision.

In our judgment the learned Judges of the Madras High Court were not right in limiting the scope of Section 14(1) by taking the aid of the fiction mentioned earlier. That in our opinion is wholly impermissible. On the point under consideration the decision of the Bombay High Court in Yamunabai v. Ram Maharaj Shreedhar Maharaj (AIR I960 Bom. 463), lays down the law correctly. (p. 1732) This is a direct authority for the proposition that property possessed by a Hindu female whether acquired before or after the commencement of the Hindu Succession Act shall be held by her as full owner thereof and an adopted son shall not divest her of the property vested in her and the doctrine of relation back of the adoption to the date of the death of the adoptive father no longer survives.

7. In Smt. T. Yasodamma's case (supra) the Andhra Pradesh High Court held that where a female Hindu makes an adoption after coming into force of the Hindu Succession Act, the adoption does not result in divesting her of the property which has already vested in her and the adopted son does not get any right in that property by virtue of the adoption. In this case, after referring to the decision of the Supreme Court in Sitabai's case (supra), it was observed that the Supreme Court had no occasion therein to consider whether the adopted son divests the adoptive mother of the properties of which she is the absolute owner and/or whether the adopted son gets a share in the properties in the hands of the adoptive mother by virtue of the adoption.

8. In Kanduru Venkata Somaiah v. Kanduru Ramasubbamma AIR 1984 AP 313, the Andhra Pradesh High Court held that it is very difficult to hold that the title once vested in a person on the death of a testator will be divested on adoption. The disposition by a will is not affected, by adoption, for, the will speaks as at the death of the testator and the property is carried before the adoption takes place and the adopted son shall take subject to the provisions of the will.

9. In N.R. Raghavachariar's Hindu Law, 1980 edn. Vol., 2, it was observed as under : 5 Position when the adopter is a woman : Under the Hindu Succession Act a woman who inherits her husband's estate or who has acquired property in any other way except under decrees or documents which confer on her only a life or restricted estate, becomes an absolute owner of the property, and if site subsequently makes an adoption, the adopted son does not pet any right in that property. The fact that the property was originally the ancestral property in the hands of her husband does not enable the adopted son to get an interest in that property. No doubt, if the widow dies without alienating the property, the adopted son would succeed to the property as her heir, but during her lifetime he has no right to question her regarding her dealings with the property. The theory of relation back applicable prior to this Act which had enabled the son to claim that he must be considered to have been born at the time of the adoptive father's death has no longer any operation and the right of the adopted son springs only on the date of the adoption. The adoption does not, divest any estate vested in anybody and since the property in the hands of the woman, who makes an adoption is her own property at the time of the adoption in whatever way it might have been acquired by her, the adopted son cannot claim to have any interest in that property. In this connection one exception ought, to be remembered, if the adopting widow has obtained the property of her husband for a limited estate with the power of adoption to him under a will or settlement and the will or the settlement mentions that on adoption by her the adopted son should take the property, the widow would be divested by the adoption and any intermediate alienation by her contrary to the terms of the will or settlement will not be binding on the adopted son. The same will be the position if the adoption is of a daughter instead of a son. (p. 1189) The above passage brings out the correct legal position. In P.Raguraman's case (supra) Madras Bench 'C' of the Tribunal, to which my learned brother, the Accountant Member was a party and wrote the order, held after reviewing the entire case law that the doctrine of relation back of the adoption to the date of the death, of the husband no longer survives in view of Section 14(1).

10. The ratio laid down in the above decisions squarely applies to the instant case. The widow, Smt. Pitchamma, became the absolute owner of the property on the death of her husband by virtue of Section 14 and the adoption does not result in divesting her of the property which had already vested in her. Proviso (c) to Section 12 clearly states that the adopted child shall not divest any person of any estate which vested in him or her before the adoption. Under Section 12 the adoption takes effect from the date of adoption. Thus, prior to the adoption, the adopted child has no right in the property. The doctrine of relation back of the adoption to the date of death of the adoptive father no longer holds good in view of the above authorities and the provisions of the Hindu Succession Act as well as the provisions of the Hindu Adoptions and Maintenance Act. Thus, on the date of the death of the adoptive father, the adopted son in the instant case had no right in the family property. The Appellate Controller was wrong in holding that the adopted son gets half share in the family property.

11. The decision of the Supreme Court in Sitabai's case (supra) is clearly distinguishable. In that case the facts are, Dulichand and Bhagirath were brothers. Sitabai was the widow of Bhagirath who predeceased Dulichand. Before the death of Dulichand, Sitabai adopted Suresh Chandra. Sitabai was entitled to maintenance out of the properties in the hands of Dulichand which remained to be joint family properties. Since the adoption took place before the death of Dulichand, the adopted son became the coparcener entitled to a half share in the joint family properties. That is not the position in the instant case. The adoptive father died in 1972 and the adoption took place in 1980. Hence, the adopted son cannot be considered as a coparcener in 1972 before the death of the adoptive father. The above decision of the Supreme Court was noticed by the Andhra Pradesh High Court in Smt. T. Yasodamma's case (supra) and it was distinguished.

12. It is contended by the learned counsel that the widow of the deceased had half share in the estate of the deceased. Reliance was placed on the decision of the Supreme Court in Gurupad Khandappa Magdum's case (supra). The learned departmental representative submitted that the above decision will apply only if there was a claim for partition by any coparcener and in case of sole surviving coparcener who dies the above decision has no application.

13. The deceased was the sole surviving coparcener having absolute rights to dispose of the entire property. During his lifetime, his wife had only a right of maintenance out of the family properties. She was not entitled for partition during his lifetime as she was not a coparcener. It is only if there is a claim for partition by another coparcener, the wife will be entitled to a share and not otherwise.

Section 6 and the proviso thereto of the Hindu Succession Act will not apply in the case of a sole surviving coparcener who dies. In this connection, we may refer to the decision of the Madras High Court in Arunachalathammal v. Ramachandran Pillai AIR 1963 Mad. 255, wherein it was held that Section 6 will not apply to property held by a person as a sole surviving coparcener or to a separate property obtained on a partition in the family when the person has left behind no undivided sons of his own. From Mulla's Hindu Law, 15th edn., at page 924 (footnote), we find that this decision of the Madras High Court has been affirmed by the Supreme Court in an unreported judgment dated 20-2-1970.

14. In the instant case, the deceased was the sole surviving coparcener. There was no claim for partition by any one. So, the question of applying the proviso to Section 6 does not arise. The deceased had absolute right, being the sole surviving coparcener, to dispose of the property during his lifetime. The decision of the Supreme Court in the case of Gurupad Khandappa Magdum (supra) has no application to the instant case as in that case Khandappa died in 1960 leaving his wife and two sons and a suit was filed after his death in 1962 for partition. It was held that in determining the share of the wife, the proviso to Section 6 and Explanation 1 thereto of the Hindu Succession Act would apply and a partition will be deemed to have taken place during the lifetime of Khandappa. That decision has no application to the instant case as the deceased here was the sole surviving coparcener and there was no claim for any partition in which a share could be allotted to the wife.

15. The decision of the Madhya Pradesh High Court in the case of Smt.

Ramkunwar Bai v. CED [1983] 142 ITR 852 was rendered on the concession of the parties that wife of the deceased had half share. This decision was noticed by the Full Bench of the same High Court in CED v. Smt.

Rani Bahu [1983] 142 ITR 843 and it was held that the decision in C.Krishna Prasad v. CIT [1974] 97 ITR 493 (SC) does not support the conclusion that in a family consisting of the deceased and his wife, where the deceased was the only coparcener and owner of the entire coparcenary interest, the property passing on his death is only half the property and not the entire property. Thus, in our view, the wife of the deceased does not get half share in the estate in the deceased.

16. The learned counsel for the accountable person then urged that as the wife of the deceased was entitled for maintenance, the maintenance should be quantified with a charge on the property and it should be deducted from the estate of the deceased. This contention has not been raised at any stage before the lower authorities. It was not raised even when the matter had come up before the Tribunal on an earlier occasion. Thereafter, when the Tribunal sent it back to the Assistant Controller, this contention was neither raised before him nor before the Appellate Controller. Even in the grounds of appeal before us, this ground has not been raised. So, we decline to entertain this contention.

17. The learned counsel then made a feeble reference to Section 39 of the Estate Duty Act, 3953 ('the Act')- This section deals only with the valuation of an interest in coparcenary property ceasing on the death of the deceased. There is no dispute with regard to the valuation of the property in this appeal. The deceased being the sole surviving coparcener, had full power of disposition of the entire property.

Hence, the entire property passed on his death under Section 6 of the Act and it has been rightly included in the net principal value of the estate of the deceased. The question of allotment of share to the deceased does not arise as he being the sole surviving coparcener, Section 39 has no application to the instant case. The Appellate Controller was wrong in directing the Assistant Controller to assess only half share in the joint family properties in the estate of the deceased. We reverse the order of the Appellate Controller and restore that of the Assistant Controller.


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