1. This is a Reference under Section 66(1) of the Indian Income Tax Act, 1922, at the instance of the asses-see. The assessee in this case is Keshavlal Lallubhai Patel, an individual. The relevant year of assessment is 1952-53, the relevant accounting period being 1st April 1951 to 31st March, 1952. The assessee has a wife by name Revagauri, an adult son by name Navinchandra and a minor son by name Hasmukhlal. The assessee and the members of his family had been assessed as individuals, for a number of years past. The assessee, his wife and two sons were members of a Hindu undivided family. As stated by the Income Tax Officer, there was, however, no coparcenary property. The assessee was possessed of self-acquired properties. On 18th April 1951, the assessee threw some of his self-acquired properties consisting of agricultural lands, a house and shares of limited liability companies into what is stated to be the common hotchpot of the said Hindu undivided family. This is evidenced by an affidavit sworn by the assessee on 18th April 1951. No entries in the books were made evidencing such a transaction. No transfers were effected at or about that time. On 12th June 1951, an oral partition was effected among the members of the aforesaid Hindu undivided family.Consistent with this partition, entries were made in the books of account On 26th June 1951, a joint declaration was made by the assessee, his wife and his adult son in respect of such partition. A pint statement was also made to that effect on 8th December 1951 before the talati and entries were made in the records of rights recording the transfers of the lands. The properties were transferred in accordance with the aforesaid arrangement to the names of the persons who became entitled thereto on such partition. The Income Tax Officer hold that there did not exist any coparcenary property or any joint family prior to 18th April 1951 and that 110 coparcenary property or joint family came into existence subsequent to 18th April 1951. He included the entire income of these properties in the income of the assessee. An appeal was preferred from that decision to the Appellate Assistant Commissioner. He held that the Income Tax Officer was not justified in rejecting the assessee's contention that as from 18th April 1951, the assessee had put some of his self-acquired properties in the family hotchpot. He was of the view that the Income Tax Officer was not justified in holding that there was no partition of the Hindu undivided family properties. He considered that a partition of the family properties had taken place on 12th June 1951. He however held that there was an indirect transfer by the assessee of his properties to his wife and minor child through the agency of a Hindu undivided family and that the said Hindu undivided family had been utilised only for the purpose of transferring the self-acquired properties of the assessee to his wife and minor son. He included the income of the properties which came to the share of the wife and minor son of the assessee in the income of the assessee under the provisions of Section 16(3) of the Income-tax Act. As the provisions of Section 16(3) of the Income-tax Act did not apply to the adult son of the assessee, the income derived from properties falling, to the share of the adult son was excluded from the income of the assessee for the relevant assessment year. The assessee preferred an appeal from this decision to the Income-tax Appellate Tribunal, The Tribunal proceeded on the footing of the genuineness of the transactions whereunder the properties were thrown into the family hotchpot and were partitioned. The Tribunal held that the provisions of Section 16 (3) (a) (iii) and (iv) were wide enough to cover an arrangement like the one entered into in this case. The Tribunal held that the throwing into the hotchpot of one's self-acquired property and a subsequent partition thereof among the members of the Hindu undivided family resulted in an indirect transfer of property within the meaning of Section 16(3) of the Act. The Tribunal upheld the decision of the Appellate Assistant Commissioner.
2. The question of law that arises for our consideration in the present reference is the following :
'Whether on the facts and circumstances of this case the throwing into the hotchpot of the applicant's self-acquired property and the subsequent partition among the members of the Hindu undivided family is au indirect transfer of property so fur as the wife and minor son are concerned,within the meaning of Section 16(3)(a)(iii) and (iv) of the Income Tax Act?'
Section 16(3) of the Income Tax Act to the extent that it is relevant provides as under:
'In computing the total income of any individual for the purpose of assessment, there shall be included-
(a) so much of the income of a wife or minorchild of such individual as arises directly or in-directly:
x x x x x (iii) from assets transferred directly or indirectly to the wife by the husband otherwise than for adequate consideration or in connection with an agreement to live apart; or
(iv) from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual otherwise than for adequate consideration; and
(b) so much of the income of any person or association of persons as arises from assets transferred otherwise than for adequate consideration to the person or association by such individual for the benefit of his wife or a minor child or both'. Under Section 2(9) of the Act the expression 'person', unless there is any tiling repugnant in the subject or contest, would include a Hindu undivided family. Section 16(3)(a) is intended to rope in certain income of a wife or a minor child while computing the total income of a husband or father. Section 16(3)(b) is intended to rope in certain income of any person, which would include a Hindu undivided family, or association of persons while computing the total income of a husband or father. Section 16(3)(a)(iii) provides that such income of a wife must arise directly or indirectly from assets which have been transferred to the wife by the husband otherwise than for adequate consideration or in connection with an agreement to live apart. Such transfer may be either direct or indirect, Section 16i3)(a)(iv) provides that such income of a minor child must arise directly or indirectly from assets transferred to the minor child, not being a married daughter, by the father otherwise than for adequate consideration. Such transfer also may be either direct or indirect. Section 16(3)(b) provides for income of a person, including a Hindu undivided family, or an association of persons from assets transferred otherwise than for adequate consideration to such person or association of persons. In Section 16(3)(b), however, the words 'as arises directly or indirectly' do not qualify the word 'income' of such person or association of persons. The words 'directly or indirectly' do not also qualify the words 'assets transferred' appearing in Section 16(3)(b).
3. In the application of this section to the facts of the case, we will have first to consider whether any assets have been transferred directly or indirectly by the assessee to his wife Revagauri and to his minor son Hasmukhlal within the meaning of this section. It is urged on behalf of the assessee that no transfer, direct or indirect, took place when the assessee put into the hotchpot of the Hindu undivided family his separate self-acquired properties. It is next urged that even it a transfer could be said to have taken place, there is no transfer, direct or indirect, to the wife of the assesses or the minor son of the assessee withinthe meaning of Section 16(3)(a)(iii) or Section 10(3)(a)(iv). It is further urged that Section 16(3) contemplates a trans-fer by the act of a party and that such transfer, in so far as it relates to immoveable property, must be effected by a registered document and that, as in this case, there has been no such transfer by the assessee to the Hindu undivided family, in Jaw there is no transfer within the meaning of Section 16(3)(a)(iii) and 1613) (a) (iv). In this connection, reliance has been placed on a decision oi the Patna High Court reported in Indar Singh v. Commr. of Income Tax, B. and O. : 11ITR16(Patna) . Maoohar Lall J. in the course of his judgment in that case observes at pages 32 and 33 (of ITR): (at pp. 174-175 of AIR) that it was well-settled that title to land cannot pass by an admission when the statute required a deed and that the property of an individual could not become the property of a joint Hindu family by mere expression of intention unless the property was transferred to the joint Hindu family by some means recognised by law. For instance, if it was move-able property then it should be handed to the joint family and its subsequent possession or enjoyment should be shown to be on behalf of the joint Hindu family, or if it was immoveable property then it must be transferred by a registered document if its value was more than Rs. 100. The learned Judge seems to have in mind the provisions of law relating to transfer of property under the Transfer of Property Act, 1882, or provisions analogous thereto. Section 5 of the Transfer of Property Act lays down that in the subsequent sections the expression 'transfer of property' means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, or to himself and one or more other living persons. In the case however of a member of a Hindu undivided family seeking to throw his separate property in the common hotchpot of the joint family, we have not to consider the provisions relating to conveyance by a living person of property to other living persons within the meaning of Section 5 of the Transfer of Property Act, but have to consider the provisions of Hindu Law in relation thereto. It is a well-known proposition of Hindu law that property which, was originally the separate or self acquired property of a member of a Hindu joint family may become joint family property if it has been voluntarily thrown by him into the common stock with the intention of abandoning all separate claims upon it. Separate property thrown into the common stock is subject to all the incidents or joint family property. A reference in this connection may be made to the well-known book on Principles of Hindu Law by Sir Dinsha Mulla, 12th Edition, page 332. A reference was also made at the bar to the case reported in Duggirala Sadasiva v. Bolla Rattin, AIR 1958 Andh Pra 145. A Division Bench of the Andhra Pradesh High Court has in that case observed as follows:
'It is clear law that a person might impress his self-acquired or separate property in whole or in part with joint family character. He might throw it into the hotchpot or blend it with joint family property or by a declaration of clear intention convert the self-acquired property into joint family property. It is not necessary that he should convertthe entire self-acquired property into joint family property or that he should own joint family property in order to do so. By a clear expression of intention, such as by a statement in a deposition by an affidavit or by executing a document, or by course of conduct he may alter the character of the self-acquired or separate property into joint family property. No formalities, whatsoever, are required for impressing the self-acquired property with the character of joint family property'.
We are in respectful agreement with these observations. In the present case, the separate 'properties of the assessee have been thrown into the hotchpot and an affidavit expressing the clear intention or the assessee to convert his separate properties into joint family properties has been made on 18th April 1951, with the result that the hitherto separate properties of the assessee referred to in the affidavit, have been impressed with the character of joint family properties.
4. It was urged by the learned Advocate General that the effect of the action of the assessee in throwing his separate property into the hotchpot and making an unequivocal declaration by his affidavit of his intent to convert some of his separate properties into joint family properties was to bring about a transfer of the said properties within the meaning of Section 16(3). It was urged that the words 'from assets transferred' appearing in Section 10(3)(a)(iii) and 16(3)(iv) were words of wide import. Reliance was placed by the learned counsel upon a passage from Burrow's Words and Phrases, 1958 Supplement to Vol V, at page 57. It is there stated as under:
' The word 'transfer' is not a term of art and hasnot a technical meaning. It is not necessary to atransfer of property from a husband to his wifethat it should be made in any particular form orthat it should be made directly. All that is required is that the husband should so deal with the property as to divest himself of it and vest it in hiswife, that is to say, pass the property from himselfto her. The means by which he accomplishes thisresult, whether direct or circuitous, may properlybe called a transfer'.
James L. J., in Gathercole v. Smith, (1881) 17 Ch. D. 1 observes at page 7 as follows:
'Now, 'transfer' is one of the widest terms that can be used. It appears to me that very word was used by the Legislature not only to prevent the incumbent from assigning himself, but for preventing any transfer by operation of law in invitum --not only to prevent a voluntary dealing by an incumbent with an annuity, but to prevent the annuity vesting in a trustee in bankruptcy, or being seized or attached under a garnishee order by an execution creditor, or otherwise transferred',
As against this submission of the learned Advocate General, reliance was placed by Mr. Pandit, the learned advocate for the assessee, on a decision of the Madras High Court reported in M.K. Stremann v. Commissioner of Income Tax, Madras : 41ITR297(Mad) ). In that case it was held that when the separate property of a coparcener ceased to be his separate property and became impressed with the character of coparcenary property there was no transfer of that propertyfrom the coparcener to the coparcenary. It became joint family property because the coparcener, who awned it up to then as his separate property, had by the exercise of his volition impressed it with the character of joint family or coparcenary property, to be held by him thereafter along with the other members of the joint family. It was by his unilateral action that the property had become joint family properly. The transaction by which a property ceased to be the, property of a coparcener and became impressed with the character of coparcenary property did not itself amount to a transfer. No transfer need precede the change. No transfer ensues either.
5. We are inclined to accept the view urged before us by the learned Advocate General that by reason of operation of law, a transfer of property takes place when a member of a joint family throws his separate property into the hotchpot of the joint family. The real question, which We have to consider, is whether there has been a transfer of assets directly or indirectly by the assessee to his wile and minor son. The assessee, while throwing the property into the hotchpot, has effected a change of ownership of the property. The same may be said to be transferred from the assessee, the individual, to the Hindu undivided family. Both the wife and the minor son are members of that Hindu undivided family. What we must consider is whether when a transfer is effected to such Hindu undivided family, there is a transfer to the wife and the minor son of the transferor who happen to be members of that family within the meaning of Section 16(3), A Hindu undivided family is a person in the eye of the law within the meaning of the Income Tax Act, 1922, A Hindu undivided family is an assessable unit. Could it be said that when a transfer is effected to a Hindu undivided family which is an assessable unit, there is a transfer effected within the meaning of Section 16(3) (a) to the wife and minor child of the assessee who are also separately assessable units as individuals? Section 16 (3) (a) aims at roping in income of the wife and minor child which may arise from assets transferred to such wife or minor child. The transfer contemplated is a transfer as a result whereof income may accrue to the transferee. In that event such income is deemed to be the income of the transferor for the purpose of assessment. When property is transferred to a Hindu undivided family, income would accrue to the joint family from the property so transferred. It could not be said to be income which accrues to ariy individual member of that family. In this connection, it will not be out of place to consider the concept of an undivided coparcenary and the incidence of coparcenary property under Hindu law. The essence of a coparcenary under the Mitakshara law, as observed in Sir Dinsha Mulla's Principles of Hindu Law, 12th Edition, at page 318, is unity of ownership. The ownership of the coparcenary property is in the whole body of coparceners. No individual member of that family, whilst it remains undivided, can predicate, of the joint and undivided property, that he, that particular member, has a definite share. His interest is a fluctuating interest, capable of being enlarged by deaths in the family and liable to be diminished by births in the family. It is onlyon a partition that such coparcener becomes entitled to a definite share. The rights of a coparcener until a partition takes place consist in a common possession and common enjoyment of the coparcenary property. As observed by Privy Council in Katama Natchier v. Moottoo Vijaya Haganadha, 9 Moo I. A. 539 , there is community of interest and unity of possession between all the members of the family, and upon the death of any one of them the others may well take by survivorship that in which they had during the deceased's lifetime a common interest and a common possession. It is not necessary here to consider the changes in that position effected by reason, oi the provisions of the Hindu Succession Act, 1956. Under ordinary law, when assets are transferred to A Hindu undivided family, an interest therein may be created in favour of a wife or minor child who happens to be a member of the said family. In the context, however, of the language used in Section 16(3)(a), we are of the view that when assets are transferred to a Hindu undivided family, there is no transfer, direct or indirect, effected by the transferor in favour of his wife or minor child who may be members of that Hindu undivided family, within the meaning of the words used in Section 16(3) (a). When income accrues to a Hindu undivided family from the assets transferred to it, it cannot be said that such income becomes the income of the wife or minor child of the transferor who are members of such Hindu undivided family. When the legislature intended to deal with the income of any person which would include a Hindu undivided family or association of persons as arose from assets transferred to such person or association of persons, it has separately legislated about it by enacting the provisions contained in Section 16(3)(b).
6. When the subsequent transfers of proper-! ties took place among the members of the Hindu undivided family as a result of partition by metes and bounds, that transaction could not be regarded as a transfer by the assessee to his wife or minor child. The two transactions, viz., the one of throwing the separate property of the assessee into the hotchpot of the joint family and the other of partitioning the joint family properties, are separate, genuine, independent transactions. Neither by the one nor by the other there has been any transfer, direct or indirect, effected by the assessee to his wife or minor son within the meaning of Section 16(3)(a) (iii) and Section 16(3)(a)(iv).
7. Our answer to the question is in the negative. The Commissioner of Income Tax to pay the costs of the Reference.