D. S. DAVE J. - This is a reference by the Income-tax Appellate Tribunal (Delhi Bench 'C') under section 66(1) of the Income-tax Act.
The question which has been referred to us is as follows :
'Whether the income from property has been properly included in the assessment of Shri Mukut Beharilal Bhargava for the year 1957-58 ?'
In order to appreciate the question of law involved in the reference, it would be proper to set out, in brief, the facts which have given rise to it.
Shri Mukat Beharilal Bhargava is the adopted son of Shri Binodilal Bhargava. The said adoption took place about 40 years back. Shri Binodilal expired in the year 1937, leaving behind him, his adopted son, Shri Mukat Beharilal whose wife gave birth to a daughter in 1942. Shri Binodilal had left certain ancestral properties at the time of his death. The income from these properties was assessed as that of an individual, i.e., of Shri Mukat Beharilal, Bhargava up to the assessment year 1955-56. In the returns which were filed for the assessment years 1956-57 and 1957-58, the income from these properties was shown as that of a Hindu undivided family. For the assessment year 1957-58, i.e., the financial year ending on 31st March, 1957, the Income-tax Officer assessed the income of the said property at Rs. 2,414. Shri Mukat Beharilal Bhargava was assessed in respect of the said income as an individual. The connection raised on his behalf was that the said properties belonged to a Hindu undivided family consisting of himself, his wife and daughter and that it was only on account of ignorance of law that the assessee had included the income from the said properties in the return of previous years as his individual income. This contention was not accepted by the Income-tax Officer who relied upon the observation of their lordships of the Privy Council in Kalyanji Vithaldas v. Commissioner of Income-tax.) Aggrieved by the assessment order dated 15th March, 1958, the assessee filed an appeal but it was dismissed by the Appellate Assistant Commissioner on 1st October, 1958. He filed a second appeal before the Income-tax Appellate Tribunal but there also, he was unsuccessful and so the present reference has been made, at his instance, by the Appellate Tribunal.
It is contended by learned counsel for the petitioner that the assessee and his wife were members of a joint Hindu family in the lifetime of Shri Binodilal Bhargava, that after the demise of shri Binodilal Bhargava in the year 1937, the assessee was left as the sole surviving coparcener but the ancestral property continued to belong to the joint family consisting of the assessee and his wife and that after the birth of a daughter in 1942 she also became the member of the joint Hindu family and thus in the financial year 1956-57 (assessment year 1957-58) the properties belonged to a Hindu undivided family consisting of the assessee, his wife and daughter. It is further urged that in Kalyanji Vithaldass case, the income was derived from business, while, in the present case, the income was derived from properties and since the properties belonged to a Hindu undivided family, it should not have been included in the assessees income in his individual capacity. He has tried to distinguish the said case from the
present one by contending that the assessment in that case was made under section 10 of the Indian Income-tax Act, 1922, under the heading 'Profits and gains of business, profession or vocation' whereas in the present case, the tax was assessable under section 9 of the said Act under the heading 'Income from property'. It is pointed out that in the present case, the assessees wife is also, as a member of the Hindu undivided family, owner of the immovable property whose income has been assessed whereas in Kalyanji Vithaldas case the business whose profits and gains were assessed to income-tax was being carried on only by the assessee and not by his wife or daughter. It has been strenuously argued that the properties are not self-acquired properties of the assessee, that they are held by him as a sole surviving coparcener and so he is not an absolute and unlimited owner thereof. According to learned counsel, the assessees father during his lifetime was under a legal obligation to maintain the assessees wife as a member of the joint Hindu family out of the joint family property and she was not divested of that right on account of Shri Binodilals demise. Similarly, if the assessees daughter were born in the lifetime of his father, the latter as manager of the joint Hindu family would have been bound to maintain her also out of the joint family property. Thus, according to him, the right of the assessees wife arose on her entry in the family after her marriage and that of the daughter arose on her birth and that these rights did not arise through the assessee so far as the joint family property was concerned. If the self-acquired and separated property of the assessee had ceased to exist, e.g., by fire or otherwise, the rights of the said two females to get maintenance from the joint family property would have continued without any break or suspension. By this reasoning he wants the court to hold that the property in issue continued to be joint family property during the relevant assessment year. In support of his contention, he has referred to certain authorities.
We have given due consideration to the subtle argument advanced by learned counsel. It may be conceded at once that the assessees wife was a member of the joint Hindu family during the lifetime of the assessees father and, if necessity had arisen, she would have been entitled to claim maintenance out of the coparcenary property. It is well settled that a joint Hindu family consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters who have a right of maintenance out of the joint Hindu family property; but at the same time the wife or the unmarried daughter of a coparcener is herself not a coparcener or has any unmarried daughter of a coparcener property. D. F. Mulla in his Principles of Hindu Law, 12th edition, has summarised the correct position of law as follows :
'Para 216. Undivided coparcenary interest -
The essence of a coparcenary under the Mitakshara law is unity of ownership. The ownership of the coparcenary property is in the whole body of coparceners. According to the true notion of an undivided family governed by the mitakshara law, 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, one-third or one-fourth. His interest in a fluctuating interest, capable of being enlarged by deaths in the family, and liable to be diminished by births in the family. It is only on a partition that he becomes entitled to a definite share. The most appropriate term to describe the interest of a coparcener in coparcenary property is undivided coparcenary interest.
Para 217. No female can be coparcener under the Mitakshara law. Even a wife, though she is entitled to maintain out of her husbands property and has to that extent an interest in his property, is not her husbands coparcener. . . . .
Para 223. All property inherited by a male Hindu from his father, fathers father, or fathers fathers father, is ancestral property. The essential feature of ancestral property according to the Mitakshara law is that the sons, grandsons and great-grandsons of the person who inherits, acquire an interest in it by birth. Their rights attach to it at the moment of their birth. Thus if A inherits proper, whether movable or immovable, from his father or fathers father, or fathers father, it is ancestral property as regards his male issue. If A has no son, sons son, or sons sons son, in existence at the time when he inherits the property, he holds the property as absolute owner thereof, and he can deal with it as he pleases. . . . . .
A person inheriting property from his three immediate paternal ancestors holds it, and must hold it, in coparcenary with his sons, sonssons, and sons sons sons, but as regards other relations he holds it, and is entitled to hold it, as his absolute property. The result is that if a person inheriting property from any one of his three immediate paternal ancestors has no son, sons son, or sons sons son, the property is his absolute property, and no relations of his are entitled to any interest in it in his lifetime.'
Now, if the above principles of law are applied to the present case, it would be clear that although the assessees wife was a member of the joint Hindu family in the lifetime of the assessees father and she was also entitled to claim maintenance, if such necessity arose out of the joint Hindu family property, she was not a member of the coparcenary and she had no ownership over the property. So long as the coparcenary consisting of the assessee and his father was in existence, there was unity of ownership and neither of them had a definite share in the property. The assessees wife was entitled to maintenance out of her husbands property and to that extent she had an interest therein, but she could not claim any ownership or any share on partition between her husband and her father-in-law. After the demise of the assessees father, the assessee became the sole surviving coparcener. It is true that the ancestral property in his hand could not be called as his self - acquired property, but at the same time learned counsel for the petitioner is not correct in saying that the assessee was still not absolute owner thereof or that he could not deal with it as he liked. If he wanted to alienate it by sale, gift or in any other manner, his wife could not legally restrain him from doing so. She could not ask for a division or partition of the property. Thus there was neither unity of ownership nor unity of possession of the property between the husband and the wife. His daughter who was born long after his fathers demise did not acquire any right superior to that of her mother. If a son were born out of the wedlock of the assessee and his wife or if the assessee had adopted a son before the relevant year, he would have certainly acquired a right in the ancestral property on account of his birth if the property were not already disposed away by the assessee. Thereafter, the property would have become the coparcenary property of the assessee and his son and its income could certainly be shown as income of a Hindu undivided family. If the property were alienated by the assessee before the birth or adoption of a son, the alienation would not have invalid on account of the subsequent birth or adoption of the son. The son could acquire a right only if the ancestral property had continued unalienated in the hands of the assessee. According to Hindu law, a sole-surviving coparcener is considered to be the absolute owner of the ancestral property and he has much right to dispose it away as his self-acquired property, yet it cannot be called as self-acquired property, because it is subject to certain restrictions. The main reason is that if, before the disposal of the property, a son is born or a son is adopted by him or by a widow of another deceased coparcener, then he also acquires a right therein. Unfortunately, this kind of right was not available under the Hindu law to the wife or daughter of a sole surviving coparcener. The unfortunate position of the wife or unmarried daughter of the sole owner is described thus by D. F. Mulla :
'Para 575 : Where a family consists of a husband and wife the wife cannot assert her right of residence in the family dwelling house either against the purchaser in execution of a decree passed against her husband in his lifetime of or against his estate after his death, or even against a purchaser under a private sale from her husband without necessity, though the purchaser had notice at the time of sale that she was residing in the house.
(2) The same rule applies to unmarried daughters. They too cannot resist the claim for possession of the purchaser at a court-auction or under a private sale.'
It is thus clear that simply because the assessees wife could claim maintenance out of the joint family property during the lifetime of her father-in-law, it cannot be held that after the demise of her father-in-law, there remained a Hindu undivided family and that the property belonged to a Hindu undivided family consisting of herself and her husband. After his fathers death, the assessee was the sole and absolute owner of the property and, in our opinion, he committed no mistake either on account of ignorance of law or otherwise, if he showed the income of the property as his individual income prior to the financial year 1956-57 and the Income-tax Officer committed to wrong in assessing the income as an individual for the assessment 1957-58. The Income-tax Officer was correct in saying that the case of the petitioner was completely covered by the observations of their lordships made in Kalyanji Vithaldass case. In that case there was a firm known as Moolji Sicka & Co. The business of the firm was begun in 1912 by two brothers Moolji and Purshottam, who had already separated, and one Kalyanji, who was not related to them. In 1919 Moolji made gifts of capital to his two sons Kanji and Sewdas born by his first wife. They were also taken into the partnership. The question arose whether the bincome of the firm which fells to the shares of Kanji and Sewdas should be assessed as income of Hindu undivided family, or as that of an individual. Learned counsel for the appellants is true to the extent that in case Kanji and Sewdas were not being assessed as owners ofimmovable property under section 9 of the Income-tax Act, but the question of law raised and decided in that case was similar to the one which has raised the present case. It was urged in that case that the interest of Kanji as also the interest of Sewdas in the firm was ancestral property since the said interest was obtained by them by gift from their father Moolji and so the income received by each one of them was income of a Hindu undivided family and not that of the individual partner. This contention was supported on the ground that Kanji had a wife and daughter and similarly Sewdas had a wife and on that basis it was argued that each one of them constituted Hindu undivided family. It was assumed by their lordships that the interest of Kanji and Sewdas in the firm was ancestral property, so that, if either had had a son, the son would have taken interest therein by birth. But no son having been born, no such interest had arisen to qualify or diminish the interest given by Moolji to Kanji and to Sewdas. Their lordships then posed a question as below :
'Does then the existence of a wife and a daughter make it income of a Hindu undivided family rather than income of the individual partner ?'
Their Lordships immediately answered the said question in the negative by saying that the income should not be treated as the income of a Hindu undivided family. The answer runs as follows :
'Their Lordships think not. A mans wife and daughter are entitled to be maintained by him out of his separate property as well as out of property in which he has a coparcenary interest, but the mere existence of a wife or daughter does not make ancestral property joint. interest is word of wide and vague significance, and no doubt it might be used of a wifes or daughters right to be maintained,. which right occurs in the daughters case on birth; but if the fathers obligations are increased, his ownership is not divested, divided or impaired by marriage or the birth of a daughter. This is equally true of ancestral property belonging to himself alone as of self acquired property.'
According to their Lordships, even though a mans wife and daughter were entitled to be maintained out the property in which he had coparcenary interest, such property did not, even though it was ancestral property, become the property of joint family. This position was further clarified by their Lordships in their judgment in the following observations :
'In an extra legal sense and even for some purposes of legal theory ancestral property may perhaps be described and usefully described as family property, but it does not follow that in the eye of the Hindu law it belongs, save in certain circumstances, to the family as distinct from the individual. . . . . . . In their Lordships view it would not be in consonance with ordinary notions or with a correct interpretation of the law of Mitakshara, to hold that property which a man has obtained from his father belongs to a Hindu undivided family by reason of having a wife and daughters.
The observation made in the last sentences applies with full force to the facts and circumstances of the present cases and we are unable to appreciate the argument of learned counsel that the property in issue belonged to a Hindu undivided family, simply because the assessee had a wife and a daughter at the relevant period of time.
It would now be proper to discuss the authorities which learned counsel has cited to support his argument. The first two cases referred to by him are Bhagwan Singh v. Mt. Kawal Kaur and Ram Das v. Lachhman Das . In the first case, it was held that a grandfather may be under no personal obligation to maintain his grand children, but the manager of a joint Mitakshara family is under a legal obligation to maintain all male members of the family, their wives and their children and on the death of one of the male members, he is bound to maintain his widow and his children.' In
the second case, it was observed that 'where the grand father in joint family is in possession of joint family property his liability to maintain the minor members of the family whose father is alive arises only owing to possession of joint family property and the liability pertains to the property only and is not personal.'
It would suffice to say both these cases have no direct bearing on the question which is involved in the present case. What learned counsel means to urge on the basis of the said cases is, that the right of the assessees wife to obtain maintenance from the joint family property arose at the time of her marriage with the assessee and that if perchance the assessee would have predeceased his father, she would have been entitled to maintenance from the joint family property. He process to argue that the joint family property did not cease to have that character merely because the assessees father died in 1937.
It may be observed that the said argument is not table in view of the observation of their Lordships of the privy council in Kalyanji Vithaldass case. It hardly needs any repetition that their Lordships made it quite clear that the mere existance of a wife or a daughter does not make the ancestral property in his hands the property of a Hindu undivided family.
Learned counsel has also referred to Shiba Prasad Singh v. Rani Prayag Kumari Debi. In that case it was observed by their Lordships that in the case of ordinary joint family property, the members of the family have (I) the right of partition, (2) the right to the restrain alienations by the head of family except for necessity, (3) the right to maintenance, and (4) the right of survivorships. It is contended by learned counsel that the observations made in that case read with further observations of their Lordships of the Privy council in commissioner of Income-tax v. Dewan Bahadur Dewan Krishan Kishore 3, show that the right of maintenance is one of the essential ingredients of the character of joint family property and so the property in issue should be held to be belonging to a Hindu undivided family. In our opinion, this argument has also no force. It was no doubt observed by their Lordships in Shiba Prasad Singhs case. that in the case of ordinary joint family property the members of the family have four rights enumerated above. But it was nowhere observed that the mere right of maintenance would convert a property into joint family property if it is not so otherwise. Learned counsel himself conceded before us that the assessees wife or daughter did not possess three out of the four rights enumerated above, i.e., they had no right of partition they had no right to restrain the assessee from alienating the ancestral property, and they had no right or surviorship. It is only on the basis of the right of maintenance that he has built up an argument but that contention cannot stand in view of the latter observation of the Privy Council in Kalyanji Vithaldass case. The observation made by their Lordship in Commissioner of Income-tax v. Dewan Bahadur Dewan Krishna Kishore also decided on not help the petitioner in any way. In that case the assessee, Dewan Bahadur Dewan Krishna Kishore, was holder of an impartible estate having succeeded as the eldest son of the previous holder. The family was governed by the Mitakshara law but by custom the rule of primogeniture controlled the devolution of the impartible property to which the case related. He had four sons who were living with him as undivided members of a Hindu family. The question arose whether the income of the impartible estate to which the assessee had succeeded by the rule of the primogenitor was chargeable in his hands in the status of an in individual. The income o of the impartible estate comprised of rent of property and interest. It was observed by their Lordships as follows :
'it,. . . . . has been settled law that property though impartible may be the ancestral property of a joint family, and that in such cases the successor falls to be designated according to the ordinary rule of the Mitakshara.... . The custom of impartibility does not touch the succession since the right of survivorships is not inconsistent with the custom; hence the estate retains its character of joint family property and devolves by the general law upon that person who being in fact and in law joint in respect of the estate is also the senior member in the senior line.'
It was held that the assessee as an individual could not, therefore, be charged in respect of the rent of property under section 9 of the Income-tax Act. It is clear from the observation of their Lordships that the impartible property was held to be retaining its character of joint family property since the last holder had four sons living with him and it was ancestral property.
Turning to the question of income which consisted of interest, it was, however, observed by their Lordships that it was chargeable as the assessees individual income. It is interesting to point out that in this connection, it was urged that the sons of the assessee had a right of maintenance and the income in the hands of the assessee from the impartible estate was that of joint family, it was observed by their Lordships as follows :
'Their Lordships will in the present case assume that sons of the assessee have a right to be maintained by him, that this right arises from the fact the he is present holder of the impartible estate, and that the right is a right to be maintained out of the current income there if in such sense that it could be enforced against the assessee in default by the courts in India giving them a charge upon the property or a sufficient part of it. Even so, it is not true in fact or in law to say that the income from the estate is received by the assessee as the income of a joint Hindu family receivable by the Karta, nor is it received by him on behalf of himself and his sons, but on his own baccount as the holder by single heir succession of the impartible estate. The presently existing right of the sons is to be paid a suitable maintenance or to have it provided for them in the ordinary course of Hindu family life. The Hindu law is familiar not only with persons such as wives, unmarried daughters and minor children for whose maintenance a Hindu has a personal liability whether he has any property or none, but also with cases in which the liability arises by reason of inheritance of property and is a liability to provide maintenance out of such property. It applies to persons whom the late owner was bound to maintain. The fact that the sons right to maintenance arises out of the fathers possession of impartible estate and is a right to be maintained out of the estate do not make it a right of a unique or even exceptional character or involve the consequence at Hindu law that income of the estate is not the fathers income'.
It is obvious that even that case shows that the mere right of maintenance of a son, wife or daughter has no effect of converting the property in the hands of a person as joint Hindu family property.
Other cases cited by learned counsel do not carry the case any further,. We have not been referred to any authority in which the ancestral property in the hands of a sole surviving male might have been considered as belonging to a Hindu undivided family, simply because he had a wife living at the time when the property devolved upon him or because a daughter was subsequently born to him.
Under the circumstances, we are unable to hold a view different from the one which was taken by the tribunal. We accordingly answer the question, referred above, in the affirmative. We leave the parties to bear their own costs.
Questions answered in the affirmative.