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The Commissioner of Income-tax Vs. S.S. Thiagarajan Shiyali - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation;Family
CourtChennai High Court
Decided On
Case NumberTax Case No. 118 of 1960
Judge
Reported inAIR1964Mad58; [1963]49ITR581(Mad)
ActsHindu Law; Hindu Women's Rights to Property Act, 1937 - Sections 3(1) and 3(2)
AppellantThe Commissioner of Income-tax
RespondentS.S. Thiagarajan Shiyali
Appellant AdvocateS. Ranganathan, Adv.
Respondent AdvocateR. Ramamani, Adv. for ;Subbaraya Aiyar, ;Padhmanabhan and ;Sethuraman, Advs.
Cases ReferredSee Jana Gadi v. Parvathi Santosh
Excerpt:
.....from total income of son and there should be separate assessment on mother and son as constituting hindu undivided family - whether such income assessable in hands of son - held, income in question not includible in total income of son. - - the facts of that case are clearly distinguishable from the present case. the view of the tribunal that thiagarajan and his mother should be treated as an assessable entity of hindu undivided family is clearly erroneous. if the coparcener dies without any male issue after partition the property taken on partition passes by inheritance or succession-to his heirs like separate property. ..the more difficult point which, however, does not fall for decision in this case, is, what is the share to which the widow would be entitled in a case like the..........a question of hindu law. one srinivasa mudaliar and his son thiagarajan originally constituted a hindu undivided family governed by the mitakshara school of hindu law. the family owned considerable moveable and immoveable properties. there was a partition between the father and the son on the 1st april 1951. thereafter each of them was separately assessed to income-tax as 'individuals' in respect of their income from the divided assets, received by them on partition. srinivasa mudaliar died on the 14th december 1953. he was survived by his widow, the mother of thiagarajan, and his son thiagarajan. in respect of the assets of srinivasa mudaliar, which he had obtained at the partiton referred to thiagarajan and his mother claimed joint ownership. they applied for succession certificate.....
Judgment:

Jagadisan, J.

1. This reference raises a question of Hindu law. One Srinivasa Mudaliar and his son Thiagarajan originally constituted a Hindu undivided family governed by the Mitakshara School of Hindu law. The family owned considerable moveable and immoveable properties. There was a partition between the father and the son on the 1st April 1951. Thereafter each of them was separately assessed to income-tax as 'individuals' in respect of their income from the divided assets, received by them on partition. Srinivasa Mudaliar died on the 14th December 1953. He was survived by his widow, the mother of Thiagarajan, and his son Thiagarajan. In respect of the assets of Srinivasa Mudaliar, which he had obtained at the partiton referred to Thiagarajan and his mother claimed joint ownership. They applied for Succession Certificate to realise amounts invested by way of fixed deposits and for collection of dividends due from shares of limited companies.

For the years ended 31st March 1955 and 31st March 1956 the previous years for the assessment years 1955-56 and 1956-57, returns were made by Thiagarajan and his mother in the status of a Hindu undivided family. These returns were only in respect of the income derived from the assets left by Srinivasa Mudaliar. As stated already, Thiagarajan had obtained his share at the partition between himself and his father, and he had his own separate income from those properties. The Income Tax Officer held that the properties left by Srinivasa Mudaliar belonged exclusively to Thiagaraja, and that, therefore, the income from those properties should be included in the other income of Thiagaraja and that the Hindu undivided family alleged to consist of the mother and the son should not be assessed. The result was that, the entire income in respect of which returns had been made fey the mother and the son came to be assessed in the hands of the son alone, as if it was his exclusive income.

Thiagarajan appealed to the Appellate Assistant Commissioner. He held that the properties belonged to a Hindu undivided family consisting of the mother and the son, and that the income from the properties should be excluded from the total income of the son and that there should be a separate assessment on the mother and the son as constituting a Hindu undivided family. The department preferred an appeal to the Income-tax Appellate Tribunal and contended that Thiagarajan, the son, alone was entitled to the whole of the income, and that the Income-tax Officer was right in assessing the income in the hands of Thiagarajan along with his other income.

The Tribunal held that the Dronerty of the late Srinivasa Mudaliar was not his separate property, but must be deemed to be an interest in a Hindu joint family, and that under Section 3(2) of the Hindu Women's Rights to. Property Act of 1937, the widow of Srinivasa Mudaliar would have a preferential claim to succeed, as against her son, Thiagaraian. But nevertheless the Tribunal affirmed the decision of the .Appellate Assistant Commissioner holding that the mother and the son constituted a Hindu undivided family. The question raised before the department and the Tribunal was only a limited one, namely, whether the income in respect of which returns had been submitted by the mother and the son should be included in the total income of the son alone or should it be assessed separately on the entity of a Hindu undivided family said to consist of the mother and the son, The opinion of the Appellate Assistant Commissioner which has now been affirmed by the Tribunal is that it should not be included in the total income of Thiagaraian. The department thereafter applied Under Section 66(1) of the Act for reference to this court and the following question has been referred :

'Whether the aforesaid income is assessable in the hands of the assessee for the assessment years 1955-56 and 1956-57?'

2. We are unable to agree with the view of the Tribunal that on the facts and circumstances of this case Thiagarajan and his mother constitute a Hindu undivided family. Thiagarajan became divided from his father on and from the 1st April 1951. The joint family of the father and the son was disrupted on that. date. When the father died on the 14th December 1953 there was of course no joint family between him and the son, Thiagarajan. It cannot be said that Srinivasa Mudaliar and his wife constituted members of a joint family. If a son had been born to Srinivasa Mudaliar after the partition, the after-born son and father would have constituted a joint family. Even assuming that Srinivasa Mudaliar was the head of a potential joint family it is inconceivable how after his death, his widow and the divided son, Thiagaraian. could themselves combine to form a joint family. A Hindu joint family or coparcenary is a creature of Hindu law. and it cannot be created or constituted by an agreement between the parties.

The Tribunal has referred to the decision in Commr. of Income Tax v. Lakshmanan Chettiar : [1940]8ITR545(Mad) , in support of its conclusion that there is a joint family between Thiagaraian and his mother. In that case the assessee and his father were members of a Hindu undivided family. The assessee's father died in 1938 and the surviving members of the family were the assessee and his step-mother. The Commissioner of Income Tax referred to this court the question whether for the year 1938-39 assessment should be made on the assessee as an individual or on the assessee and his step-mother as a Hindu undivided family or on the assessee and his step-mother as an association of individuals. It was held that the assessment should be made on the assessee and his stepmother as a Hindu undivided family.

The facts of that case are clearly distinguishable from the present case. That was a case where there was no division between the father and the son. After the death of the father, the son became the sole surviving coparcener. The stepmother was entitled to rights under the Hindu Women's Rights to Property Act of 1937. She obtained an interest in the joint family property and though she was not a coparcener she was certainly a member of the family. It was in those circumstances that this court held that the assessee and his step-mother-father himself having died undivided - should be treated as a Hindu undivided family. The view of the Tribunal that Thiagarajan and his mother should be treated as an assessable entity of Hindu undivided family is clearly erroneous.

3. The real question however is whether the income in respect of which returns had been submitted should be treated as the exclusive income of Thiagarajan includible in his total income or not. The answer to this question depends only on a proper interpretation of the relevant provisions of the Hindu Women's Rights, to Property Act. Sections 3 (1) and 3 (2) are the only material provisions which need be referred to, and they read as follows : -

'3 (1). When a Hindu governed by the Dayabhag school of Hindu law dies intestate leaving any property, and when a Hindu governed by any other school of Hindu law or by customary law, dies intestate leaving separate property, his widow or if there is more than one widow, all his widows together shall, subject to the provisions of Sub-section (3), be entitled in respect of property in respect of which he dies intestate to the same share as a son..........................

(2) When a Hindu governed by any school of Hindu law other than the Dayabhag school or by customary law dies having at the time of his death an interest in a Hindu joint family property, his widow shall, subject to the provisions of Sub-section (3), have in the property the same interest as he himself had.'

What is the nature of the property obtained by a coparcener as a result of the partition? Is it 'separate property' falling within the scope of Section 3 (1) of the Act or is 'an interest in a Hindu joint family property' falling within the scope of Section 3 (1) of the Act, or is 'an interest in a joint Hindu family property' covered by Section 3 (2) of the Act. It is certainly ancestral property as regards his male issues who took an interest in it by birth, whether they are in existence at the time of the partition or are born subsequently. If the coparcener dies without any male issue after partition the property taken on partition passes by inheritance or succession-to his heirs like separate property. The Act has raised many conundrums, and judicial opinion in the matter of interpretation has of course been conflicting.

The scope of Section 3 (1) and Section 3 (2) was considered by the Federal Court in Umayal Achi v. Lakshmi Achi . It was held that 'separate property' meant only 'self-acquired property', and that the property of the sole surviving coparcener or the property obtained by a coparcener on partition was not 'separate property' and must be deemed to be an 'interest in the joint family property'. Subsequent decisions of the High Courts merely followed that decision. In Visalamma v. Jagannatha Rao, (S) : AIR1955Ori160 the Orissa High Court held that where a Hindu has effected a partition with his only son the properties which fell to the share of the father were not his separate properties for the purpose of Section 3(1) of the Act but are joint family properties within the meaning of Section 3 (2). In such a case, it was held that the widow could be entitled to succeed to the whole of the properties obtained on partition, excluding the divided son.

This court followed the Orissa decision in Subramanian v. Kalyanarama Iyer, : AIR1957Mad456 . The learned Judges observed :

'If the fact that on the birth of a son, such son would have a right by birth in the property, obtained by a coparcener at a partition prevents us from holding that such property is separate property; it follows from that very fact that it should be deemed to be joint family property......... .........The more difficult point which, however, does not fall for decision in this case, is, what is the share to which the widow would be entitled in a case like the present? Will she be entitled exclusively to the property left by her husband or should she share them with the two divided sons? In the Orissa case, (S) : AIR1955Ori160 , the learned Judges held that the widow would be entitled to the entire interest to the exclusion of the divided son. It may be a matter for argument that if the property held by the divided member of the family is deemed to be joint family 'property, the other members of the erstwhile co-parcenery must also be deemed to have an interest in them. We refrain from expressing our final opinion on this matter .....................'

A later decision of this court in Unnamalai Ammal v. Seethapathi Reddiar : AIR1961Mad90 has, however, held that in such circumstances the widow would take the entire property excluding the divided son. The view of the Bombay High Court is also on the same lines See Jana Gadi v. Parvathi Santosh, : AIR1958Bom346 .

4. If the matter were res integra, we would have been inclined to take a different view with great respect to the learned Judges who participated; in the decision cited above. It seems to us that Section 3(2) quite clearly and in terms unmistakably refers only to the case where a Hindu not governed by a Dayabhag school dies as an undivided member of a joint family. The word 'dies having at the time of his death an interest in a Hindu joint family property' are appropriate to describe the right of a member of a joint family to an undivided share in the joint family properties. The sub-section visualises an undivided estate, an undisrupted family and the death of a member of that family. It is the devolution of this interest in joint family property that is provided for in this sub-section. The conception that after the disruption of the family and distribution of the assets to the sharers, the sharer holds the divided share as an interest in the joint family property is not rational, even judged by standards of Hindu law. The ameliorative character and object of the Act to confer benefits on Hindu women cannot override the plain meaning of a statute or serve to strain the statutory language almost to a point of distortion. But in view of the decision of the Federal Court in Umayal Achi's case and the two decisions of Division Benches of this court, and having regard to the fact that the Act has now been repealed by the Hindu Succession Act of 1956 we would prefer to follow the said decisions rather than dissent from them.

5. The conclusion of the Tribunal that the income in question in respect of assessment years 1955-56 and 1956-57 is not includible in the total income of Thiagarajan is correct.

6. The question is answered in favour of the assessee. The department will pay his costs. Counsel's fee Rs. 250/-.


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