1. The question in this reference under Section 256(1) of the I.T. Act, 1961, reads as follows :
' Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the share of income from property at Nohar in Rajasthan, share of income from Thirani building, Darjeeling, and share of income from the firm, M/s. Maheswari & Co., could be included in the assessment of the assessee in the status of the HUF '
2. Prior to the partition hereinafter stated, the properties at Nohar and the Thirani building (hereinafter referred to as the ' house properties ') mentioned in the question were the Mitakshara coparcenary properties of the assessee, Malchand Thirani, his two brothers and his father, Iswardas Thirani, since deceased.
3. Iswardas had a separate property, namely, a share in the firm, M/s. Maheswari & Co., in which he was a partner. He was assessed as an individual in respect of his share of income from this firm during his lifetime. Iswardas, his wife, his three sons, and two unmarried daughters were members of a HUF. This undivided family was divided and all the properties were duly partitioned by a registered deed of partition dated February 23, 1959, in which Iswardas, his wife, his aforesaid sons and daughters were parties. This partition was duly recorded by the ITO, Darjeeling, under Section 25A of the Indian I.T. Act, 1922.
4. Under this deed Iswardas got the aforesaid house properties and was thereafter assessed as an individual in respect of the income of these two house properties.
5. His wife got some other properties under this deed. Similarly, his three separated sons also got some other properties and provision for maintenance was-also made for his two unmarried daughters.
6. Iswardas died intestate on June 3, 1963. He left the aforesaid persons and two other married daughters. Thereafter, the widow and the four daughters relinquished their interests in all the properties which are the subject-matter of this reference in favour of the sons of Iswardas by executing deeds of disclaimer.
7. In the assessment proceedings, the ITO held that on the death of Iswardas, his widow, three sons and four daughters inherited in equal shares the properties left by him under Section 8 of the Hindu Succession Act, 1956, and the sons became the owners of one-third share in these properties in view of the aforesaid deeds of disclaimer. He further held that the house properties were ancestral properties and the one-third share of the firm became the ancestral property in the hands of the sons and, therefore, under the Mitakshara law one-third share of all these properties became the properties of the HUF of the assessee and his sons. He, therefore, assessed the one-third income of all these properties as income of the HUF of the assessee and his sons by rejecting the claim of the assessee that the income of these properties was not includible in the assessment of the assessee in the status of a HUF.
8. Both the appellate authorities have dismissed the appeals filed by the assessee. As Mr. B. K. Bagchi, learned counsel for the revenue, has discarded the reasons given by the Tribunal as untenable in law and has argued the case from his own point of view, we will, therefore, deal only with his arguments, for, in our opinion, the question should be answered in favour of the assessee.
9. Mr. Bagchi argues that the one-third income of all these properties is includible in the assessment of the assessee in the status of a HUF. In support of this contention, he argues that the Hindu Succession Act, 1956, does not apply to these two house properties, for, according to him, Iswardas became the sole coparcener of these two house properties after the partition and these two house properties did not become the separate properties of Iswardas but remained as ancestral properties in his hands and, therefore, on his death these two properties have passed by survivorship to his sons and the grandsons under the Mitakshara law.
10. He also argues that after the partition Iswardas, his wife and theunmarried daughters constituted a Hindu joint family'and this joint familycontinued after the death of Iswardas who could adopt a son during hislifetime or a son could be adopted to him by his widow and, therefore, onthe death of Iswardas, his sons and grandsons became equally interested inthese two house properties along with the widow and the'unmarrieddaughters of Iswardas under the Mitakshara law.
11. Mr. Bagchi alternatively argues that the proviso to the main Section 6 of the Hindu Succession Act, 1956, is applicable to these two house properties and, therefore, these two properties have devolved upon the widow, sons, grandsons and the daughters of Iswardas in equal shares on his intestate death. In any event, these two properties, he argues, are ancestral properties in the hands of the sons and, therefore, their sons have acquired interest in these properties as coparceners of their -respective fathers.
12. As to the share in the aforesaid firm, Mr. Bagchi argues that the widow, sons, grandsons and the daughters of Iswardas have inherited it under Section 9 of the Hindu Succession Act, 1956, and, in any event, this property is an ancestral property in the hands of the sons and, therefore, their sons are also interested in it as coparceners of their respective fathers and accordingly the conclusion reached by the ITO was correct.
13. As the arguments of Mr. Bagchi are fully supported by the case of CIT v. Dr. Babubhai Mansukhbhai : 108ITR417(Guj) , he submits that we should follow it in which the Gujarat High Court has differed from the case of CIT v. Ram Rakshpal, Ashok Kumar : 67ITR164(All) , decided by the Allahabad High Court. He further submits that we should differ from the case of Addl. CIT v. P. L. Karuppan Chettiar : 114ITR523(Mad) , in which the Full Bench of the Madras High Court has followed the case of Ram Rakshpal, Ashok Kumar : 67ITR164(All) and has differed from the case of Dr. Babubhai Munsukhbhai : 108ITR417(Guj) .
14. As a joint family continues with two female members after the death of a male member of that family and in view of his aforesaid arguments we will not refer to the other cases cited by Mr. Bagchi as those cases do not at all deal with the Hindu Succession Act, 1956.
15. It may now be noted here that Mr. Bagchi rightly concedes before us that it was not the case of the department at any stage of the proceedings below nor it has been found by the Tribunal that, after the partition, Iswardas, his wife and the unmarried daughters constituted a joint family or that these two house properties were the joint family properties of that family. Therefore, in our opinion, Mr. Bagchi is not permitted to take this new plea.
16. Assuming, however, that he can take this new plea, we will deal with his arguments. In our opinion after the partition Iswardas was not a coparcener with anyone. His sons separated from him and also from each other. These two house properties ceased, to be the coparcenary properties after the partition. His wife got certain properties under the deed of partition in lieu of her claim against the joint family properties and, therefore, she had no further claim against these two properties received by Iswardas.
17. Provision for maintenance was also made for the unmarried daughters and although they could enforce their claim for maintenance, if any, against these two house properties in view of the provisions of the deed of partition, yet after the death of, Iswardas, in our opinion, they have inherited these two house properties in equal shares along with their mother, brothers and two other married sisters under Section 8 of the Hindu Succession Act, 1956. These female heirs have relinquished their interests in these two house properties in favour of Iswardas and, therefore, they ceased to have any claim whatsoever against these two house properties.
18. Further, Iswardas was not competent to adopt any son during his lifetime nor a son could be adopted to him by his widow in view of the mandatory provisions of Section 11 of the Hindu Adoptions and Maintenance Act, 1956. Iswardas also did not become a father of any other son after the partition. Therefore, no one could be or become a coparcener of Iswardas relating to these two house properties.
19. Mr. Bagchi argues that the Hindu Succession Act, 1956 (hereinafter referred to as 'the Act'), does not apply to these two house properties, but at the same time concedes that the case of the department all through was that this Act was applicable to all the properties left by Iswardas, The only argument made before the Tribunal by the departmental representative was that having regard to the provisions of Section 6 of the Act, the properties left by Iswardas must be treated as properties belonging to the HUF of the assessee and when the assessee would come under Section 6 of the Act, it is not necessary to look forward and see whether the assessee's case would be covered by Section 8 of the Act. The Tribunal, however, held that Section 8 of the Act was applicable. Therefore, this new plea is not also available to Mr. Bagchi. Even on the merits, we are not impressed by his arguments.
20. This Act amends and codifies the law relating to intestate succession of Hindus. The provisions of Hindu law which are in any way inconsistent with or contrary to the provisions of this Act ceased to have any effect in view of Section 4 of the Act.
21. So far as a male Hindu dying intestate is concerned, the Act deals with his interest in a coparcenary property and also with his other properties.
22. The main Section 6 of the Act says that when a male Hindu dies after the commencement of this Act, having at the time of his death an interest in a Mitakshara coparcenary property, his interest in the property shall devolve by survivorship upon the surviving members and not in accordance with this Act.
23. This section uses the words ' Mitakshara coparcenary property ' and not the words ' joint family property '. The Mitakshara rule of survivorship conies into play only where there are at least two coparceners and one of them dies leaving the other coparcener. Therefore, the main Section 6 of the Act cannot apply where a male Hindu dies without leaving a coparcener, for it is elementary that inheritance can never remain in abeyance.
24. The wife and the unmarried daughters of Iswardas were not coparceners of Iswardas under the Hindu law. Iswardas and his sons separated from each other. They ceased to be the coparceners after the partition. These two house properties also ceased to be the coparcenary properties after the partition and, therefore, the main Section 6 of the Act cannot apply to these two house properties.
25. Similarly, the proviso to main Section 6 of the Act has no application because at the time of his death Iswardas had no coparcener, nor these two house properties were his coparcenary properties. Moreover, the proviso to main Section 6 applies only where a male Hindu dies intestate leaving at the time of his death an interest in a coparcenary property and leaving behind him a coparcener and a female relative specified in Class I of the Schedule or a male relative claiming through a female relative specified in that class. It is only when these pre-conditions are fulfilled his interest in the Mitakshara coparcenary property shall under the proviso devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivorship.
26. Further, ' Section 6 ' of the 'Hindu Succession Act, 1956, ' has no application to property received by a member of a joint family on partition ' as said by the Supreme Court in its judgment dated February 20, 1970, in Civil Appeal No. 115 of 1967 (Arunachalathammal v. Ramachandran Pillai) and quoted by the Madras High Court in Tirupurasundari Ammal v. Srinivasam Pittai, AIR 1972 Mad 264 and, therefore, it can no longer be argued that Section 6 or the proviso to it is applicable to these two house properties.
27. Barring Section 5, this Act is a comprehensive and self-contained code on all matters relating to intestate succession of all the Hindus. Section 6 deals with the coparcenary interest in the Mitakshara coparcenary property. Section 8 deals with all other properties of a male Hindu.
28. Section 8 says that the ' property of a male Hindu dying intestate shall devolve according to the provisions of this Chapter '. It uses the words ' the property of a male Hindu '. No word of limitation is attached to this expression. Therefore, this expression includes all properties, whatever their nature and character may be, except the interest of a male Hindu in a Mitakshara coparcenary property which has been taken out of the purview of this section by the main Section 6 of the Act where it applies. But, again, where the proviso to the main Section 6 is applicable, the interest of a male Hindu dying intestate in a coparcenary property must devolve by intestate succession under this Act, that is to say, under Section 8 of the Act and not by survivorship.
29. In other words, the Mitakshara rule of survivorship does not apply where the proviso to main Section 6 is applicable. ' Further, the interest of a coparcener in the coparcenary property is his property during his lifetime and, therefore, it falls squarely within the word ' property ' used in Section 8 which does not make any distinction between a property received by a coparcener oil partition and his self-acquired property.
30. Under Section 8 of the Act property of a male Hindu on his intestate death devolves, firstly, upon his heirs specified in Class I of the Schedule and if there is no such heir then upon the heirs specified in Class II and if there is no such heirs then upon his agnates and in the absence of the agnates upon his cognates.
31. The heirs specified in Class I of the Schedule take the property simultaneously and to the exclusion of all other heirs as stated in Section 19 of the Act. Section 19 further provides that if two or more heirs succeed together to the property of an intestate, they shall take the property per capita and not per stirpes and also as tenants-in-common and not as joint tenants.
32. The proviso to main Section 6 and Section 8 read with the Schedule and Section 19 of the Act clearly show that the nature and the character of an ancestral property under the Mitakshara law have been completely abrogated where these provisions of the Act are applicable. An ancestral property inherited by a son on the intestate death of his father under these provisions of the Act cannot, therefore, be a coparcenary property at all in his hands.
33. Generally speaking, under the Mitakshara Law, a father, his sons, grandsons and great grandsons are the coparceners in respect of the coparcenary property. On the death of any one of them his interest in the coparcenary property passes not by succession but by survivorship to the surviving coparceners. A separate property of the father inherited by a son on the intestate death of his father is an ancestral property and he, his sons, grandsons and great grandsons are interested in it as coparceners. On the death of any one of them his interest in that property passes by survivorship and not by succession under the Mitakshara law.
34. A grandson whose father is alive and a great grandson whose father or grandfather is alive are not the heirs under Section 8 read with the Schedule to the Act. In other words, they are totally excluded from inheritance not only in respect of a separate property of a male Hindu but also in respect of his interest in the coparcenary property where the proviso to the main Section 6 applies which abrogates the rule of survivorship.
35. A married daughter and also a married daughter of a predeceaseddaughter of a male Hindu are heiresses under Section 8 read with class I of theSchedule to the Act. They are members of the joint family of their respective husbands. The property inherited by them either under the proviso to the main Section 6 or under Section 8 of the Act is not an ancestral prope (sic) in their respective hands. They are also not coparceners of anyone (sic) respect of any property whatsoever, for a female can never be a copa (sic) under the Mitakshara law.
36. As a property inherited by a female relation is neither a (sic) property nor a coparcenary property in her hands, her sons do (sic) any interest whatsoever in that property during her lifeti (sic)Section 14 says that any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner.
37. Under the Mitakshara law a coparcener cannot dispose of his interest in the coparcenary property by a will, but this bar has been totally removed by Section 30 of the Act and where the proviso to the main Section 6 applies his interest in the coparcenary property on his death devolves by testamentary succession and not by survivorship.
38. Under the Mitakshara law a property inherited by a daughter on the intestate death of her father is not an ancestral property in her hands, as already stated. Similarly, under the Act a property inherited by a female relation of a male Hindu is not an ancestral property in her hands. Under the Act it is her absolute property and no one has any right whatsoever in it during her lifetime. She is entitled to dispose of this property in any manner she likes and the property so transferred by her does not become the ancestral property in the hands of the transferee. And it is beyond dispute that relinquishment of the entire interest in a property is a transfer of that property.
39. Where a father is alive his male and female issues are totally excluded from inheritance by Section 8 and also by the proviso to main Section 6 of the Act for the obvious reason that they will inherit the property absolutely, and in equal shares on the intestate death of their father in terms of the provisions of the Act. And, in view of the aforesaid provisions, including Sections 4(1)(a), 14 and 19 of the Act and the Schedule, it will be incorrect to say that the rule of survivorship and the Mitakshara rule of intestate succession to the separate property of a male Hindu including the nature and character of an ancestral property and the capacity of a son in which he inherits the property of his deceased father under that law are still applicable where the aforesaid provisions of the Act are directly applicable.
40. Therefore, on the facts and circumstances of the case, it must be held that the widow, the sons and all the daughters of Iswardas have inherited all these properties absolutely under Section 8 of the Act in equal shares and per capita and not per stirpes, and as tenants-in-common and not as joint tenants in terms of Section 19 of the Act. The widow and the daughters have relinquished their interest in all these properties in favour of the sons of(sic) ardas as admitted by Mr. Bagchi before us and, therefore, each son of(sic) ardas became the absolute owner of one-third share in all these proper-(sic) nce, their respective sons have no interest whatsoever in these(sic) during the lifetime of their respective fathers and no part of the(sic) ese properties is includible in the assessment of the assessee in(sic) a HUF.
41. In the premises, we are not impressed by the arguments of Mr. Bagchi and answer the question in the negative and in favour of the assessee without making any order as to costs.
Sudhindra Mohan Guha, J.
42. I agree.