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Commissioner of Income-tax Vs. P.N. Talukdar - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference Nos. 67 of 1976 and 77 of 1979
Judge
Reported in[1982]135ITR628(Cal)
ActsIncome Tax Act, 1961 - Section 2(31); ;Constitution of India - Article 37
AppellantCommissioner of Income-tax
RespondentP.N. Talukdar
Appellant AdvocateAjit Sengupta, Adv.
Respondent AdvocateAninda Mitra and ;R.N. Dutta, Advs.
Cases ReferredMangru Meya v. Commissioners of
Excerpt:
- sabyasachi mukharji, j.1. this reference has been made to this court in respect of the assessment to income-tax for the assessment year 1970-71, corresponding to the previous year which ended on 31st march, 1970. the assessee was governed by the dayabhaga school of hindu law.2. one anath bandhu de talukdar had three sons: t.n. talukdar, p.n. talukdar (the assessee), and one m. talukdar and two daughters. during the accounting year the assesses had lived with his sons jointly and the sons were sanjoy, sanjit and ranjit, at that time all of them being minors, along with the assessee's wife, mrs. meena talukdar. the assessee's father had left a house at deoghar and another house at hindustan park, calcutta. the assessee gave a declaration on april 19, 1969, and it may not be inappropriate to.....
Judgment:

Sabyasachi Mukharji, J.

1. This reference has been made to this court in respect of the assessment to income-tax for the assessment year 1970-71, corresponding to the previous year which ended on 31st March, 1970. The assessee was governed by the Dayabhaga school of Hindu law.

2. One Anath Bandhu De Talukdar had three sons: T.N. Talukdar, P.N. Talukdar (the assessee), and one M. Talukdar and two daughters. During the accounting year the assesses had lived with his sons jointly and the sons were Sanjoy, Sanjit and Ranjit, at that time all of them being minors, along with the assessee's wife, Mrs. Meena Talukdar. The assessee's father had left a house at Deoghar and another house at Hindustan Park, Calcutta. The assessee gave a declaration on April 19, 1969, and it may not be inappropriate to refer to the said declaration. The assessee stated in the said declaration that the assessee possessed and owned as his self-acquired property, several movable properties in the form of shares in companies, credit balance in banks, etc., and immovable properties including residential house at No. 5, Sunny Park, Calcutta, and that, being desirous, the assessee, thereafter, stated, inter alia, as follows:

'That being desirous of vesting the said premises No. 5, Sunny Park, Calcutta, including furniture, fixture, fittings, electric installations, air-conditioning plant attached to or embodied with the said premises, in the joint family comprising of myself, my wife, Mrs. Meena Talukdar and minor sons, Sanjoy, Sanjit and Ranjit, I have on the auspicious day of 1st Baisakh, 1376 (corresponding to 14th day of April, 1969) unequivocally and irrevocably transferred to and thrown into the common hotchpot of the said family the said property being premises No. 5, Sunny Park, Calcutta, more particularly described hereunder.'

3. In the assessment proceeding for the relevant year the assessee had claimed that he had thrown his interest in the immovable property along with the movable arid immovable properties to the Hindu joint family by declaration dated 19th April, 1969, referred to hereinbefore. The ITO held that the assessee was a Hindu governed by the Dayabhaga school of Hindu law and as such it could not be said that, he could throw his property to the HUF. In those circumstances the ITO held that the notional income of the property at No. 5, Sunny Park, Calcutta, was assessable in the hands of the assessee since he was the owner of the property. He took the bona Me value of the property at 10% of the income out of which he deducted l/6th and made the assessment accordingly.

4. The assessee went up in appeal before the AAC. He was, however, unsuccessful there. The AAC relied on certain authorities and upheld the order of the ITO. The assessee went up in further appeal before the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal referred to several decisions and to Article 37 of the Constitution of India and in view of the directive principles enshrined in the Constitution the Tribunal held that the assessee had thrown his self-acquired properties including the residential house at No. 5, Sunny Park, Calcutta, into the common hotchpot of the HUF consisting of himself, his wife and his minor sons as mentioned in the declaration and from this it followed that the dwelling house income could not be included in the total income of the assessee, the house at No. 5, Sunny Park, being an HUF property. In those circumstances, the Tribunal under Section 256(1) of the I.T. Act, 1961, referred a particular question : inasmuch as the revenue was not satisfied with the question as framed, there was an application made to this court under Section 256(2) of the I.T. Act, 1961, and pursuant to the direction of the High Court, the following question which calls for determination has been referred to this court. 'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the house at No. 5, Sunny Park, Calcutta, which was originally the self-acquired property of the assessee, since deceased, a Hindu governed by the Dayabhaga School of Hindu Law, became a Hindu undivided family property by the act and conduct of the assessee since deceased and that accordingly the income of the said property was not. liable to be included in the total income of the assessee ?'

5. The first question that requires cansideration in this case, is, whether the house property at No. 5, Sunny Park, Calcutta, which admittedly was the self-acquired property of the assessee, since deceased, became a HUF property. The second question which requires consideration as a matter of course is, whether the property was liable to be included in the total income of the assessee. In order to determine this question it is necessary to find out whether for a Hindu governed by the Dayabhaga School of Hindu law it is possible to blend or impress or throw his property into joint family property. Before we do so it may not be inappropriate to refer to certain decisions of the Judicial Committee to which our attention was drawn. We may first refer to the decision on which reliance was placed on behalf of the revenue in the case of Gouranga Sundar Mitra v. Mohendra Narayan Mitra : AIR1927Cal776 . There the Division Bench of this court held that under the Dayabhaga school there could not be a joint family consisting of the father and the sons because so long as the father was alive he was the master. The Division Bench observed that the sons might acquire separate properties of their own but they had no concern whatsoever with the joint family property if any property could be so called during the lifetime of the father. Sons, after the death of the father, might form a normal Hindu joint family but the test is whether they were joint in food, worship and estate. Reliance was placed on the above observations of the court in aid of the proposition that the assessee and his sons and wife could not be formed into a joint family because so long as the assessee was alive others in the said joint family had no interest or could not claim any interest in the property in view of the principles applicable to the Dayabhaga school of law. It has to be borne in mind that the controversy in that case arose in respect of certain shares in the property by the sons of the brothers. There the two brothers, Rash Behari and Jadav, combined their earnings in order to acquire properties and the whole of the property in suit belonged to the two brothers equally, at least that was the case of the plaintiff. The learned subordinate judge, according to the Division Bench of this court, had started with an erroneous notion of what was a true joint Hindu family in Bengal. In that context the Division Bench made the aforesaid observations upon which reliance was placed on behalf of the revenue. The Division Bench observed that the learned subordinate judge started with the observation that during the lifetime of Kali Prosad, the father and the sons had formed a joint Hindu family. The next question was whether it can be said that the five brothers, after the death of the father, formed a normal Hindu joint family. The test, of course, laid down by the Division Bench must be whether they were joint in food, worship and estate. The Division Bench found that the brothers were not living together in the properties. It is in that context that the observation of the Division Bench seemed to have proceeded to view of the claim to the property of the brothers' sons that the expression 'Hindu joint family' is synonymous with the expression 'coparcenary property', a premise which we shall presently notice in the context of our present controversy, has been clearly explained by the Judicial Committee as well as the Supreme Court here. The principle in the context of the controversy of the brother's right to a joint family property for a Hindu governed by the Dayabhaga school of law was again reiterated in another Division Bench judgment of this court in the case, of Hemchandra Ganguli v. Matilal Ganguli : AIR1934Cal68 . There the Division Bench held that under the Dayabhaga school of Hindu law prevalent in Bengal there could not be a joint family consisting of the father and the sons. So also brothers living in commensality were not members of a joint Hindu family governed by the Dayabhaga so as to enable the brothers to claim the self-acquisition of a brother in more affluent circumstances as acquisition of the joint family, unless these other brothers proved that they had also contributed to the acquisition of the property claimed by them as acquisition by the joint family. It was, further, reiterated that property which was originally self-acquired may become joint property, if it had been voluntarily thrown into the joint stock with the intention of abandoning all separate claims upon it. A clear intention to waive separate rights must, however, be established and will not be inferred from acts attributable to various causes. The Division Bench further reiterated that where no nucleus of joint property was admitted or proved, the onus was upon the party asserting that the property was not the self-acquired property of an individual member of the family but was thrown into common stock. It has to be borne in mind that while the Division Bench reiterated the principle that property which was originally self-acquired might become joint property if it. had been voluntarily thrown into the joint stock with the intention of abandoning all separate claims upon it, a principle upon which learned advocate for the assessee sought to rely, the other observation of the Division Bench was in the context of the claim in the property by a son as a coparcenary property. Here also the expression 'joint family' under the Dayabhaga school of law and the claim to property was being used in the context of a coparcenary, not in the context of joint Hindu family simpliciter. The principles upon which the right of a coparcenary and the right of a joint family are based are to be found enumerated in Mulla's Hindu Law, 14th Edn. We may first refer to Article 213 which deals with a Hindu coparcenary, where the learned editor of Mulla on the principles of Hindu law reiterates that a Hindu coparcenary was a much narrower body than the joint family. The Hindu coparcenary, according to Mulla, included only those persons who acquired interest in the joint coparcenary by birth and they were the sons, grandsons and great-grandsons of the holder of the joint property for the time being or in other words the three generations next to the holder in unbroken male descent.

6. It was explained by Mulla, in the said article, that to understand the formation of a coparcenary, it was important to note the distinction between ancestral property and separate property. Property inherited by a Hindu from his father, father's father or father's father's father was ancestral property. Property inherited by him from other relations were his separate property. The essential feature of ancestral property was that if the person inheriting it had sons, grandsons or great-grandsons, they become joint owners with him, they become entitled to it by reason of their birth. Ancestral property was only a species of coparcenary property. In Article 214 Mulla explained the formation of a coparcenary. The concept of a joint Hindu family constituting a coparcenary was that of a common male ancestor with his lineal descendants in the male line within four degrees counting from and inclusive of such ancestor or three degrees exclusive of the ancestor. It was further reiterated that a coparcenary was purely a creature of law and it could not be created by an act of parties, save in so far that by adoption a stranger might be introduced as a member thereof. Article 212 along with other articles, which we have set out hereinbefore, in Chap. XII of Mulla's Hindu Law explains that a joint Hindu family consists of, unlike a coparcenary, all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. It is further reiterated that a joint and undivided family is the normal condition of a Hindu society. An undivided Hindu family is ordinarily joint not only in estate but also in food and worship. The existence of a joint estate is not an essential requisite to constitute a joint family and a family which does not own a property may nevertheless be a joint family. Where there is a joint estate and the members of the family become separate in estate, the family ceases to be joint. Mere severance in food and worship does not operate as a separation. It has been further explained in Article 212 that a joint or undivided Hindu family may consist of a single male, member and widows of deceased male members. The property of a joint family does not cease, to be a joint family property belonging to any such family merely because the family is represented by a single male member. Our attention was drawn to Article 227 which deals with property thrown into common stock. It stipulates that property which was originally the separate or self-acquired property of a member of a joint family may, by operation of the doctrine of blending, 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. A clear intention to waive his separate rights must be established and it will not be inferred from the mere fact of his allowing the other members of the family to use it conjointly with himself nor from the fact that the income of the separate property was used to support a son nor from the mere failure of a member to keep separate accounts of his earnings. In Clause 2(a), it is reiterated by the learned editor of Mulla's Hindu Law that the basis of the doctrine is the existence of coparcenary and coparcenary property as well as the existence of the separate property of a coparcener and the doctrine cannot be applied to a Hindu female who has acquired immovable property from her father, for, she is not a coparcener at all. The said article, appearing in Chap. XII, deals with Mitakshara school of Hindu law. In Clause (2b) of Article 227 it is stated that the act by which the coparcener throws his separate property into the common stock is a unilateral act and a matter of individual volition. As soon as he declares his intention to treat his self-acquired property as that of the joint family the property assumes the character of joint family property. Mulla further states that the above rules which deal with coparcenary property in Hindu law would apply also to brothers living together and forming a joint family governed by the Dayabhaga. Chapter XIII which deals with the incidence of Dayabhaga law reiterates in Article 273 that according to the Mitakshara law, each son acquired at his birth, an equal interest with his father in all ancestral property held by the father, and on the death of the father the son takes the property, not as his heir, but by survivorship. According to the Dayabhaga law, the sons do not acquire any interest by birth in ancestral property. Their rights arise for the first time on the father's death. On the death of the father, the sons take such of the property as was left by him, whether separate or ancestral, as heirs and not by survivorship. Since the sons did not take any interest in ancestral property in their father's lifetime there could be no coparcenary in the strict sense of the word between a father and sons, according to the Dayabhaga law, so far as regards ancestral property. In Article 275 it has been, reiterated that since the sons, according to the Dayabhaga law, did not acquire any interest by birth in ancestral property, they could not demand a partition of such property from the father as they could under the Mitakshara law, nor could they call for an account of the management thereof from the father as they could under the Mitakshara law. As great reliance was placed on Article 227, it may not be inappropriate to set out the said article which is as follows :

'277. Coparceners according to the Dayabhaga, law.--According to the Mitakshara law, the foundation of a coparcenary is first laid on the birth of a son. The son's birth is the starting point of a coparcenary according to that law. Thus if a Hindu governed by the Mitakshara law has a son born to him, the father and the son at once become coparceners.

According to the Dayabhaga law, the foundation of a coparcenary is first laid on the death of the father. So long as the father is alive, there is no coparcenary in the strict sense of the word between him and his male issue. It is only on his death leaving two or more male issues that a coparcenary is first formed. Before the Hindu Women's Rights to Property Act, 1937, his male issues inherited his property, separate as well as ancestral, as his heirs, but as between themselves they held it as coparceners, and the property inherited from the deceased was coparcenary property. On the death of any one of the coparceners, his heirs succeeded to his share in the coparcenary property, and they became members of the coparcenary. Such heirs, in default of male issue, could be his widow or widows, or his daughter or daughters. These two, though females got into the coparcenary, representing the share of their husband or father as the case might be. A coparcenary under the Dayabhaga law could thus consist of males as well as females. Under the Mitakshara law, no female can be a coparcener with male coparceners. But even under the Dayabhaga law a coparcenary could not start with females. Thus, if a person died leaving two or more widows, or two or more daughters, they could not constitute a coparcenary......

In case of a male Hindu governed by the Dayabhaga school dying intestate and leaving ancestral property, of which, according to the Dayabhaga law as interpreted by the courts he was in the position of an absolute owner, such property also will (as in case of his separate or self-acquired property) devolve by succession according to the provisions of that Act, upon the heirs there specified.

The question of the formation of a coparcenary by operation of law and as to who can be members of such coparcenary in case of a male Hindu governed by the Dayabhaga School dying intestate after the coming into operation of that Act leaving separate or ancestral property and leaving him surviving as his heirs, inter alia, two or more male issue will depend on the same principles on which under the previous law a coparcenary could be formed consisting of males and females.'

7. We are, however, not concerned with the question of the Hindu Women's Rights to Property Act in this, reference. So, we have left out that portion from the above quotation. In Article 286, it has been stated that the presumption with regard to joint family and joint family property which applied to cases under the Mitakshara law would seem to apply also to cases under the Dayabhaga law. But there was no presumption under the Dayabhaga law that property purchased by a son in the father's name, in the father's lifetime and of which the son had been in possession since the purchase, was joint family property. The burden of proof in such a case lay on those who deny the ownership of the son. Where the property purchased by one of the sons was a house even though the father and the sons were living in it, the onus of proving that it was thrown into the common stock, or that they also contributed to the acquisition, was on the other sons. Therefore, the principles that follow from the enunciation of the above distinctive feature mentioned in Mullet's Hindu Law are that a coparcenary is different from a joint family. Secondly, right to a property in coparcenary is by the birth of a son. Thirdly, in the strict sense of the term, there could not be, even after the death of the father, in respect of Hindu law governed by Dayabhaga law, any coparcenary property.

8. If we bear the above principles in mind we may appreciate the observations of the Judicial Committee in the case of Kalyanji Vilhaldas v. CIT [1937] 5 ITR 90, where the Judicial Committee observed that the income from separate and self-acquired property of a Hindu which had not been thrown into a common stock was assessable to super-tax as the income of an individual and not as an income of the HUF even though he had sons from whom he was not divided inasmuch as the sons had no interest in such income. The existence of a wife or of a wife and daughters did not make the income derived from the ancestral property, income of an HUF for purposes of assessment to super-tax. There, Sir George Rankin, delivering the opinion of the Judicial Committee, observed that the expression 'Hindu undivided family' was used in the Indian I.T. Act with reference not to one school only of Hindu law but to all schools and it was a mistake to read it as equivalent to a narrower expression, 'Hindu coparcenary.' It could not be said that no female could become a member of a joint Hindu family. It is in this context also that the Judicial Committee in the case of Rajanikanta Pal v. Jagamohan Pal [1923] L.R. 50 IA 173 ; AIR 1923 PC 57, observed that where a member of a joint Hindu family blended his self-acquired property with the property of a joint family either by bringing his self-acquired property into the joint family account or by bringing it to a joint family account or separate account the effect was that all the properties so blended became the joint family properties. The above rule applied to the case of brothers living together forming a joint family governed by the Dayabhaga system. Here, Lord Buckmaster, delivering the opinion of the Judicial Committee, it is to be noted, used the expression a Hindu governed by Dayabhaga blending his property into a Hindu joint family and had not used the expression coparcenary as such so as to indicate the sons living together in food, worship and estate after the death of the father forming a coparcenary, because, as we have noted, the significance of father who has the right along with lineal three male descendants becoming a coparcener and acquiring a right in the property by birth can never be applicable to the Dayabhaga school of Hindu law even in the case where his sons were living in joint food, worship and estate of the Dayabhaga school of Hindu law. This distinction, in our opinion, has to be borne in mind and would be relevant while we shall deal with one of the arguments advanced on behalf of the revenue before us.

9. In the case of N.V. Narendranath v. CWT : [1969]74ITR190(SC) , the Supreme Court had occasion to deal with the concept of coparcenary and joint family in the context of W.T. Act, 1957. There the Supreme Court observed that where a coparcener having a wife and two minor daughters and sons had not received his share of joint family properties on partition, such property in the hands of the coparcener belonged to the joint Hindu undivided family of himself, his wife and minor daughters and could not be assessed as his individual property for the purposes of wealth-tax. It must be reiterated that the Supreme Court was dealing with a case where the question arose in respect of an HUF governed by the Mitakshara school of law. The Supreme Court reiterated that there need not be at least two male members to form an HUF as a taxable unit for the purpose of W.T. Act, 1957. The expression 'Hindu undivided family' in the Act was used in the sense in which a Hindu joint family was understood according to the Supreme Court, in the personal laws of the Hindus. Under the Hindu system of law, the Supreme Court pointed out, a joint family might consist of a single male member and his wife and daughters and there was nothing in the scheme of the W.T. Act to suggest that an HUF to be assessable as a unit must consist of at least two male members. The Supreme Court observed at pp. 192 and 193 (of 74 ITR) of the report that a Hindu joint family consisted of all persons lineally descended from a common ancestor and included their wives and unmarried daughters and the Supreme Court reiterated that a Hindu coparcenary was a much narrower body than a Hindu joint family which included only those persons who acquired by birth an interest in the joint or coparcenary property, those being the sons, grandsons and the great grandsons of the holder of the joint property for the time being. In this connection, the Supreme Court referred to the observations of George Rankin J., which we have noted hereinbefore.

10. In the case of CWT v. Smt. Champa. Kumari Singhi : [1972]83ITR720(SC) , the expression 'Hindu undivided family' appearing in Section 3 of the W.T. Act, [ 957, fell for consideration before the Supreme Court and the Supreme Court observed that the said expression included a 'Jain undivided family'. The Supreme Court reiterated that the words 'Hindu undivided family' were not used in the context of statutes with reference to one school of Hindu law only but to all schools of law. The question may be looked at from another point of view as was looked at by the Supreme Court in the case of Surjit Lal Chhabda v. CIT : [1975]101ITR776(SC) . There, the Supreme Court observed that a joint family under the Dayabhaga law was like a Mitakshara family normally joint in food, worship and estate. In both systems the property of a joint family might consist of ancestral property, joint acquisitions and self-acquired properties thrown into the common stock. In fact, whatever be the school of Hindu law by which the person was governed, the basic concept of an HUF in the sense of who could be its members was just the same. Generally speaking, the Supreme Court noted, the normal state of every Hindu family was joint and, in the absence of proof of a division, such was the legal presumption. A joint Hindu family with all its incidence, the Supreme Court pointed out, was a creature of law and could not be created by an act of parties except to the extent to which a stranger might be affiliated to the family by adoption. At p. 782 (of 101 ITR) the Supreme Court again reiterated that a Hindu coparcenary was a much narrower body than a joint family. It included only those persons who acquired by birth an interest in the joint or coparcenary property and referred to the observations of George Rankin J., mentioned hereinbefore. The Supreme Court further observed that outside the limits of coparcenary there was a fringe of persons, male and female, who constituted an undivided or a joint family. There was no limit to the number of persons who could compose it nor their remoteness from the common ancestor or their relationship with one another. A joint Hindu family consisted of persons lineally descended from a common ancestor and included their wives and their unmarried daughters and reiterated that a joint Hindu family with all its incidence was a creature of law and could not be created by an act of the parties. If that' is the position and if it is the creature of law, which, in our opinion, is contemplated under Section 2(31) in the definition of 'person' under the I.T. Act, 1961, wherein under Clause 2 of Section 2(31) 'person ' includes a 'Hindu undivided family', the section does not speak of a Hindu coparcenary as such (but of) an HUF as a taxable unit. Now, an HUF may be taxable if it has a taxable income or property or may be a non-taxable HUF. It is important to bear in mind this distinction because learned advocate for the revenue sought to assert that an HUF must have a property in order to constitute a joint HUF. There is no warrant for such an assumption. He sought to rely for this proposition on the observations of the two Division Bench decisions of this court, referred to in the beginning of this judgment. But, as we have explained in the beginning, the said two decisions were rendered in entirely different contexts, viz., in the context of right of brothers' son to the property inherited from the father by the brothers living in joint food, worship and estate. The Supreme Court also in this connection noted in the aforesaid decision at p. 781, viz., : [1975]101ITR776(SC) , that Section 2(31) of the I.T. Act, 1961, provides that the expression 'person' would include, inter alia, an HUF. The Supreme Court further noted that the HUF had not been defined in the I.T. Act and the reason for the omission was that the expression had a well-known connotation under the Hindu law and, being aware of it, the Legislature did not want to define it separately. Therefore, the expression 'Hindu undivided family', the Supreme Court noted in the aforesaid decision, must be construed in the sense in which it was understood in Hindu law. In this connection reliance was placed on Mayne's Hindu Law, 11th Edn., pp. 364-365, as also on Mulla's Hindu Law and the decision of the Bombay High Court in the case of CIT v. Gomedalli Lakshminarayan [1935] 3 ITR 367 . This position was also explained by the two Division Bench judgments and the first one to which we must refer is the decision of the Madras High Court in the case of R. Submmania Iyer v. CIT : [1955]28ITR352(Mad) . There, the Division Bench observed that under the Hindu law, in order that a joint family might exist, it was not necessary that there should be a joint family property. A father and his son constituted the members of a joint Hindu family and oven if there was no ancestral nucleus or other joint family property there was nothing to prevent the father from impressing upon any self-acquired property belonging to him the character of joint family property. No formalities were necessary in order to bring this about and the only question was one of intention on the part of the father to abandon his separate rights and invest it with the character of joint family property. Now, this observation was made in the context of a Hindu governed by the Mitakshara school of law. Whether the observation of the court that where there was no nucleus of coparcenary property in the Mitakshara school of law it was possible to impress self-acquired property as coparcenary property was correct or not, we need not express any opinion in view of certain decisions to which our attention was drawn on behalf of the revenue. But in so far as the Division Bench of the Madras High Court observed that under the Hindu law, in order that a joint family might exist, it was not necessary that there should be a joint family property, in our opinion, the Division Bench of the Madras High Court was expressing the general incidence of Hindu law applicable both to the Dayabhaga and Mitakhshara schools of law. To the same effect was the observation of a Division Bench of the Bombay High Court in the case of Damodar Krishnaji Nirgude v. CIT : [1962]46ITR1252(Bom) , in dealing with the question whether Section 16(3) of the Indian I.T. Act, 1922, could apply to property thrown by a Hindu into the joint family property. The Division Bench of the Bombay High Court observed that it was open for a member of the HUF to throw his self-acquired property into the family hotchpot even though there was no joint or ancestral property. The Division Bench further reiterated that throwing of self-acquired property into the hotchpot of the family did not amount to a transfer of such property by the person to either his wife or his son and the partition of such property between the person and his Wife and minor would not materially affect the effect or validity of the partition, a view on the aspect of the question with which we are not directly concerned and we do not propose to express any opinion on the point but only we point out that it is to be noted in this connection that it was possible for a member of an HUF to throw his self-acquired property in the family hotchpot though the observation was made in respect of a Hindu governed by the Mitakshara school of law.

11. Reliance was also placed on the decision in the case of CWT v. Bishwanath Chatterjee : [1976]103ITR536(SC) . There also the Supreme Court was dealing with the expression 'belonging to the assessee' under Section 2(m) and Section 3 of the W.T. Act, 1957. The Supreme Court noted that the liability to pay wealth-tax under Section 3 read with Section 2(m) of the W.T. Act, 1957, arose out of the ownership of the asset and not otherwise. Mere possession or joint possession unaccompanied by the right of ownership of property would, therefore, not bring the property within the definition of 'net wealth', for, it would not then be an asset belonging to the assessee. The properties of a Hindu male governed by the Dayabhaga school of Hindu law, held on his death by his heirs, were not assessable to wealth-tax jointly in the status of a joint HUF.

12. Our attention was also drawn to the observations of the Bombay High Court in the case of CIT v. M.M. Khanna : [1963]49ITR232(Bom) , a decision on which the Tribunal placed a good deal of reliance. There the Division Bench of the Bombay High Court observed :

'A joint Hindu family springs from a Hindu male and every Hindu male can be the stock of a fresh descent constituting a joint Hindu family or a Hindu coparcenary. Where, from a Hindu male a joint Hindu family springs into existence, this family goes on having its different branches and sub-branches. Each branch starts with the male descendant of the common ancestor and each sub-branch with the male descendant of the head of the branch. While the entire group proceeding from the common ancestor with its several branches and sub-branches in the normal undivided state is a Hindu joint family, each of the branches and each of sub-branches again is a Hindu joint family according to the concept of a joint family under the Hindu law. It is, therefore, possible for a main Hindu undivided family to be composed of a large number of branch families, each of the branches itself being a Hindu joint family and so also the sub-branches of those branches.

Where a Hindu joint family consists of branch families each of the branch families may possess property which constitutes the joint family property of that branch alone and in which the other branches or the main Hindu family as such have no right or interest.'

13. The Division Bench further observed that under the Hindu law any member of a joint family might throw his self-acquired property in the hotchpot of the family to which he belonged and thus make it the joint family property of the said family. The Division Bench further reiterated that the throwing of property into the common hotchpot of the joint family was possible even if the family hotchpot was empty, i.e., even if there was no nucleus of the family, though the context in which the observation of the Division Bench of the Bombay High Court was made was in the context of a Hindu governed by the Mitakshara school of law. But as we have noted that so far as the concept of a Hindu joint family is concerned unlike the concept of a Hindu coparcenary, a Hindu joint joint family is a common feature of Hindu law of both the schools. .

14. By throwing a self-acquired property into the common hotchpot it could be made a joint family property. Learned advocate for the revenue sought to urge that it was possible only, if there was a coparcenary property, which in the case of a Dayabhaga school of Hindu law would only be the property, which would be enjoyed by the brothers living in a common mess, worship and estate, that the throwing of the self-acquired property into the joint hotchpot can arise. In this connection he referred to the decision in the case of Goli Eswariah v. CGT : [1970]76ITR675(SC) . There the Supreme Court observed that the unilateral declaration of a Hindu coparcener, whereby he threw his self-acquired property into the common stock of joint family property, did not amount to a transfer so as to attract the provisions of the G.T. Act, 1958. The doctrine of throwing into the common stock inevitably postulated that the owner of a separate property was a coparcener who had an interest in the coparcenary property. The separate property of the coparcener ceased to be separate property and acquired the characteristics of joint family or ancestral property not by any physical mixing with the ancestral property but by his own volition and intention and by his waiving and surrendering his separate rights in it as separate property. The Supreme Court at p. 678 of the 76 ITR observed as follows:

'To pronounce on the question of law presented for our decision, we must first examine what is the true scope of the doctrine of throwing into the 'common stock' or 'common hotchpot'. It must be remembered that a Hindu family is not a creature of a contract. As observed by this court in Mallesappa Bandeppa Desai v. Desai Mallappa, : [1961]3SCR779 , the doctrine of throwing into the common stock inevitably postulates that the owner of separate property is a coparcener who has an interest in the coparcenary property and desires to blend his separate property with the coparcenary property. The existence of a coparcenary is absolutely necessary before a coparcener can throw into the common stock his self-acquired properties. The separate property of a member of a joint Hindu family may be impressed with the character of joint family property if it is voluntarily thrown by him into the common stock with the intention of abandoning his separate claim therein. The separate property of a Hindu ceases to be separate property and acquires the characteristics of joint family or ancestral property not by any physical mixing with his joint family or his ancestral property but by his own volition and intention by his waiving and surrendering his separate rights in it as separate property. The act by which the coparcener throws his separate property in the common stock is a unilateral act. There is no question of either the family rejecting or accepting it. By his individual volition he renounces his individual right in that property and treats it as a property of the family. No longer he declares his intention to treat his self-acquired property as that of the joint family property, the property assumes the character of joint family property. The doctrine of throwing into the common stock is a doctrine peculiar to the Mitakshara. school of Hindu law. When a coparcener throws his separate property into the common stock, he makes no gift under Chapter VII of the Transfer of Property Act, In such a case there is no donor or donee. Further, no question of acceptance of the property thrown into the common stock arises.'

15. There the Supreme Court observed that the existence of a coparcenarywas absolutely necessary before a coparcener could throw into the common stock his self-acquired properties. Learned advocate for the revenuesought to urge that this passage indicates that unless there was some coparcenary property there could not be throwing of any property into a common hotchpot. As we have noted, the existence of a Hindu joint family is quite distinct from a Hindu coparcenary. It is further clear from the principle enunciated, that the existence of a joint family does not depend upon the existence of a joint property. Therefore, in the case of a Hindu governed by the Dayabhaga school, the separate property of a member of a joint Hindu family might be impressed with the character of joint family property if it is voluntarily thrown by him into the common stock with the intention of abandoning his separate claim therein. The separate property of a Hindu ceases to be separate property and acquires the characteristics of joint family or ancestral property not by any physical mixing with his joint family or his ancestral property but by his own volition and intention by his waiving and surrendering his separate rights in it as separate property. Reliance was also placed on the decision in the case of Mallesappa Bandeppa Desai v. Desai Mallappa, : [1961]3SCR779 . The Supreme Court observed at p. 1271, in para. II of the judgment, as follows:

'The question which falls for our decision is : Does this principle apply in regard to a property held by a Hindu female as a limited owner In bur opinion, it is difficult to answer this question in favour of the appellants. The rule of blending postulates that a coparcener who is interested in the coparcenary property and who owns separate property of his own may by deliberate and intentional conduct treat his separate property as forming part of the coparcenary property. If it appears that property which is separately acquired has been deliberately and voluntarily thrown by the owner into the joint stock with the clear intention of abandoning his claim on the said property and with the object of assimilating it to the joint family property, then the said property becomes a part of the joint family estate; in other words, the separate property of a coparcener loses its separate character by reason of the owner's conduct and get thrown into the common stock of which it becomes a part. This doctrine, therefore, inevitably postulates that the owner of the separate property is a coparcener who has an interest in the coparcenary property, and desires to blend his separate property with the coparcenary property, There can be no doubt that the conduct on which a plea of blending is based must clearly and unequivocally show the intention of the owner of the separate property to convert his property into an item of joint family property. A mere intention to benefit the members of the family by allowing them the use of the income coming from the said property may not necessarily be enough to justify an inference of blending, but the basis of the doctrine is the existence of coparcenary and coparcenary propertyas well as the existence of the separate property of a coparcener. How this doctrine can be applied to the case of a Hindu female who has acquired immovable property from her father as a limited owner, it is difficult to understand. Such a Hindu female is not a coparcener and as such has no interest in coparcenary property, She holds the property as a limited owner, and on her death the property has to devolve on the next reversioner. Under Hindu law it is open to a limited owner like a Hindu female succeeding to her mother's estate as in Madras or a Hindu widow succeeding to her husband's estate, to efface herself and accelerate the reversion by surrender ; but, as is well known, surrender has to be effected according to the rules recognised, in that behalf. A Hindu female owning a limited estate cannot circumvent the rules of surrender and allow the members of her husband's family to treat her limited estate as part of the joint property belonging to the said family. On first principles such a result would be inconsistent with the basic notion of blending and the basic character of a limited owner's title to the property held by her. This aspect of the matter has apparently not been argued before the courts below and has not been considered by them. Thus, if the doctrine of blending cannot be invoked in regard to the property held by Channama, the appellants' claim in respect of the said property can and must be rejected on this preliminary ground alone.'

16. As we have noted in the aforesaid decision of the Judicial Committee in the case of Rajanikanta Pal v. Jagamohan Pal, AIR 1923 PC 57, the Judicial Committee interpreted the expression 'joint Hindu family'. We have further noted that the coparcenary in the strict sense of the term can never apply in the case of Hindu brothers living jointly in food, worship and estate after the death of their father in respect of their property inherited from the father because in the strict sense of the word 'coparcenary' by which three degrees of lineal descendants acquire right by birth can never be applicable to a Hindu governed by the Dayabhaga school of Hindu law. Therefore, in our opinion, it is not the ratio of the Supreme Court decision referred to hereinbefore that in order to impress the separate and self-acquired property of a Hindu governed by the Dayabhaga school of Hindu law with the joint family character there should be a nucleus of a joint property inherited from their ancestors which is in the nature of the coparcenary property.

17. Before we proceed to answer this question we must note that the Tribunal has proceeded on certain aspects of the directive principles of the Constitution. It is true that the directive principles of the Constitution have to be borne in mind but that is the obligation of the State which makes the law. So long as a law is not made it is not necessary to examine how far the question of applicability of the directive principles could be invoked in this case. To meet the argument that the directive principles would not be applicable learned advocate for the revenue drew our attention to the case of Mangru Meya v. Commissioners of the Budge Budge Municipality, : AIR1953Cal333 . It is not necessary for us to refer to the said decision in this controversy.

18. In this case there is no doubt that the declaration has not been disputed. The declaration is categorical and by the conduct and act of the assessee the self-acquired property of the assessee had become joint Hindu undivided family property and, therefore, the income of the said property cannot be assessed as the income o the assessee. In the premises we answer the question in the affirmative and in favour of the assessee. In the facts and circumstances of the case, parties will pay and bear their own costs.

19. Reference under Section 256(2) of the I.T. Act, 1961, which we have indicated before disposes of the question more comprehensively. In that view of the matter, it is not necessary for us to answer the question under Section 256(1) of the I.T. Act, 1961.

Sudhindra Mohan Guha, J.

20. I agree.


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