1. This reference under Section 27(1) of the W.T. Act, 1957, arises out of the wealth-tax assessment of Maharaja Sir Padma Shamsher Jung Bahadur Rana, the assessee in the assessment year 1957-58. At the instance of the CWT, West Bengal-II, Calcutta, the Tribunal has drawn up a statement of case and has referred the following question as a question of law arising out of its order :
'Whether, on the facts and in the circumstances of the case, and on a proper construction of the Lal Mohar and the two Khadga Nishanas taken along with the opinion of the expert on the Nepalese law, the sum of Rs. 18,41,952 could be assessed in the hands of the assessee as an individual '
2. The facts found and/or admitted are, inter alia, as follows: The assessee had been the former Prime Minister to the King of Nepal between1943 and 1948. He came over to India on the 27th February, 1948, and resigned his office on the 26th April, 1948.
3. The assessee belongs to a family of Hindus, known as Ranas, who are Rajputs by caste and had migrated from India to Nepal. They were governed originally by the Mitakshara School of Hindu Law which they carried with them to Nepal. In course of time they became part of the population of Nepal. The laws of Nepal which developed in course of time came to be known as the Mulki Ain of Nepal and were a modified form of the original Hindu law. Traditionally, the eldest member of the Rana families used to become the Prime Minister and was called Maharaja.
4. On the 28th November, 1947, a Lal Mohar (literally translated as the 'Red Seal') was granted by the King of Nepal in favour of the Prime Minister. The relevant portion of the said document is as follows :
'That in distributing your family properties consisting of cash and kind, Birta-land in Torai or Hills, house and lands within the valley, you are hereby granted the sole authority of using your own choice irrespective of the law of partition prevalent in the country. If any member of the family institutes a case against the division made by you on the ground of inequitable distribution it will not be heard by me or by my successors or anybody else. If anybody hears the complaint he will be committing the sin of Five Mahapataks (Five Great Sins); whoever makes a complaint will be deemed dishonest. This special privilege of dividing your family property and granting marriage expenses according to your own choice is conferred upon you as in the case of former Prime Ministers as per this Lal Mohar. If any of your coparceners makes a complaint on the grounds of inequitable division or of rewards or charity or grants made by you it shall not be heard by me or by my successors or by anybody else. If anybody gives a hearing to the complaint he shall be accused of having committed the Five Great Sins. If anybody makes a complaint he shall be deemed to be dishonest. You are granted the right of dividing your property as you like, making any gift, reward or charity as per this Royal Lal Mohar.'
5. By two documents knows as 'Khadga Nishanas', respectively, dated the 6th December, 1947, and the 16th January, 1948, the assessee effected a partition of his family properties. By the first document, the assessee distributed certain assets between his wife, Maharani Kamala Devi, his son, Major General Narendra Shamsher Jung Bahadur Rana, his daughters and his grandchildren. By the second document dated the 16th January, 1948, the assessee confirmed the earlier division of assets made by the first document and affirmed that the recipients of the properties thereunder would be entitled to the amounts from the State Bank of India, Calcutta, as specified in the document. He stated further as follows :
'Whatever amount remains or will remain in the bank and whatever shares remain in my name after my expenditure, gift in charity and rewards, shall be shared equally between you, Shri Maharani Kamala Devi and Major General Narendra Shamsher J.B. Rana.'
6. The value of such property as remained in residue jointly between the assessee, his wife and his son was Rs. 18,41,952 and consisted of the following items :
Rs.1.Shares & debentures held by the assessee jointly with his son, Narendra Shamsher and jointly with his wife, Maharani Kamala Devi, valued at
10,47,5942.Balance in the State Bank of India, 3, Strand Road, Calcutta--Dividend A/c.
11,8113.Balance in the Chartered Bank Ltd., 4. Netaji Subhas Road, Calcutta, in the joint name of the assesseeand his wife, Maharani Kamala Devi 6,62,5474.Loan to Gladstone Lyall Ltd. 1,00,0005.Cash in hand 20,000
7. In the assessment year 1957-58, the relevant valuation date being the 31st March, 1957, the assessee filed two wealth-tax returns on the 11th March, 1958. In the first return, he disclosed his net wealth in the status of an individual. In the second return, a net wealth of Rs. 17,69,952 was disclosed as belonging to his HUF. Revised returns were subsequently filed for the individual as also for the HUF. The wealth of the family was revised to Rs. 17,91,952.
8. In the wealth-tax assessment of the assessee in his status of 'individual' a sum of Rs. 18,41,952 shown as belonging to the HUF was held by the WTO to be the personal wealth of the assessee and added to his individual wealth and assessed as such. At the assessment proceedings, the assessee wanted time to produce expert evidence to prove that the said properties and assets belonged to the joint family under the Nepalese law but time as prayed for was not granted. On appeal, the AAC upheld the addition made by the WTO.
9. There was a further appeal by the assessee to the Tribunal. During the pendency of the appeal before the Tribunal the assessee--died and his widow and executrix, Maharani Kamala Devi, was brought on record.
10. Before the Tribunal, the assessee examined one Neer Kumar Kshetry, an advocate of the Supreme Court of Nepal, who gave evidence on Nepalese law and his opinion on the points involved. A written opinion in the form of questions and answers was filed before the Tribunal, inter alia, as follows:
'6. You said that the Nepalese personal law has the same characteristics with Mitakshara School of Hindu law. Will you tell what are these characteristics Answer:
The characteristics are as follows :
(a) Son acquires right in joint family property by birth.
(b) There is coparcenary between father, mother and son.
(c) The father has no absolute right to dispose of joint family property excepting in the case of legal necessity when he can dispose of the whole of the joint family, movable property and half of the immovable property.
(d) Partition can be made even during the lifetime of the father, both ancestral and self-acquired property, whether movable or immovable. These characteristics of Nepalese personal law resemble the Mitakshara School of Hindu law as prevailing in India.
7. Can you show from the texts that father can partition his self-acquired property Answer:
Section 37 of the Law of Partition states as follows :
'There shall be made partition in accordance with law in respect of these properties self-acquired by coparceners and the debts incurred by them provided they are living jointly without separation in food.
Even if there is no partition and there is separation in food or the coparcener maintained themselves on their own earnings even if the coparceners are together in food, their earnings and debts shall go to the respective coparceners.'
8. In spite of the above provision in the Law of Partition where a father with a view to a partition of his ancestral as well as self-acquired properties brings all properties together for the purpose of partition and abandons his claim on the self-acquired property whether his son and wife can claim a share in such a partition Answer:
Even in respect of self-acquired property the father is bound to make partition. Because the language of Section 37 of the Law of Partition is mandatory. 9. Whether wife has claim in partition ?
Yes, she has the same status according to Nepalese law as that of a son. 10. Has the unmarried daughter claim in partition
She is entitled to marriage expenses according to the family status and position. In some cases, she is entitled to a share in partition... 13. From reading the Lal Mohar, dated 80th Kartik 2003, executed by his Majesty the King in favour of Maharaja Padma Shamsher, how can you say that the privilege can be given to every person
The privilege of extended power in partitioning the properties was used to be given to the Rana Prime Ministers only and during their regime and not to others. But any other privilege, such as granting of rent-free land, is given through the medium of Lal Mohar. 14. Could Maharaja Padma Shamsher deprive any of his coparceners in getting share in the partition by virtue of the Lal Mohar dated 30th Kartik, 2003 Sambat, executed in his favour
From reading the Lal Mohar it is evident that nowhere it is stated that the Maharaja could deprive any of his coparceners. However, he could make inequitable and unequal distribution of the properties and nobody could complain against such action. This much was the special privilege granted under the Lal Mohar. 15. Whether in spite of the Lal Mohar granted by His Majesty the King the other coparceners had claim in respect of properties which was the subject matter of partition
That Lal Mohar did not destroy the claim of any of the coparceners of the Maharaja in getting a share in the partition. Every coparcener has the right to get a share according to personal law. But the Lal Mohar gave special privilege to the Maharaja to partition the properties among all the the coparceners, with greater share or smaller share, according to his will but all coparceners must participate in it.... 17. Is it not correct that Khadga Nishana is an instrument of partition?
Khadga Nishana is an instrument always executed by Rana Prime Minister in the capacity of the Prime Minister with a special sign of Khadga not necessarily an instrument of partition, but in the present case upon reading I say that the two Khadga Nishanas dated 8th Magh-and 3rd Magh, 2004 Sambat, are instruments of partition...... 19. Whether Maharani Kamala Devi and Narendra Shamsher had claim in respect of the shares and other properties jointly held by each of them with Maharaja Padma Shamsher when there was such stipulation in the two Khadga Nishanas dated 8th Magh and 3rd Magh, 2004 Sambat
Under Section 61 of the Law of Partition coparceners should have rights and claim on the property lying undistributed after the foregoing partition if there is any stipulation to that effect in a deed. That stipulation in such deed shall be followed. Section 61 of the Law of Partition reads as follows : 'When whole properties have not been partitioned, partition can be made at any time. Partition is made but certain properties are not partitioned, such properties shall be treated according to the deed, if there is any. In case, there is no deed and the claimants have possession it shall be deemed as if there is a deed, When there is neither deed nor possession, the properties remaining due to be partitioned after the foregoing partition, claim can be entertained as long as the persons sharing in partition are alive, otherwise not'.'
11. On the basis of the evidence on Nepalese law and the opinion of the learned advocate, the Tribunal held, inter alia, as follows :
(a) The Lal Mohar issued by the King of Nepal in favour of the assessee had only given the assessee power to distribute the assets as between different coparceners according to the assessee's own discretion.
(b) The properties, however, actually belonged to the Hindu undivided family and the assessee was not made the full and arbitrary owner thereof by the said Lal Mohar.
(c) No power was conferred upon the assessee to alienate the family properties.
(d) The assessee had made the two partitions by the said two Khadga Nishanas before he migrated to India and these divisions were made long before the Wealth-tax Act was promulgated in India.
(e) It could not be said that the divisions of the property were contrived with the intention of escaping taxation.
(f) The entire amount of Rs. 18,41,952 represented the joint family assets.
(g) There had been subsequently a final division in respect of even these joint assets.
(h) On the 14th April, 1957, Narendra Shamsher Jung Bahadur Rana acknowledged the final division by his letter and relinquished all his claims in regard to the said assets and liabilities.
12. On the facts found as aforesaid the Tribunal held that the said sum of Rs. 18,41,952 should be deleted from the assessment of the individual forthe relevant assessment year. The appeal of the assessee was, accordingly, allowed.
13. Mr. B.L. Pal, learned counsel for the revenue, has contended before us that on reading the documents, namely, the 'Lal Mohar' and the said two Khadga. Nishanas, it can be clearly seen that the properties referred to therein were the self-acquired properties of the assessee and it could not be said that they belonged to the HUF. Mr. Pal relied in particular on the following sentence occurring in the Lal Mohar :
'You are granted the right of dividing your property as you like making any gift, reward or charity as per this Royal Lal Mohar.'
14. Mr. Pal also faintly submitted that the Tribunal had not taken appropriate evidence in respect of the Nepalese law and that the learned advocate from Nepal was not properly examined. The Tribunal proceeded only on the basis of his opinion submitted in writing. Mr. Pal at one stage of his submissions went so far as to say that the revenue did not have any opportunity to cross-examine Mr. Neer Kumar Kshetry. Mr. Nirmal Mukherjee, learned advocate for the assessee, has contended otherwise.
15. In the facts as found by the Tribunal and the admitted circumstances of this case, the contentions of the revenue cannot be upheld. Neither the documents, viz., the Lal Mohar and the two Khadga Nishanas nor the opinion of the expert on Nepalese law has been challenged by the revenue. The said documents were executed in Nepal and their legal effect has been clearly explained in the evidence of the expert. The revenue neither challenged such evidence nor has adduced any evidence to the contrary by calling experts of their own.
16. The further contention of the revenue that Neer Kumar Kshetry, the learned advocate, could not be cross-examined has no merit whatsoever. The Tribunal has recorded in its order that the learned advocate had been examined. There is nothing on record to show that the revenue wanted to cross-examine this witness but was refused the opportunity. This finding of the Tribunal has not been challenged as perverse or as contrary to record. There was not even a miscellaneous application calling upon the Tribunal to correct any part of its order. We hold that it is no longer open to the revenue to raise such a question.
17. The contentions of Mr. Pal in respect of the Lal Mohar are also of little substance. The document records in more than one place that there was a joint family, that the properties acquired by the Prime Minister belonged to the coparceners in the said joint family and that power had been specifically given to the Prime Minister only to distribute the properties between the members of the joint family in any manner he liked. It will be neither correct nor lawful to rely only on the last lines in the said document and holdthat the properties referred to therein were the personal and self-acquired properties of the assessee and that the same continued to remain as such.
18. The question itself proceeds on the basis that the Lal Mohar, the two Khadga Nishanas and the opinion of the expert on Nepalese law has to be taken into account for the purpose of arriving at the answer. The answer, therefore, becomes self-evident.
19. For the reasons as aforesaid, we answer the question referred to us in the negative and in favour of the assessee. There will be no order as to costs.
C.K. Banerji, J.
20. I agree.