TMI Blog1973 (11) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case, the Tribunal was right in holding that the self-acquired and personal assets left by the said Manilal Chhotalal, the deceased father of the respondent, were to be assessed in the hands of the Hindu undivided family represented by the respondent and not in his hands in his individual capacity?" The relevant assessment year in this case is 1964- 65 and the assessee in this case is an individual. The assessee's father, Manilal, was assessed as an individual in respect of his self-acquired properties and in respect of income from such property. Manilal died in February, 1926, leaving behind him his widow, his only son, the present assessee, and his daughter, Vasumati. At the time of the death of Manilal, both the assessee and his sister, Vasumati, were unmarried. Subsequently, the assessee got married to Mrinalini and Mrinalini bore a child, a daughter, Jayashree, and no other issue was born to the couple. What the assessee received on the death of his father, Manilal, consisted entirely of the self-acquired properties of Manilal. Before the Wealth-tax Officer, the assessee claimed the status of a Hindu undivided family in regard to the net wealth which consisted entirely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lji, Purshottam and Kalyanji were concerned, they were each members of a Hindu undivided family. Each had a son or sons from whom, so far as the evidence went, he was not divided. But the income from the firm was clearly the separate and self-acquired property of the partner, and as it had not been thrown into the common stock, it could not be regarded as income of the family. The question before the Privy Council was whether the income of these different partners from the partnership could be considered as income of the different Hindu undivided family represented by each of the partners and be assessable to super-tax as income of the Hindu undivided family. The Privy Council also found that so far as Chaturbhuj was concerned, he had obtained his interest in the firm from his brother, Kalyanji. It was not self-acquired and not ancestral property.Chaturbhuj had no son, but even if he had, the son would have taken by birth no interest in the income from the partnership. Thus, in none of the cases of the four Partners, Moolji, Purshottam, Kalyanji and Chaturbhuj did the fact that the partner concerned had a wife and daughter or more than one daughter affect the result and the existen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision in Arunachala Mudaliar v. Muruganatha Mudaliar. After considering the text of the Mitakshara and various relevant texts, the Supreme Court observed at page 499 of the report: "The property of the grandfather can normally vest in the father as ancestral property if and when the father inherits such property on the death of the grandfather or receives it by partition, made by the grandfather himself during his lifetime. On both these occasions the grandfather's property comes to the father by virtue of the latter's legal right as a sort or descendant of the former and consequently it becomes ancestral property in his hands..... To find out whether a property is or is not ancestral in the hands of a particular person, not merely the relationship between the original and the present holder but the mode of transmission also must be looked to; and the property can ordinarily be reckoned as ancestral only if the present holder has got it by virtue of his being a son or descendant of the original owner." The Supreme Court in this case held that when the father obtains the grandfather's property by way of gift, he receives it not because he is a son or has any legal right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g from Ceylon in Attorney-General of Ceylon v. Arunachalam Chettiar (No. 2) and the legal consequence flowing from the decision in Attorney-General of Ceylon v. Arunachalam Chettiar (No. 2) has been summed up in two subsequent decisions of the Supreme Court and, therefore, it is not necessary for us to refer at length to the observations of their Lordships in Arunachalam Chettiar's case. In Gowli Buddanna v. Commissioner of Income-tax , the facts were that A, his wife, his two unmarried daughters and B, his adopted son, were members of a Hindu undivided family. A died and the question arose whether the property in the hands of the adopted son could be said to be property of the Hindu undivided family consisting of the son, his widowed, mother and his two unmarried sisters. On these facts following the observations of their Lordships of the Privy Council in Arunachalam Chettiar's case , it was held by the Supreme Court that the property of the joint family did not cease to belong to the family merely because the family was represented after A's death by a single coparcener B, who possessed rights which an owner of property might possess, and the income received therefrom was taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been and has not ceased to be joint family property....... it would not appear reasonable to impart to the legislature the intention to discriminate, so long as the family itself subsists, between property in the hands of a single coparcener and that in the hands of two or more coparceners." The Supreme Court pointed out in Gowli Buddanna's case that in Arunachalam's case the Privy Council had considered the question whether a single coparcener can alienate the property in a manner not open to one of several coparceners. In that connection the Privy Council had observed in Arunachalam's case: Let it be assumed that his power of alienation is unassailable that means no more than that he has in the circumstances the power to alienate joint family property. That is what it is until he alienates it, and, if he does not alienate it, that is what it remains. The fatal flaw in the argument of the appellant appeared to be that, having labelled the surviving coparcener ' owner ', he then attributed to his ownership such a congeries of rights that the property could no longer be called ' joint family property '. The family, a body fluctuating in numbers and comprised of male and female m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nderstood in the personal laws of Hindus. Under the Hindu system of law a joint family may consist of a single male member and his wife and daughters and there is nothing in the scheme of the Wealth-tax Act to suggest that a Hindu undivided family as an assessable unit must consist of at least two male members. Mr. Kaji for the revenue relies upon the following passage from the judgment of Ramaswami J., who delivered the judgment of the Supreme Court in N. V. Narendranath's case, at page 193 of, the report: " The next question is whether the assets which came to the share of the appellant on partition ceased to bear the character of joint family properties and became the individual property in his hands. In this connection, a distinction must be drawn between two classes of cases where an assessee is sought to be assessed in respect of ancestral property held by him : (1) where property not originally joint is received by the assessee and the question has to be asked whether it has acquired the character of a joint family property in the hands of the assessee ; and (2) where the property already impressed with the character of joint family property comes into the hands of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be determined whether the family property can properly be described as joint property of the undivided family. " Thus, the test which has been approved in N. V. Narendranath's case is as to what are the rights of the members of the Hindu undivided family and for this purpose we have to consider the rights not only of the members who are in existence but also those who may yet to be born. Applying the test evolved by the Supreme Court in Narendranath's case to the facts of this case, it is obvious that at the time of the relevant valuation date, the family consisted of the assessee, his wife, Mrinalini, his daughter, Jayashree, and his mother. The three female members of the family, namely, his widowed mother, his wife and his daughter were entitled to be maintained out of the property and were not only members of the family but had certain rights in the property which is in dispute. These are the rights of the members of the family who were in existence at the valuation date but applying the test of members yet to be born, it is obvious that if a son were to be born to the assessee or to be adopted by the assessee, then the newly born son or it adopted son would get right as f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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