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TMI Blog1969 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... s such as deposits in banks. The appellant filed returns for the assessment years 1957-58, 1958-59 and 1959-60 in the status of a Hindu undivided family. The appellant's family during the material time consisted of himself, his wife and his two minor daughters and there was no other male member. The appellant claimed to be assessed in the status of Hindu undivided family inasmuch as the wealth returned consisted of ancestral property received or deemed to have been received by him on partition with his father and brothers. The Wealth-tax Officer did not accept the contention of the appellant and assessed him as an individual for the assessment years 1957-58, 1958-59 and 1959-60. On appeal to the Appellate Assistant Commissioner of Wealth-tax the finding that he must be assessed as an individual was confirmed. The Income-tax Appellate Tribunal however on appeal by the appellant held that he should be assessed in the status of a Hindu undivided family. Thereupon, the Commissioner of Wealth-tax applied to the Tribunal to state a case to the High Court under section 27(1) of the Wealth-tax Act, 1957 (27 of 1957) (hereinafter called " the Act "). The Tribunal accordingly referred the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 5 : " Exemption in respect of certain assets.--(1) Wealth-tax shall not be payable by an assessee in respect of the following assets and such assets shall not be included in the net wealth of the assessee--. . . (ii) the interest of the assessee in the coparcenary property of any Hindu undivided family of which he is a member. " Under section 3 of the Wealth-tax Act not a Hindu coparcenary but a Hindu undivided family is one of the assessable legal entities. A Hindu joint family consists of all persons lineally descended from a common ancestor, and includes their wives and unmarried daughters. A Hindu coparcenary is a much narrower body than the Hindu joint family ; it includes only those persons who acquire by birth an interest in the joint or coparcenary property, these being the sons, grandsons and great grandsons of the holder of the joint property for the time being. In Kalyanji Vithaldas v. Commissioner of Income-tax, Sir George Rankin observed : " The phrase 'Hindu undivided family' is used in the statute with reference, not to one school only of Hindu law, but to all schools ; and their Lordships think it a mistake in method to begin by pasting over the wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f each of these partners. Chaturbhuj had a wife and daughter but no son. Kanji and Sewdas, sons of Moolji, were married men but neither had a son. It was found by the Appellate Tribunal that Chaturbhuj, Kanji and Sewdas had received by gift from Moolji their respective share capital in the firm, that the share capital belonged to them in their individual capacities and was self-acquired. The question at issue was whether the existence of a son and a wife or a wife and a daughter made the income of the partners the income of the Hindu undivided family rather than the income of the individual partner. The Judicial Committee held that though the income was from an ancestral source, the fact that each partner had a wife or daughter did not make that income from ancestral source income of the Hindu undivided family of the partner, his wife and daughter. Different considerations would be applicable, where property already impressed with the character of joint family property comes into the hands of a single coparcener. The question to be asked in such a case is whether the property retains the character of joint family property or whether it sheds the character of joint family property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Hindu undivided family was exempt from payment of estate duty. On a claim to estate duty in respect of Arunachalam's estate in Ceylon, the Judicial Committee held that Arunachalam was at his death a member of the Hindu undivided family, the same undivided family of which his son, when alive, was a member and of which the continuity was preserved after Arunachalam's death by adoptions made by the widows of the family and since the undivided Hindu family continued to persist, the property in the hands of Arunachalam as a single coparcener was the property of the Hindu undivided family. The Judicial Committee observed at page 543 of the Report : " . . . though it may be correct to speak of him as the 'owner', yet it is still correct to describe that which he owns as the joint family property, For his ownership is such that upon the adoption of a son it assumes a different quality : it is such, too, that female members of the family (whose members may increase) have a right to maintenance out of it and in some circumstances to a charge for maintenance upon it. And these are incidents which arise, notwithstanding his so-called ownership, just because the property has been an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le surviving coparcener was originally joint family property, it did not cease to belong to the joint family and income from it was assessable in the hands of Buddanna as income of the Hindu undivided family. In the course of the judgment Shah J., speaking for the court, examined the decision of the Judicial Committee in Kalyanji's case and Gomedalli's case and pointed out that there was a clear distinction between the two classes of cases : " It may however be recalled that in Kalyanji Vithaldas's case income assessed to tax belonged separately to four out of six partners : of the remaining two it was from an ancestral source, but the fact that each such partner had a wife or daughter did not make that income from an ancestral source income of the undivided family of the partner, his wife and daughter. In Gomedalli Lakshminarayan's case, the property from which income accrued belonged to a Hindu undivided family and the effect of the death of the father, who was a manager, was merely to invest the rights of a manager upon the son. The income from the property was and continue to remain the income of the undivided family. This distinction, which had a vital bearing on the issue f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coparceners is taken by him as representing his branch. Again, the ownership of the dividing coparcener is such "that female members of the family may have a right to maintenance out of it and in some circumstances to a charge for maintenance upon it" : see Arunachlam's case. It is evident that these are the incidents which arise because the properties have been and have not ceased to be joint family properties. It is no doubt true that there was a partition between the assessee, his wife and minor daughters on the one hand and his father and brothers on the other hand. But the effect of partition did not affect the character of these properties which did not cease to be joint family properties in the hands of the appellant. Our conclusion is that when a coparcener having a wife and two minor daughters and no son receives his share of the joint family properties on partition, such property in the hands of the coparcener belongs to the Hindu undivided family of himself, his wife and minor daughters and cannot be assessed as his individual property. It is clear that the present case falls within the ratio of the decision of this court in Gowli Buddanna's case and the Appellate Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as claimed by the appellant, but came into being when the son was actually born. It was suggested on behalf of the respondent that the decision of this case must be taken to be implicitly, if not explicitly that there was no Hindu undivided family prior to the date of the birth of the son. But we do not think that any such implication can be raised. The case of the appellant throughout the course of the proceedings was that the Hindu undivided family came into existence for the first time in or about March, 1952, when the son was conceived and it was not his case at any time that a Hindu undivided family was in existence prior to the conception of the son. Indeed, it was common ground between the parties that there was no Hindu undivided family in existence prior to the conception of the son. The only dispute was whether the Hindu undivided family came into existence for the first time when the son was conceived as claimed by the assessee or whether it came into existence when the son was born as claimed by the income-tax department. The appellant relied on the doctrine of Hindu law that the son conceived is in the same position as the son born and the respondent contended that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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