TMI Blog1969 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... compensation under section 45 of the Act was paid severally to the appellant, his father and his brothers. Other properties belonging to the joint family of the appellant, his father and brothers were also partitioned between them from time to time. The assets forming the subject of reference to the High Court consisted of investments made from the compensation amount received by the appellant in securities, shares, etc. and also other assets 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h-tax is not payable under this Act ; . . . " Section 3 : " Charge of wealth-tax.--Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the first day of April, 1957, a tax (hereinafter referred to as wealth-tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e firm of M/s. Moolji Sicka and Co., viz., Moolji, Purshottam, Kalyanji, Chaturbhuj, Kanji and Sewdas. Moolji, Purshottam and Kalyanji each had a son or sons from whom he was not divided. It was found by the Appellate Tribunal that the capital supplied by them to the partnership business belonged to them in their individual capacities and was their self-acquired property. Hence the income of the firm which had to be assessed to super-tax was the separate income of 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 daug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and son were domiciled in India and had trading and other interests in India, Ceylon and Far Eastern countries. The undivided son died in 1934 and Arunachalam became the sole surviving coparcener in the Hindu undivided family to which a number of female members belonged. Arunachalam died in 1938 shortly after the Estate Ordinance No. 1 of 1938 came into operation in Ceylon. By section 73 of the Ordinance it was provided that property passing on the death of a member 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', ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, one Buddappa, his wife, his two unmarried daughters and his unmarried son, Buddanna, were members of a Hindu undivided family. Buddappa died and after his death the question arose whether the income of the properties held by Buddanna as the sole surviving coparcener was assessable as the individual income of Buddanna or as the income of the Hindu undivided family. It was held by this court that since the property which came into the hands of Buddanna as the sole 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to him, it would assume a different quality. It continues to be ancestral property in his hands as regards his male issue for their rights had already attached upon it and the partition only cuts off the claims of the dividing coparceners. The father and his male issue still remain joint. The same rule would apply even when a partition had been made before the birth of the male issue or before a son is adopted, for the share which is taken at a partition by one of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the status of an individual for any part of the relevant accounting year. The question was answered against the assessee by the High Court. The assessee appealed to this court and the contention of the appellant was that according to the doctrine of Hindu law a son conceived is in the same position as a son actually in existence. The argument was rejected by this court which held that the Hindu undivided family did not come into existence on the conception of the son 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 ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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