TMI Blog1986 (7) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessment year 1967-68. A common question of law arose in all these cases and these where disposed of by the High Court by a common judgment. One Rangi Lal and his son, Chander Sen, constituted a Hindu undivided family. This family had some immovable property and a business carried on in the name of Khushi Ram Rangi Lal. On October 10, 1961, there was a partial partition in the family by which the business was divided between the father and the son, and, thereafter, it was carried on by a partnership consisting of the two. The firm was assessed to income-tax as a registered firm and the two partners were separately assessed in respect of their share of income. The house property of the family continued to remain joint. On July 17, 1965, Rangilal died leaving behind his son, Chander Sen, and his grandsons, i.e., the sons of Chander Sen. His wife and mother predeceased him and he had no other issue except Chander Sen. On his death, there was a credit balance of Rs. 1,85,043 in his account in the books of the firm. For the assessment year 1966-67 (valuation date October 3, 1965), Chander Sen, who constituted a joint family with his own sons, filed a return of his net wealth. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Wealth-tax Act for the assessment years 1966-67 and 1967-68 and one against the assessment under the Income-tax Act for the assessment year 1967-68. The Tribunal dismissed the Revenue's appeals. The following question was referred to the High Court for its opinion : " Whether, on the facts and in the circumstances of the case, the conclusion of the Tribunal that the sums of Rs. 1,85,043 and Rs. 1,82,742 did not constitute the assets of the assessee-Hindu undivided family is correct ? " Similarly, in the reference under the Income-tax Act, the following question was referred: " Whether, on the facts and in the circumstances of the case, the interest of Rs. 23,330 is an allowable deduction in the computation of the business profits of the assessee-joint family? " The answer to the questions would depend upon whether the amount standing to the credit of late Rangi Lal was inherited, after his death, by Chander Sen in his individual capacity or as a karta of the assessee-joint family consisting of himself and his sons. The amount in question represented the capital allotted to Rangi Lal on partial partition and accumulated profits earned by him as his share in the firm. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's Hindu Law. After discussing all these aspects, the court came to the conclusion that the position of the Hindu law was that partition took away qua a coparcener the character of coparcenary property from the property which went to the share of another coparcener upon a division, although the property obtained by a coparcener upon partition continued to be coparcenary property for him and his unseparated issue. In that case, what had happened was that one Ram Rakshpal and his father, Durga Prasad, constituted a Hindu undivided family which was assessed as such. Ram Rakshpal separated from his father by partition on October 11, 1948. Thereafter, Ram Rakshpal started business of his own, income whereof was assessed in the hands of the assessee-family. Shri Durga Prasad also started business of his own after partition in the name and style of M/s. Murlidhar Mathura Prasad which was carried on by him till his death. Durga Prasad died on March 29,1958, leaving behind him his widow, Jai Devi, his married daughter, Vidya Wati, Ram Rakshpal and Ram Rakshpal's son, Ashok Kumar, as his survivors. The assets left behind by Durga Prasad devolved upon three of them in equal shares by success ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lass I, then upon the heirs mentioned in Class I of the Schedule. Class I of the Schedule reads as follows: " Son ; daughter ; widow ; mother ; son of a predeceased son ; daughter of a predeceased son; son of a predeceased daughter, daughter of a predeceased daughter; widow of a predeceased son; son of a predeceased son of a predeceased son; daughter of a predeceased son of a predeceased son; widow of a predeceased son of a predeceased son. " The heirs mentioned in Class I of the Schedule are son, daughter, etc., including the son of a predeceased son but does not include specifically the grandson, being a son of a son living. Therefore, the short question is, when the son as heir of Class I of the Schedule inherits the property, does he do so in his individual capacity or does be do so as karta of his own undivided family? Now, the Allahabad High Court has noted that the case of CIT v. Ram Rakshpal Ashok Kumar [1968] 67 ITR 164, after referring to the relevant authorities and commentators, had observed at page 171 of the said report that there was no scope for considerations of a wide and general nature about the objects attempted to be achieved by a piece of legislation whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the coparcenary. His right accrues to him not on the death of the father or inheritance from the father but with the very fact of his birth. Normally, therefore, whenever the father gets a property from whatever source from the grandfather or from any other source, be it separate property or not, his son should have a share in that and it will become part of the joint Hindu family of his son and grandson and other members who form joint Hindu family with him. But the question is, is the position affected by section 8 of the Hindu Succession Act, 1956, and, if so, how? The basic argument is that section 8 indicates the heirs in respect of certain property and Class I of the heirs includes the son but not the grandson. It includes, however, the son of a predeceased son. It is this position which has mainly induced the Allahabad High Court in the two judgments we have noticed to take the view that the income from the assets inherited by a son from his father from whom he has separated by partition can be assessed as income of the son individually. Under section 8 of the Hindu Succession Act, 1956, the property of the father who dies intestate devolves on his son in his individual c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court at the instance of the Revenue, it was held by the Fall Bench that under the Hindu law, the property of a male Hindu devolved on his death on his sons and grandsons as the grandsons also have an interest in the property. However, by reason of section 8 of the Hindu Succession Act, 1956, the son's son gets excluded and the son alone inherits the property to the exclusion of his son. No interest would accrue to the grandson of P in the property left by him on his death. As the effect of section 8 was directly derogatory of the law established according to Hindu law, the statutory provision must prevail in view of the unequivocal intention in the statute itself, expressed in section 4(1) which says that to the extent to which provisions have been made in the Act, those provisions shall override the established provisions in the texts of Hindu law. Accordingly, in that case, K alone took the properties obtained by his father, P, in the partition between them and, irrespective of the question as to whether it was ancestral property in the hands of K or not, he would exclude his son. Further, since the existing grandson at the time of the death of the grandfather had been exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the construction should be confined to the language used in the new Act. The High Court felt that, so construed, section 8 of the Hindu Succession Act should be taken as a self-contained provision laying down the scheme of devolution of the property of a Hindu dying intestate. Therefore, the property which devolved on a Hindu on the death of his father intestate after the coming into force of the Hindu Succession Act, 1956, did not constitute Hindu undivided family property consisting of his own branch including his sons. It followed the Full Bench decision of the Madras High Court as well as the view of the Allahabad High Court in the two cases noted above including the judgment under appeal. The Andhra Pradesh High Court in the case of CWT v. Mukundgirji [1983] 144 ITR 18 had also to consider this aspect. It held that a perusal of the Hindu Succession Act, 1956, would disclose that Parliament wanted to make a clean break from the old Hindu law in certain respects consistent with modern and egalitarian concepts. For the sake of removal of any doubts, therefore, section 4(1)(a) was inserted. The High Court was of the opinion that it would, therefore, not be consistent with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property in the situation contemplated by section 8, he takes it as karta of his own undivided family. The Gujarat High Court's view noted above, if accepted, would mean that though the son of a predeceased son and not the son of a son is intended to be excluded (sic) under section 8 to inherit, the latter would, by applying the old Hindu law, get right by birth to the said property contrary to the scheme outlined in section 8. Furthermore, as noted by the Andhra Pradesh High Court, the Act makes it clear by section 4 that one should look to the Act in case of doubt and not to the pre-existing Hindu law. It would be difficult to hold today that property which devolved on a Hindu under section 8 of the Hindu Succession Act would be Hindu undivided family property in his hands vis-a-vis his own son; that would amount to creating two classes among the heirs mentioned in Class I, the male heirs in whose hands it will be joint Hindu family property vis-a-vis their sons and female heirs with respect to whom no such concept could be applied or contemplated. It may be mentioned that heirs in Class I of the Schedule under section 8 of the Act included widow, mother, daughter of a predec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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