9911796707
TMI Blog1965 (8) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... his two widows, Lakshmi Achi and Nachiar Achi, and also his last will and testament by which he nominated his executors and directed them to arrange for adoption of a son to each of his widows as also the widow of his pre-deceased son. When Arunachalam Chettiar (junior) died, the Government of Ceylon levied estate duty on his half share in the estate, which belonged to the joint family consisting of himself and his father. The levy as reduced in April, 1942, amounted to Rs. 2,21,743. This amount was paid on March 31, 1943. In the meantime, litigation between the three widows having arisen, the Court of the Subordinate Judge of Devakotta appointed receivers to take possession of the entire estate. On May 16, 1942, they instituted a suit in the District Court of Colombo questioning the validity of the levy of estate duty on certain grounds. On the death of Arunachalam Chettiar (senior) a similar demand of estate duty on his share of the properties in Ceylon was made and a total sum of Rs. 6,33,601.76 was paid by March 31, 1943. On November 8, 1949, the District Court of Colombo set aside the levy of estate duty in the case of Arunachalam Chettiar (junior) and affirmed the levy in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. They were all credited to one account. So, at the time the assessee, and his sharers divided the estate, they only divided the capital left by the Arunachalas. Any share in that capital, whatever it may have been at its inception, at the time of division between the sharers, was only capital having regard to the decision in Veerappa Chettiar's case. Therefore, this sum must be deleted from the assessment. " So, the Tribunal's view was based upon the primary grounds : (1) there was no allocation of the receipt to any of the sharers and (2) the entire receipt without any allocation, as so much for principle and so much for interest, was found credited to one account in the books of the estate. On these premises the Tribunal was prepared to take the view that when there was a division on February 17, 1947, the sharers divided the fund as capital. In its opinion, whatever the character of the amount might have been before partition, when the joint estate was divided, it went to the sharers only as capital. Mr. Balasubrahmanyan for the revenue argues that the Tribunal was wrong in taking that view. He says that at the time the estate duties were paid, there was actually no joint f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar property or fund, which it possessed before division, it would only be capital in the hands of the sharer. This proposition has been laid down by this court in Veerappa Chettiar v. Commissioner of Income-tax and it has been followed in subsequent cases. Learned counsel for the assessee urges that this principle should apply to the facts of this case. We are of the view that it is not possible to give effect in full to either the contention for the revenue or that of the assessee. It may be that in a sense the decree is the basis for the estate getting interest. But this is only in recognition of a cause of action which the estate already had. The decree was but merely declaratory of the liability of the Ceylon Government to pay interest on the estate duties illegally collected. The circumstances in which the court directed payment of interest cannot in any way be distinguished from an action for money had and received with accrued interest. The interest, as held in Ramanathan Chettiar v. Commissioner of Income-tax, is a sort of compensation for the use of money which has been, wrongfully collected. We are, therefore, unable to accept the contention for the revenue that the sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of his share in the assets available after discharging the family debts ..... What is distributed amongst the sharers at the partition is the net residue of the estate after payment of family debts and no artificial dissection of the allotments into capital and profits is necessary and in many cases would be impossible." These observations, which form the ratio of that decision, sprung from the cardinal principle that no member of a joint Hindu family could predicate that he has a right to any definite share in any item of the joint family property or in the income of the family estate until he gets divided from the family. Until a division is effected, the owner of the properties is the joint family, which is treated as a unit even for purposes of income-tax. It is because of this peculiar incident of coparcenary property, it had been held that when joint family properties are divided, they are divided as such without any distinction being made between one character and another of this or other property of the joint family, as capital, interest or outstanding and so on. On facts, Veerappa Chettiar v. Commissioner of Income-tax was also a case where a receipt which was included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot take him the whole length for, in this case, as we said, there was disruption in the status of the family as on February 17, 1947. The effect of the disruption in status undoubtedly is that the joint Hindu family as such came to an end then. We are not at the moment thinking of a joint Hindu family as statutorily recognised under the provisions of the Indian Income-tax Act, 1922. We may in passing mention that no argument for the assessee was addressed to us based on section 25A. After the disruption in status, the three adopted sons owned the common estate not as coparceners but as tenants-in-common. In Commissioner of Income-tax v. Keshavlal Lallubhai Patel the Supreme Court quoted with approval the following observation of this court in M. K. Stremann v. Commissioner of Income-tax : " . . . obviously no question of transfer of assets can arise when all that happens is separation in status, though the result of such severance in status is that the property hitherto held by the coparcenary is held thereafter, by the separated members as tenants-in-common...... " When this change is brought about in the character of the common property, the peculiar incidents of coparcenary pr ..... 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