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TMI Blog1998 (11) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... family of Dadasaheb Ukajirao ?" The facts and circumstances of the case in which the questions have arisen are that the assessee Chandrasinhrao H. Gaekwad was being assessed as a Hindu undivided family. The Hindu undivided family consisted of two brothers, Shri Chandrasinhrao and Shri Dilipsinhrao, sons of Dadasaheb. Chandrasinhrao was the karta of the family. The said Chandrasinhrao died on March 27, 1965. On the death of Shri Chandrasinhrao on March 27, 1965, it was claimed for the assessment year 1966-67 and subsequent assessment years that by operation of law a complete partition of the Hindu undivided family properties between the two branches of brothers had taken place, The claim was made in income-tax proceedings as well as in wealth-tax proceedings. The Wealth-tax Officer did not agree with the claim of the assessee, as the same was not accepted by the Income-tax Officer too under section 171 of the Income-tax Act, 1961. On appeal before the Appellate Assistant Commissioner, he too did not agree with the claim of the partition either under the Wealth-tax Act or under the Income-tax Act. However, the Appellate Assistant Commissioner upheld the contention of the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surviving a female relative specified in class I of the Schedule or a male relative specified in that class who claims through such female, the interest of the deceased in the Mitakshara coparcenary property shall devolve by testamentary or intestate succession as the case may be under this Act and not by survivorship. Thus, substantive provision has been made deviating from the existing course of devolution of interest in coparcenary in the presence of a female heir of class I or a male heir of class I claiming through a female heir of class I. In the absence of a female relative specified in class I or a male relative claiming through such female relative specified in class I of the Schedule, the rule of devolution by survivorship to remaining members of coparcenary survives. Section 6 further provides where the property on the death of a male Hindu devolves by succession and not by survivorship according to the provisions of the Act, for the purpose of giving effect to that provision, that the interest of a Hindu Mitakshara coparcenary shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim to separate assessment in the status of a different entity, on the basis of any notional partition that might be assumed for the purpose of determining the share of the deceased at the time of his death for the purpose of working out the extent of his estate for devolution of his interest to his heirs, in case a female relative specified in class I or a male relative claiming through such female relative specified in class I of the Schedule to the Hindu Succession Act, survives the deceased. It may be noticed here that there is no material in the statement of case or in the annexures submitted along with it to suggest whether any female heir specified in class I of the Schedule or any male heir claiming through such female heir specified in class I in the Schedule survived deceased Chandrasinhrao so as to invoke the applicability of section 6 in his case. The existence of such heir at the time of death of a male coparcener is a question of fact which cannot be left to assumption. Section 20 of the Wealth-tax Act deals with the question about partition of a Hindu undivided family and its continued assessment in that status. For the purpose of wealth-tax three classes of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n were to take place. The Legislature has not expressed that "a partition is deemed to have taken place" but only tells us to assume the share "if the partition had taken place", which clearly indicates that no partition either actual or notional is deemed to have taken place. The family as it is minus the deceased continues as before. Law is also trite that succession does not remain in abeyance. There is no hiatus between the death of a person and vesting of his estate in his heirs. Actual computation and separation of such interest may be done later on. The effect of succession is that the share of the deceased goes out of community ownership of the coparcenary and vests in the heirs of the deceased, in case there is a female heir or male heir claiming through such female surviving the deceased, and vests in them in their individual capacity. In the absence of such heirs, no part of coparcenary property is diminished as in that event it continues to devolve by survivorship on the remainder of coparceners. On the vesting of such interest, qua such shares, the heirs become tenants-in-common with the coparcenary and they are owners of definite and determinate shares of such estate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purposes of Hindu law there is disruption of the joint family, for the purposes of the Wealth-tax Act the family is deemed to continue to be a Hindu undivided family liable to be assessed as such." The decision in Goswami Brijratanlalji Maharaj v. CWT [1971] 79 ITR 373 (Guj), has been approved by the Supreme Court in Tatavarthi Rajah v. CWT [1997] 225 ITR 561. In this connection, it would be profitable to refer to the decision of the Supreme Court in M. K. Balakrishnan Menon v. Asst. CED-cum-ITO [1972] 83 ITR 162. The question arose in the context of section 7 of the Hindu Succession Act, which provides in the like manner as section 6 for devolution of interest of a Hindu in a tarwad, tavazhi or illom to which Marumakkattayam and Nambudri laws apply. Such interest of a Hindu dying after the commencement of the Act in a tarwad, tavazhi or illom which was joint property is to devolve by succession, testamentary or intestate under the provisions of the Hindu Succession Act and not according to customary law. For the purpose of working out the measure of the deceased's interest in the property of a tarwad, tavazhi or illom, Explanation was provided that the interest of a Hindu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anubhai (HUF) [1996] 220 ITR 334, by a Division Bench of this court. The question arose in the context of computation of capital gains tax on transfer of capital asset which originally belonged to the Hindu undivided family. The asset was transferred after the death of a male member of the coparcenary. The Revenue had claimed to assess the entire capital gains arising out of transfer of such capital asset in the hands of the existing Hindu undivided family, whereas the assessees which included heirs of the deceased Bhalubhai filed voluntary returns showing separate income in the individual capacities on the basis of inheritance. Two fold contentions were raised, firstly, that the share of the deceased passing on to his heirs by inheritance, no more remained the asset of the Hindu undivided family; and, secondly, the widow of the deceased who would have been entitled to a share had the partition taken place between father and son immediately before the death of a male member claimed that she had as a result of such notional partition acquired an indefeasible right and claim to share in the property and therefore her entitlement for share in joint property be also excluded on that pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uires consideration of the question as to what is the effect on the ownership of the coparcenary over the estate hitherto held by it as property of the Hindu undivided family. It is to be seen that while section 20 deals with continued assessment of the Hindu undivided family as an entity until the Wealth-tax Officer is satisfied on an enquiry, that partition as a whole among the various members or groups of members in definite portions has taken place. However, it does not raise any presumption about continued ownership of all the properties notwithstanding that by operation of law the Hindu undivided family has been divested of its ownership on whole or any part of it as joint tenants of coparceners. We may point out here the distinction between the two. A joint tenant is a concept under which co-owners lay claim to the entire property as such, whereas co-owners holding as tenants-in-common claim only to the extent each one has a share in such joint property. If A and B are co-owners of property X as joint tenants the ownership of each one extends to every inch of the property in jointness with the other in property X in its entirety. In case they hold the property X as co-tenant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity is only an individual, the Hindu undivided family or company. The body owning the property jointly, the remainder of the Hindu undivided family and the body of heirs is neither an individual, a Hindu undivided family nor a company but at best an association of persons of individuals (heirs) and the Hindu undivided family (the remainder) and cannot be taxed jointly in respect of their joint property. The property on which the coparcenary or the Hindu undivided family loses its domain as owner and vests in the heirs of the deceased who may or may not be members of the Hindu undivided family of which the deceased was a member, as their individual property cannot be said to be belonging to the Hindu undivided family which is a continuously existing entity, on the valuation date, for the purpose of inclusion in its net wealth. One has to keep in mind the distinction between the continued existence of a Hindu undivided family with the same status and continued domain over the coparcenary property as belonging to it notwithstanding that its status in law may come to an end merely on claiming of a partition by any one or more of members entitled to claim such partition that is to say ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hindu undivided family, the value of jewellery to be taken to be only 2/3rds share of the property and not the whole of it, the court answered : "When it is said that the Hindu undivided family, Usha and Pushpavati were tenants-in-common of definite ascertained properties belonging to the Hindu undivided family at the date of death of Dinesh, it must mean that they were tenants-in-common in respect of each of those properties. Each one of them had an undivided share in every item of those properties. It is true that none of them could predicate at any point of time that a particular identified part of any property belonged to him. So also it is equally true that if any of them sought to ascertain and separate his share in the properties, he would not get one-third share in specie from each of the properties : some properties may be given to him in lieu of his one-third share in the properties while some others may be given to the other tenants-in-common." The court further opined "Usha and Pushpavati as heirs of Dinesh had one-third share in the properties of the Hindu undivided family which included the jewellery while the assessee-Hindu undivided family had only the rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion of the interest of the assessee-Hindu undivided family without reaching finding that the necessary facts for operation of section 6 in the present case existed. Learned counsel for the Revenue has relied on a decision in Tatavarthi Rajah v. CWT [1997] 225 ITR 561 (SC), in support of the contention that so much of the interest of the deceased in the coparcener vested in his share is not liable to be excluded from the assessment of net wealth of the Hindu undivided family. Having carefully perused the decision we are unable to find any such ratio therein. It does support learned counsel about the continued status of the Hindu undivided family without recording a finding of actual partition. However, what property is to be included in computing its net wealth and whether the interest of the deceased which has vested in his heirs as independently of their interest in the Hindu undivided family properties in their individual capacity will continue to be taxed in the Hindu undivided family was neither raised nor decided. In fact the only question before their Lordships of the Supreme Court was whether the provisions of section 20 would govern the case where status of the Hindu ..... 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