TMI Blog1992 (7) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... L. K. Agarwal (sic) would constitute Hindu undivided family property in the hands of his sons and grandsons ?" For the assessment year 1977-78, the assessee, Shri L. K. Goyal, filed a voluntary return declaring a total income of Rs. 13,510 in the status of a Hindu undivided family. The assessee died on February 25, 1976 (sic), leaving behind four sons, namely, S. S. Goyal, V. P. Goyal, H. C. Goyal and M. C. Goyal. The property owned by the family represented deposits with Messrs. Jaipur Auction House, Messrs. Modern Furniture and Messrs. Goyal and Sons, and the return for the assessment year 1977-78, has been filed by the assessee in respect of the income earned on the above deposits. The Income-tax Officer, in his assessment order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt. It will be seen that the case of W. N. Jain, which was relied upon by the learned Appellate Assistant Commissioner of Income-tax in taking the view that, on the death of L. K. Goyal, his estate devolved upon his four sons by way of inheritance, was decided on the basis of CIT v. Dr. Babubhai Mansukhbhai [1977] 108 ITR 417 (Guj). The contention of learned counsel for the Revenue is that L. K. Goyal had throughout been assessed as an individual and on his death the income for which the return has been filed, it would have gone by inheritance to his four sons and they did not constitute a Hindu undivided family and the status could not be held as Hindu undivided family. According to learned counsel, the Income-tax Officer has rightly as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded family on substantive basis as held by the Appellate Assistant Commissioner or on protective basis as held by the assessing authority ? In the case of CIT v. Ram Rakshpal, Ashok Kumar [1968] 67 ITR 164, the Hon'ble judges of the Allahabad High Court referred to the case of Muhammad Husain Khan v. Babu Kishva Nandan Sahai, AIR 1937 PC 233, 238, wherein Sir Shadi Lal, an eminent judge, observed (at page 170) : "The rule of Hindu law is well-settled that the property which man inherits from any of his three immediate paternal ancestors, namely, his father, father's father, and father's father's father is ancestral property as regards his male issue, and his son acquires jointly with him an interest in it by birth. Such property is held b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Assistant Commissioner but, on further appeal, the Tribunal held that the properties did not form part of the joint family properties and hence the income therefrom could not be assessed in the hands of the family. On a reference to the Madras High Court, a Full Bench of that court held that (headnote) : ". . . 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. " The Full Bench further held (headnote): " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding Ns sons. In fact the Madhya Pradesh High Court followed the Full Bench decision of the Madras High Court in the case of Addl. CIT v. P. L. Karuppan Chettiar [1978] 114 ITR 523. The Andhra Pradesh High Court also had occasion to deal with a similar question, though in the context of wealth-tax in the case of CWT v. Mukundgirji [1983] 144 ITR 18 and in view of section 8 of the Hindu Succession Act said that the property which a son inherited from his father in case the father and his son do not constitute a joint Hindu family in the coparcenary is his individual property. There is only one case where a contrary view has been taken and it is CIT v. Dr. Babubhai Mansukhbhai [1977] 108 ITR 417 (Guj). Placing reliance on the old Hindu l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to above. The apex court, in paragraph 20 (at page 1760 of AIR) of the aforesaid judgement said (at page 381 of 108 ITR) : "In view of the preamble to the Act, i.e., to modify where necessary and to codify the law, in our opinion, it is not possible when the Schedule indicates heirs in Class I and only includes son and does not include son's son but does include son of a predeceased son, to say that when a son inherits 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 who is intended to be excluded under section 8 is to inherit, the latter wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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