The property in the hands of a sole surviving co-parcener of a Hindu undivided family is the property of a Hindu undivided family, because there is always a potentiality of another co-parcener coming into existence either by adoption or by birth.

Narasimham, J.

1. The question referred to this Court by the Wealth Tax (Income-tax) Tribunal under Sec. 66 (1) of the Indian Income-tax Act, read with Sec.27 of the Wealth Tax Act, is as follows:-

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"Whether on the facts and in the circumstances of the case the status of the petitioner is that of Hindu joint family ?"

2. The facts stated by the learned Tribunal are as follows. The petitioner on partition obtained his share out of the ancestral property of an original joint Hindu Mitakshara family, After partition his family consisted of himself and his wife, there being no issue. Thus he is the sole co-parcener in respect of the property that fell to his share after partition. The question for consideration is whether for the purpose of income-tax and wealth tax he should be assessed as an "individual" or else, as a Hindu undivided family.

3. Following the well known decision of the Privy Council in Kalyanjis case, Kalyanji Vitbaldas V/s. Commissioner of Income-tax, Bengal, AIR 1937 PC 36, and the subsequent decisions following the same, the Tribunal held that the assessee should be assessed only as an "individual". But in Rukmini Bai V/s. Commissioner of Wealth Tax, B. and O., AIR 1984 Orissa 274, a Division Bench of the Orissa High Court, after discussion of the subsequent decisions of the Privy Council, especially Anant V/s. Shankar, AIR 1948 PC 196, Srinivas Krishnarao V/s. Narayan Devji, AIR 1954 SC 379, and the case which went from Ceylon, Attorney-General of Ceylon V/s. A.R. Arunachalam Chettiar, 1957 App Cas 513: 1958-34 ITR (Supp) 42, held that the ancestral property in the hands of a sole surviving co-parcener should also be held to be the property of a Hindu undivided family, because there is always a potentiality of another co-parcener coming into existence either by adoption or by birth. The subsequent decisions of the High Court, in which doubt was cast on the correctness of that portion of the judgment of the Privy Council in Kalyanjis case, AIR 1937 PC 36, which dealt with the point in controversy, were also noticed. It is, therefore, unnecessary to repeat the reasons given in that judgment. I may, however, specially refer to the Ceylon case (at pp. 45-46) where their Lordships pointed out that the true test to decide whether the property in the hands of a sole surviving co-parcener is the properly of a Hindu undivided family or that of an individual is not whether his right of alienation of the property is unrestricted, which, according to them, was an irrelevant consideration. Their Lordships observed that it is only on analysing the nature of the rights of the members of the undivided family, both those in being and those yet to be born, that it can be determined whether the family property can properly be described as "joint property" of the undivided family. That decision was given while construing the expression "Hindu undivided family" occurring in a taxing statute of Ceylon, namely, the Estate Duty Ordinance I of 1938, and there is no special reason why the principle laid down therein should not be applied in construing the same expression occurring in the taxing statutes of India. Kalyanjis case, AIR 1937 PC 36, was actually noticed by their Lordships of the Privy Council, as will be clear from p. 46.

4. Our attention was, however, drawn to a judgment of the Rajasthan High Court in Mukat Beharilal Bhargava V/s. Commissioner of Income-tax, Delhi, 1964-53 ITR 613 (Raj), and that of the Madras High Court in K.R. Ramachandra Rao V/s. Commissioner of Wealth Tax, Madras, 1963-48 ITR 959: (AIR 1963 Mad 280), where, following the principle in Kalyanjis case, AIR 1937 PC 36, it was held that the property in the hands of a sole surviving co-parcener of a Hindu undivided family should be assessed as the property of an "individual". With great respect, I am unable to follow these decisions, because they have not taken into consideration the subsequent decisions of the Privy Council, especially in the Ceyl