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High Court Of Calcutta
SABYASACHI MUKHERJI, SUDHINDRA MOHAN GUHA
COMMISSIONER OF INCOME-TAX - Appellant
Versus
U.C.MAHATAB, MAHARAJA OF BURDWAN - Respondent
Income-Tax Reference 312 Of 1973
Decided On : 09/08/1980
INCOME TAX - HINDU UNDIVIDED FAMILY - PARTITION - IMPARTIBLE ESTATE - HINDU SUCCESSION ACT, 1956 - WHETHER THE IMPARTIBLE ESTATE CEASED TO EXIST AFTER THE COMING INTO FORCE OF THE HINDU SUCCESSION ACT, 1956 - WHETHER THE PROPERTY OF THE IMPARTIBLE ESTATE BELONGS TO THE HINDU JOINT FAMILY - WHETHER THE PARTITION OF THE PROPERTIES COMPRISING THE IMPARTIBLE ESTATE BY A DEED DATED 10TH APRIL, 1962, AMONGST THE COPARCENERS WAS VALID.
Fact of the Case:
The assessee was the holder of an impartible estate known as the Burdwan Raj and was governed by the Mitakshara school of Hindu law. There was a partition of the family properties, according to the assessee, between the assessee and his three sons, by a deed dated 10th April, 1962. The assessee claimed partition of the family properties before the ITO. The ITO was of the view that the assessee has been assessed as an individual in the past and there has been no HUF which could be partitioned within the meaning of Section 171 (1) of the I. T. Act, 1961, and the claim for partition was not enforceable. He was also of the view that the partition had not taken place in the true sense of the term as the assessee's mother and brother had no right to relinquish their title or interest in the impartible estate which was solely governed by the rule of primogeniture.
Finding of the Court:
The Tribunal held that though the impartible estate could not be held in coparcenary, still the estate belonged to the joint family. According to the Tribunal, by the passing of the Hindu Succession Act, 1956, the law in respect of the impartible estate had radically changed and the. impartible estates were abolished except those saved by Section 5 (ii) of the said Act, viz. , the Hindu Succession Act, 1956. Under Section 4 of the Hindu Succession Act, the law of succession hitherto applicable to the Hindus, either by virtue of any text, rule, custom or usage, ceased to have effect in respect of matters dealt with under the said Act. All impartible estates except those saved under Sections 5 (ii) and 5 (iii) would now have the ordinary incidents of property and the provisions of the Hindu Succession Act, 1956. It was further held that the instant case, did not come within the exception of Section 5 (ii) or Section 5 (iii) of the said Act. Thus, according to the Tribunal, the rule of primogeniture was no longer enforceable and the impartible estate was abolished. It was further held that Section 27 (ii) of the I. T. Act, 1961, would be applicable, if at all, to those estates saved by Section 5 (ii) or Section 5 (iii) of the Hindu Succession Act, 1956, but not to other impartible estates which no longer existed. Since the estate, in the instant case, was no longer an impartible estate, according to the Tribunal, Section 27 (ii) of the I. T. Act, 1961, could not be made applicable. It was further held that the property, in the instant case, belonged to the Hindu joint family and there had been a valid partition of the family property by a deed dated 10th April, 1962, and the shares of the parties had been divided into definite shares. Thus, the coparceners, according to the Tribunal, after partition, became the owners of the properties allotted to them. It was further held that there was nothing to doubt the partition. The Tribunal, accordingly, upheld the order of the AAC directing the ITO to exclude the income from those properties allotted to the shares of the other coparceners from the total income of the assessee.
Issues: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the impartible estate of which the assessee was a holder ceased to exist after the coming into force of the Hindu Succession Act, 1956, and Section 27 (ii) of the Income-tax Act, 1961, cannot be made applicable ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the property of the impartible estate belongs to the Hindu joint family ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the partition of the properties comprising the impartible estate by a deed dated 10th April, 1962, amongst the coparceners was valid and thus excluding the income from those properties allotted to the shares of the other coparceners from the total income of the assessee ?
Ratio Decidendi: The Supreme Court held that the Hindu Succession Act, 1956, only dealt with the position at the time of succession after the coming into operation of the Hindu Succession Act, 1956. It did not affect the position and character of the HUF or of the ingredients of the impartible estate as such of an impartible estate which is in existence from before the coming into operation of the Hindu Succession Act, 1956.
Final Decision: Question No. 1 must, therefore, be answered in the negative and in favour of the revenue. So far as the properties covered under Section 27 (ii) of the I. T. Act, 1961, are concerned, question No. 2 must also be answered in the negative and in favour of the revenue. Question No. 3, in so far as these cover properties covered by Section 27 (ii) of the I. T. Act, 1961, is in the negative and in favour of the revenue.
( 1 ) IN this case, the assessment years involved are 1963-64, 1964-65 and 1965-66. The assessee was the holder of an impartible estate known as the Burdwan Raj and was governed by the Mitakshara school of Hindu law. There was a partition of the family properties, according to the assessee, between the assessee and his three sons, by a deed dated 10th April, 1962. The assessee claimed partition of the family properties before the ITO. The ITO was of the view that the assessee has been assessed as an individual in the past and there has been no HUF which could be partitioned within the meaning of Section 171 (1) of the I. T. Act, 1961, and the claim for partition was not enforceable. He was also of the view that the partition had not taken place in the true sense of the term as the assessee's mother and brother had no right to relinquish their title or interest in the impartible estate which was solely governed by the rule of primogeniture. He further found that there was a clear bar in Hindu law from making a gift by a coparcener till the individual coparcener's interest was determined by means of partition and the very fact that the assessee had made a gift in favour of his brother on the 17th October, 1958, to the detriment of the existing HUF proved that the claim for partition was not enforceable. The ITO also rejected the contention of the assessee that the gift should be considered as partial partition. He also held that the entire property had not been divided. He rejected the assessee's contention that the partition was unequal in view of the assessee's position as also in order to discharge the liabilities and for meeting the expenses of pending litigation. Thus, he did not accept the partition and included the entire income in the hands of the assessee as an individual.
( 2 ) THERE was an appeal before the AAC. The AAC was of the view that after the coming into force of the Hindu Succession Act, 1956, the irnpartible estate vested in the hands of the joint family. He, further found that the impartible estate ceased to exist after the Hindu Succession Act, 1956, came into force and the property comprised in the estate became the joint family property. He observed that Section 171 only referred to the position of law in respect of an HUF which had been assessed under the I. T. Act, 1961, and its claim regarding partition and it did not deny the existence of the HUF which might be owning property but had not been assessed to tax. As regards the gift, he held that the transfers were by way of family arrangements and it amounted to partial partition of the properties owned by the HUF. He also held that the intention to partition was really the test and once the members of the family partitioned the property in definite shares, though in unequal shares, the partition was complete. He also found that the assessee had filed separate return in the status of an HUF which itself showed, according to the AAC, that there was an HUF. The AAC further found that there was a partition by a deed of partition dated 10th April, 1962, and the properties mentioned in the deed of partition passed on, according to the AAC, to the different coparceners and the ITO was, therefore, not justified in including the income from such properties in the income of the assessee. He thus directed the ITO to exclude the income from those properties which had been allotted to the shares of the other coparceners from the total income of the assessee.
( 3 ) THE revenue preferred an appeal before the Tribunal. It was urged that under Section 27 (ii) of the I. T. Act, 1961, the holder of an impartible estate should be deemed to be the owner of all the properties comprised in the estate and the income of all the properties of the estate were to be included in the total income of the assessee so long as Section 27 (ii) was on the statute book. It was further urged that the impartible estate was not held in coparcenary and so there cou
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