1973 Supreme(Raj) 4

Rajasthan High Court
Jagat Narayan, C.J. & Jain, J.
Thakur Gopalsingh of Badnor - Appellant
Versus
Commissioner of Wealth Tax - Respondents
Wealth Tax Ref. No. 16 of 1966
Decided On : January 09, 1973

Headnote:(a) Wealth Tax Act, Sec. 4—Rajasthan Land Reforms and Resumption of Jagirs Act, S. 23 —Private property of Jagirdar where other members entitled to maintenance — Held that such property held by Jagirdar, though impartible, yet it was property held by Hindu Joint family and not personal property of Jagirdar.(b) Hindu law—Joint family property—Succession and inheritance governed by rule of primogeniture—Abolition and resumption of Jagir—Jagirdar succeeding to private property as absolute owner—Other members of Jagirdars family entitled to maintenance from holder of Jagir under the law governing the grant of Jagir—Held that though the private property of Jagirdar was impartible yet the character of property was that of property held by Hindu Joint family—Other members of family were entitled to share in property and where such property was sold other members were entitled to share sale proceeds.(c) Gift Tax Act — Rajasthan Land Reforms and Resumption of Jagirs Act, Sec. 23 —Private property of Jagirdar where other members entitled to maintenance—Held that such property was not personal property of Jagirdar but property held by Hindu Joint family — Sale of such property—Division of sale proceeds amongst members of family— Held that amount received by members was not gift but as their share in sale proceeds.

       A reference to the provisions of the Revenue Code Mewar (Act No. V of 1947) shows that the Jagirdar in the State of Udaipur was vested with all the revenue rights in the Jagir lands. On the death of the Jagirdar, the Jagir was to pass to a male descendant of the original grantee as may be recognised by the Udaipur Darbar. It also provided that the Jagirdar had no right to dispose of his Jagir by will, mortgage or sale. Junior members and sons of the Jagirdar were to be maintained from the income of the Jagir. It is thus clear that even under the Act of 1947. the Jagir was hereditary and the junior members of the family had their right and interest in the Jagir in respect of maintenance and a possible right of succession. In the circumstances, it cannot therefore be said that a Jagirdar in the State of Udaipur had the absolute domain over the estate and he held the same without any strings. The fact that the property is ancestral and its succession is governed by the rule of primogeniture does not mean that the estate is not capable being joint family property. As noticed above, the Jagirdar is bound to maintain and defray the reasonable expenses of the junior members of / the family from the Jagir.

       Held = In view of the law and the facts of this case the argument that the Jagirdar was the absolute owner of the Jagir is not acceptable. There is no manner of doubt that the Jagir of Badnore was not the absolute property of the Jagirdar and it belonged to the Hindu undivided family.

       Held = The Jagir which the assessee held belonged to the joint Hindu family and it was not his self acquired or his separate property. The compensation awarded to him or the market price of the compensation on the date of valuation could be assessed for wealth-tax purposes only as that of Hindu undivided family. The character of compensation cannot be different than what it was of the Jagir. The position under the Wealth Tax Act during the relevant assessment years was similar to the one that existed in regard to the income-tax law prior to the introduction of sec. 9(4), where in a family governed by the Mitakshara, by custom the rule of primogeniture controls the devolution of impartible property. The custom of impartiality does not touch the succession since the right of survivorship is not inconsistent with the custom ; hence the estate retains its character of joint family property and devolves by the general law upon that person who, being in fact and in law joint in respect of the estate, is also the senior member in the senior line, Hence a holder of the estate -receiving income from house property cannot be said to be owner of such property. It is the joint family that is the owner and therefore he cannot be assessed as an individual in respect of such income.

       Held = Next question that arises is whether the distribution of the sum of Rs. 2,00,000 received by the assessee as the sale proceeds of the Garh sold by him to the Government of Rajasthan amongst his sons, his wife and himself was or was not a transfer of assets within the meaning of the Gift Tax Act, 1958. We have held above that the Jagir held by the assessee belonged to the Hindu undivided family of the holder of the estate though by rule of primogeniture, he held it in his hands without sharing it with the others. His sons and his wife constituting the joint Hindu family with him had rights and interest in the Jagir though limited. The fort at Badnore was a part of the Jagir and as such, it was also the property of the Hindu undivided family. The assessee had partitioned this amount among five persons including himself. After the resumption of Jagir the Garh had been held to be the private property of the assessee under sec. 23 of the Act but it continued to remain the property belonging to the Hindu undivided family. The character of this property in the hands of the Jagirdar will be impartible. By renouncing his rights in the impartible estate and by a similar relinquishment of the right of succession by other heirs who are likely to succeed, the impartible character of the estate is destroyed. Every member of the family has some interest in the estate and it cannot be said that the other members of the family have no existing interest in the estate though it was impartible and remained in the hands of the senior member of the family. After renouncing his interest in the estate, and surrender of right of succession, the property remained as that of the Hindu undivided family and it can certainly be divided among the members of the family and such a division will not constitute a transfer. Thakur Gopal Singh having relinquished his right of keeping the sale price obtained by the sale of the Garh as impartible property it became open to be partitioned amongst the members of the joint family. The partition of Rs. 2,00,000 did not involve any transfer and the provisions of the Gift Tax Act were not attracted. (Paras 5, 10, 13, 14, 18 and 20)