Per Shri K.C. Srivastava, Accountant Member - The deceased, Shri A.K. Chanda, died on 25-10-1972. Earlier he was the Comptroller and Auditor General of India. He owned a flat No. 4 in Akash Deep at 5, Lower Rawdon Street, Calcutta. There is no dispute that this was a self-acquired property of the deceased. By a declaration made on 6-11-1967, the deceased threw this property in the common hotch pot of the HUF consisting of self, his wife, Mrs. Monica Chanda, and his two daughters, Mrs. Anjali Pal and Miss Malavika Chanda. It was also declared that the income from this property shall absolutely belong to the said HUF, of which he was the karta. After this declaration, income-tax assessments were made in the hands of the HUF. For the assessment year 1973-74, the ITO had assessed the income in the hands of legal heir, representing the deceased, as her individual income. Against this order revision petition was made before the Commissioner, who held that at the relevant time both the daughters were married and they could not be a part of the HUF of Shri Chanda. The Commissioner held that up to the date of death of Shri Chanda the income from this property was taxable in the hands of the HUF consisting of Shri Chanda and Smt. Chanda and after that date it was to be assessed as the income of Smt. Chanda in her individual capacity.

2. In the estate duty return filed, the accountable person had claimed that only one-fourth of the value of this property had passed on the death of the deceased. According to this claim, there were four members in the HUF according to the declaration made by Shri Chanda and the deceased had only one-fourth share. The other three-fourth share belonged to the other three members, namely, the wife and the two daughters. The Assistant Controller did not accept this plea and he held that the deceased was governed by Dayabhaga law under which the foundation of the coparcener was laid on the death of the father and not before it. As Shri Chanda did not have any male issue, there was no question of his forming a coparcenary in respect of his self-acquired property. He made a reference to paragraph 227 of Mulla’s Principles of Hindu Law which deals With the self-acquired property being thrown into common stock. He found that the principle of blending or throwing into common stock applied to brothers living together and forming a joint family governed by the Dayabhaga law. According to the Assistant Controller, a HUF could not be formed by throwing self-acquired property into the common hotch pot of HUF consisting of himself, his wife and his daughters. The claim of the assessee was, therefore, rejected and the whole value of the property was included in the estate of the deceased.

3. When the matter came before the Appellate Controller, strong reliance was placed on the observations made by the Supreme Court in the case of Surjit Lal Chhabda v. CIT [1975] 101 ITR 776. On the basis of these observations it was claimed that in Dayabhaga system also a Hindu could throw his self-acquired property into common hotch pot and, therefore, on the date of death the property belonged to the HUF having four persons and the deceased has only one-fourth share in this property. The Appellate Controller, however, referred to Mulla’s Principles of Hindu Law, according to which, there is no coparcenary so long as the father is alive in Dayabhaga law. It is only on his death leaving two or more male issues that coparcenary is formed. Where a male coparcener dies, his female heir can step in his shoes and in that situation a female can also be a coparcener along with males in a Dayabhaga family. However, even under the Dayabhaga law a coparcenary could not start with females and on the death of a person his wife and daughters could not constitute a coparcenary.

4. Next, the Appellate Controller further referred to the decision of the Supreme Court in the case of Surjit Lal Chhabda (supra) and quoted extensively from that decision. H