High Court Of Allahabad
Girdhari Lal (Decd.) Through L/H vs. CIT & ANR.
Section 4
Asst. Year 1986-87 to 1991-92
M. Katju & R.S. Tripathi, JJ.
IT Appeal Nos. 20 to 24 & 27 of 2004
17th May, 2004
Counsel Appeared
Rakesh Ranjan Agrawal & Suyash Agarwal for the Appellant : A.N. Mahajan, for the Respondents
JUDGMENT
By the court :
These six connected IT appeals have been filed under s. 260A of the IT Act, 1961, by which the appellant has challenged the judgment, dt. 27th Feb., 2004, of the Tribunal, New Delhi. All these appeals have been decided by the impugned common judgment. Since they involve identical questions of law hence they are being decided by this common judgment. We have heard Shri R.R. Agrawal, learned counsel for the appellant, and learned counsel for the Department. The facts of the case are that on 14th March, 1970, the agricultural land of Gayasen was compulsorily acquired under the U.P. Awas Evam Vikas Parishad Adhiniyam by the Meerut unit of the U.P. Awas Evam Vikas Parishad. Gayasen died in the year 1977 intestate. After his death his assets devolved upon his sons, Giridhari Lal and Ramji Lal. No partition between Gayasen and his sons was done during the lifetime of Gayasen. On 23rd July, 1983, possession of the acquired land was taken over by the Meerut unit of the U.P. Awas Evam Vikas Parishad. On 23rd Aug., 1990, Addl. District Judge, Meerut, awarded enhanced compensation, solatium and interest to Giridharilal under s. 18 of the Land Acquisition Act. On 11th Oct., 1991, Giridharilal received Rs. 4,90,091.02. On 2nd Nov., 1991, he received further interest of Rs. 4,82,593.35. Thus, the total interest received is Rs. 9,72,684.37. On 25th Feb., 1992, Girdharilal died. On 31st March, 1992, proceeding under s. 148 was initiated for the asst. yrs. 1986-87 to 1991-92 by issuing notices to the legal heirs of the late Giridharilal and six assessment orders were passed under s. 143(3) r/w s. 148 of the Act, and the income-tax assessed was Rs. 1,33,924 in each assessment year in the status of an individual.
The AO denied the claim of the heirs of the late Giridharilal to be assessed in the status of an HUF. On 22nd Feb., 1997, the CIT(A), Meerut, allowed the appeals filed by the assessee and held the status of the late Giridharilal as an HUF. He held that in the absence of a will the self-acquired property of a father dying intestate and the income thereon was in the status of an HUF. Hence, he set aside the assessment orders. On 27th Feb., 2004, the Tribunal set aside the aforesaid order of the CIT(A), Meerut, dt. 22nd Feb., 1997, and held the status of the late Giridharilal to be individual. The Tribunal further held that income by way of interest on the enhanced compensation was taxable in the hands of the late Giridharilal as individual. Learned counsel for the appellant submitted that Gayasen having died in the year 1977 intestate, his property on his death became an HUF property in the hands of his sons. Admittedly, there was no partition between Gayasen and his sons during the life time of Gayasen. We accept this submission of learned counsel for the appellant. It has been held by the Division Bench of this Court in J.P. Verma vs. CIT (1990) 81 CTR (All) 296 : (1991) 187 ITR 465 (All) that under the Hindu law on the death of an Hindu male his property devolves upon his heirs in accordance with s. 8 of the Hindu Succession Act. However, what has been overlooked by the Tribunal is that the nature of the property changes when an Hindu male dies. On his death even his self-acquired property becomes ancestral property in the hands of his sons. This is because under the Hindu law the property which a person inherits from his father, father’s father and father’s father’s father is ancestral property. Hence, even if the property in question was the self-acquired property of Gayasen, it became an HUF property on his death in the hands of his sons. The Tribunal has held that after the death of Gayasen the self-acquired property devolved on his son, Giridharilal, in his individual capacity. This view is clearly incorrect. The property may have been the self-acquired property of Gayasen, but the moment Gayasen died, the nature of his property changed and it came ancestral property in the hands of his sons and not their self-acquired property. In our opinion, the decision of the Supreme Court in the case of CWT vs. Chander Sen (1986) 58 CTR (SC) 119 : (1986) 161 ITR 370 (SC) supports our view.
The basic fallacy of the Tribunal is that it was of the opinion that if the property is self-acquired property in the hands of an Hindu male it will remain self-acquired property even after his death. This is not correct as stated above. On the death it becomes ancestral property in the hands of his sons. “All property inherited by a male Hindu from his father, father’s father or father’s father’s father, is ancestral property” (vide Mulla’s Principles of Hindu Law). For the reasons given above, these appeals are allowed and the impugned judgment of the Tribunal is set aside, and the order of the CIT(A), dt. 22nd Feb., 1997, is restored.
[Citation : 269 ITR 50]
