High Court Of Allahabad
CIT vs. Charan Dass (HUF)
Section 171
Asst. Year 1985-86
R.K. Agrawal & Prakash Krishna, JJ.
IT Ref. No. 47 of 1995
8th August, 2005
Counsel Appeared
R.R. Agrawal, for the Assessee
JUDGMENT
BY THE COURT :
The Tribunal, New Delhi, has referred the following question of law under s. 256(1) of the IT Act, 1961 (hereinafter referred to as “the Act”), for opinion to this Court : “Whether, in view of the facts and circumstances of the case, the Tribunal was legally correct in holding that the AO was not right in applying the provisions of sub-s. (9) of s. 171 of the IT Act, and also in directing him to record the finding relating to the partition as claimed by the assessee ?”
2. The dispute relates to the asst. yr. 1985-86. Briefly stated the facts giving rise to the present reference are as follows : M/s Charan Dass (HUF) consisted of Sri Charan Dass, Karta, Smt. Kans Rani, the wife of the Karta, and two sons, namely, Sri Somnath and Sri Chandra Mohan. The wives and children of Sri Somnath and Chandra Mohan were also members of the said HUF. Sri Charan Dass made a will dt. 30th April, 1984. The relevant portion of the will is reproduced below : “I further bequeath my total interest in my coparcenary property that I may be possessed of at the time of my death to the HUF consisting of my sons, Shri Somnath Ghai and Shri Chandra Mohan Ghai, my wife, wives of Shri Somnath and Shri Chandra Mohan Ghai and their children as members.” Sri Charan Dass expired on 28th May, 1984. After his death all the assets of the HUF were ascertained and collected in the books of account of the firm M/s Veer Industries, in which the said HUF was the partner. On 29th March, 1985, the assets of the HUF were distributed by making entries in the books of account of M/s Veer Industries. An application was filed before the AO requesting him to record a finding of complete partition under s. 171 of the IT Act. The AO held that it was a case of partial partition and refused to recognise the partition in view of sub-s. (9) of s. 171 of the IT Act. The matter ultimately reached the Tribunal at the instance of the assessee. The Tribunal in appeal took the view that in view of s. 6 of the Hindu Succession Act, a complete partition has taken place as claimed by the assessee. The Tribunal has placed reliance upon a judgment of the Supreme Court in the case of Gurupad Khandappa Magdum vs. Hirabai Khandappa Magdum (1981) 129 ITR 440 (SC). Heard counsel for the parties.
The Supreme Court in Gurupad Khandappa Magdum vs. Hirabai Khandappa Magdum (supra), has interpreted s. 6, its proviso and Expln. 1 with a view to ascertain the share of the deceased’s widow in the coparcenary property. In this case the joint Hindu family consisted of Karta, his wife, two sons and three daughters. On the death of the Karta his widow claimed 7/24th share in the joint Hindu family property in which her husband had a coparcenary interest. The Supreme Court observed that for the purpose of determining the share of the plaintiff (widow), two things become necessary to determine, first her share in her husband’s share and second her husband’s own share in the coparcenary property. The proviso to s. 6 contains the formula for fixing the share of the applicant, while Expln. 1 contains a formula for deducing the share of the deceased. Interpreting the scope and width of Expln. 1, the Supreme Court has observed that the fiction created by Expln. 1 has to be given its due and full effect as the fiction created by s. 18A(9)(b) of the Indian IT Act, 1922 was given by it in CIT vs. S. Teja Singh AIR 1959 SC 352. The relevant portion is quoted below : “In our case, it is not necessary, for the purposes of working out the fiction, to assume and supply a missing link which is really what was meant by Lord Asquith in his famous passage in East End Dwellings Co. Ltd. vs. Finsbury Borough Council (1952) AC 109 (HL) at p. 132. He said : ‘If you are bidden to treat an imaginary state of affairs as real, you must also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it; and if the statute says that you must imagine a certain state of affairs, it cannot be interpreted to mean that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.’
In order to ascertain the share of heirs in the property of a deceased coparcener it is necessary in the very nature of things, and as the very first step, to ascertain the share of the deceased in the coparcenary property. For, by doing that alone can one determine the extent of the claimant’s share. Explanation 1 to s. 6 resorts to the simple expedient, undoubtedly fictional, that the interest of a Hindu Mitakshara coparcener “shall be deemed to be” the share in the property that would have been allotted to him if a partition of that property had taken place immediately before his death. What is, therefore, required to be assumed is that a partition had in fact taken place between the deceased and his coparceners immediately before his death. That assumption, once made, is irrevocable. In other words, the assumption having been made once for the purpose of ascertaining the share of the deceased in the coparcenary property, one cannot go back on that assumption and ascertain the share of the heirs without reference to it. The assumption which the statute requires to be made that a partition had in fact taken place must permeate the entire process of ascertainment of the ultimate share of the heirs, through all its stages. To make the assumption at the initial stage for the limited purpose of ascertaining the share of the deceased and then to ignore it for calculating the quantum of the share of the heirs is truly to permit one’s imagination to boggle. All the consequences which flow from a real partition have to be logically worked out, which means that the share of the heirs must be ascertained on the basis that they had separated from one another and had received a share in the partition which had taken place during the lifetime of the deceased. The allotment of this share is not a processual step devised merely for the purpose of working out some other conclusion. It has to be treated and accepted as a concrete reality, something that cannot be recalled just as a share allotted to a coparcener in an actual partition cannot generally be recalled. The inevitable corollary of this position is that the heir will get his or her share in the interest which the deceased had in the coparcenary property at the time of his death, in addition to the share which he or she received or must be deemed to have received in the notional partition.”
5. The above case is the sheet anchor of the assessee’s contention, as noticed by the Tribunal. On a close reading of the aforesaid case law, we find that in para 11 of the report in Gurupad Khandappa Magdum vs. Hirabai Khandappa Magdum (supra), the Supreme Court clarified the matter by making explicit observation that it is not concerned as to whether in reality a partition had taken place between the plaintiff’s husband and his sons. The relevant portion is quoted below : “Whether a partition had actually taken place between the plaintiff’s husband and his sons is beside the point for the purposes of Expln. 1. That Explanation compels the assumption of a fiction that in fact ‘a partition of the property had taken place’, the point of time of the partition being the one immediately before the death of the person in whose property the heirs claim a share.”
6. The real controversy in the above case before the Supreme Court was about the extent of the share of the widow in the coparcenary property. It was not concerned as to whether a partition takes place immediately after the death of a member of a coparcenary of the coparcenary property. Therefore, this case cannot be treated as an authority for the proposition that a partition takes place in the joint Hindu family, as soon as a male coparcener dies. In the case in hand, the question involved is whether there is necessarily a disruption of joint Hindu family immediately after the death of a coparcener. The above case was examined by the Supreme Court in a subsequent judgment in State of Maharashtra vs. Narayan Rao Sham Rao Deshmukh (1985) 46 CTR (SC) 349 : (1987) 163 ITR 31 (SC), wherein it has been observed that its judgment in the case of Gurupad Khandappa Magdum vs. Hirabai Khandappa Magdum (supra) is an authority for the proposition that when a female member who inherits an interest in the joint family property under s. 6 of the Hindu Succession Act files a suit for partition expressing her willingness to go out of the family, she would be entitled to get both the interest she has inherited and the share which would have been notionally allotted to her as stated in Expln. 1 to s. 6 of the Hindu Succession Act. But it has been observed by the apex Court itself “It cannot be an authority for the proposition that she ceases to be a member of the family on the death of a male member of the family whose interest in the family property devolves on her without her volition to separate herself from the family”. Further, it has been held that the ownership of a defined share in the family property by a person need not be treated as a factor which would militate against his being a member of a family.
Thus, the gist of the aforesaid pronouncements of the Supreme Court is that there is no ipso facto partition of joint Hindu family properties immediately after the death of a male coparcener of the Mitakshara school having coparcenary interest in the coparcenary property. The fiction given by Expln. 1 has nothing to do with the actual disruption of the status of an HUF. It freezes or quantifies the share of a female heir in the coparcenary property on account of the death of a coparcener at the relevant point of time. We have considered the aforesaid judgment of the Hon’ble Supreme Court in great detail in IT Ref. No. 95 of 1992, CIT vs. Smt. Meera Prem Sundar (HUF) decided on 1st April, 2005 [reported at (2005) 198 CTR (All) 458—Ed.] and IT Ref. No. 263 of 1991, CIT vs. Dharam Pal Singh (HUF) [reported at (2005) 196 CTR (All) 28—Ed.] and have come to the conclusion that there is no partition and disruption of the HUF as per Expln. 1 to s. 6 of the Hindu Succession Act. Learned counsel for the assessee has placed reliance upon a Division Bench judgment of this Court in the case of Girdhari Lal (Decd.) through L/H vs. CIT (2005) 193 CTR (All) 656 : (2004) 269 ITR 50 (All), we find that the controversy involved therein was a different one and the said case has no application to the controversy involved in the present case. In that case it is nowhere held that after the death of the Karta, a partition takes place or there is disruption of the HUF. In that case the High Court was concerned with the interpretation of s. 8 of the Hindu Succession Act. Sec.
8 of the Hindu Succession Act deals with the succession of self-acquired property. Sec. 6 of the Hindu Succession Act deals with the case of determination of the share of a male Hindu when he dies. Under the Hindu law self- acquired property and joint Hindu family property are not treated on par. Therefore, the reliance placed upon the judgment of Girdhari Lal (supra) is misplaced one. We find that another Division Bench of this Court in the case of CED vs. Smt. S. Harish Chandra (1987) 59 CTR (All) 56 : (1987) 167 ITR 230 (All) has held that the proviso to s. 6 creates a fiction for the purpose of the said section. It sets out the mode of devolution of interest in coparcenary property. It comes into operation only after the death of the coparcener and only for the limited purpose of laying down the succession. In the result, we answer the above question referred to us in the negative, i.e., in favour of the Revenue and against the assessee. There shall be no order as to costs.
[Citation : 280 ITR 637]
