Rajasthan H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that after the merger of the Indian States, the impartible estate ceased to exist ?

Counsel Appeared

R. N. Surolia, for the Revenue : H. P. Gupta, for the Accountable Person

BY THE COURT

This reference under s. 64(1) of the ED Act, 1953, is at the instance of the CED to answer the following questions of law:

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that after the merger of the Indian States, the impartible estate ceased to exist ?

Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that after the merger of the Indian States, the private properties of the Rulers belonged to the HUF, if the HUF was in existence ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that at the time of the death of H.H. Maharaja Shri Sumer Singhji, the HUF was in existence and so the private property in question at the time of the death of Shri Sumer Singhji was only HUF property and as such he was not competent to dispose of the same ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not deciding the legal issue before it whether H. H. Maharaja Shri Sumer Singhji at the time of his death was competent to dispose of the property which is stated to be property belonging to the HUF within the meaning of s. 6 of the ED Act, 1953 ?”

His Highness Maharaja Shri Sumer Singhji of Kishangarh died on 16th Feb., 1971. He was assessed to income-tax and wealth-tax during his lifetime. The accountable person filed the account of the estate of the deceased showing the status as HUF. The Asstt. CED took the view that the deceased was the holder of an impartible estate and was, therefore, the absolute owner of the entire property. Accordingly, he was of the view that the entire estate and not merely a part of it passed on to the accountable person. Accordingly, the assessment was completed on the net principal value of the estate at Rs. 13,27,214. The Appellate CED, however, held that the property was ancestral in character and formed HUF property, on account of which the deceased had only 1/4th share therein, which passed on his demise and not the entire property. On further appeal, the Tribunal has sustained that view. It has been held that the property, though initially impartible by custom, was ancestral in character and had become the property of the HUF to which the deceased belonged. It was held that the earlier rule of primogeniture governing the property did not have the effect of depriving the property of the character of HUF property at the time of the demise of the deceased. It was further held that the HUF being in existence at the time of the demise of the deceased, the property was impressed with that character. Reliance was placed on the decisions of the Supreme Court including those in H. H. Maharajadhiraja Madhav Rao Scindia’s Bahadur vs. Union of India case, AIR 191 SC 530, laying down the law relating to such property. It was, therefore, held that only 1/4th share of the deceased in the property passed on his demise and not the entire property.

Learned counsel for the Revenue is unable to point out any infirmity in the Tribunal’s reasoning on the basis of which the conclusion is based. It is obvious that on this conclusion, it was unnecessary to decide the further question covered by the above-quoted question No. 4.

Consequently, the reference is answered against the Revenue and in favour of the assessee by holding that the view taken by the Tribunal is justified and that, for this reason, it was unnecessary to decide the point covered by the aforesaid question No. 4.

No order as to costs.

[Citation : 173 ITR 277]