Rajasthan H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the deceased widow, as a member of the HUF was the absolute owner of one half of the HUF’s property and that the same passed on her death?

High Court Of Rajasthan : Jaipur Bench

Controller Of Estate Duty vs. Radheyshyam

Sections ED 6, ED 7, ED 39(1)

V.K. Singhal & M.A.A. Khan, JJ.

DB ED Ref. No. 129 of 1981

9th May, 1996

Counsel Appeared

K.S. Gupta for G.S. Bapna, for the Revenue : N.M. Ranka with B.S. Yadav, for the Accountable persons

M.A.A. KHAN, J. :

The Tribunal, Jaipur Bench (for short “the Tribunal”) has referred the following questions to this Court for its opinion :

“1. Whether, on the facts and in the circumstances of the case the Tribunal was justified in holding that s. 6 of the ED Act, 1953 is not applicable in this case ?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the cessor of interest deemed to pass on the death of the deceased in respect of the property held by the smaller HUF is to be one half and not full ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the share of the deceased in the larger HUF on the basis of deemed partition should have been 1/6th and not 1/3rd ?”

2. The case stated by the Tribunal under s. 64(1) of the ED Act, 1953 (hereinafter referred to as “the Act”) is as under : Late Shri Chillu Ram, the deceased, constituted an HUF along with his wife Smt. Kastoori Devi. This HUF of the deceased held certain movable and immovable properties and had also one-third share in the properties owned and held by the bigger HUF of M/s Jawahar Lal Gainda Lal. The bigger HUF was assessed as such till asst. yr. 1954-55. A partial partition of bigger HUF took place and was recognized by the ITO on 4th Jan., 1958. The deceased in his capacity of `Karta’ of his smaller HUF, became a partner to the extent of 1/3rd share in a firm styled as M/s Jawahar Lal Gainda Lal. Shri Chillu Ram died on 29th Jan., 1974. At the time of his death the deceased had, as mentioned above, 1/3rd share in certain properties of the bigger HUF and was also having share in the properties belonging to his own smaller HUF. After the death of the deceased the Accountable Persons (APs) filed the return of the estate which belonged to the deceased and passed on his death. In such return the APs had shown the share of the deceased in the bigger HUF at 1/6 (one sixth) and in the smaller HUF at one- half which, according to them, was includible in the principal value of the estate of the deceased passing on his death. The Assistant Controller of the Estate Duty (ACED), however, noted that the deceased had no male issue. He, therefore, held the view that the entire share at one-third which the deceased along with his wife had in the bigger HUF would pass on his death. He accordingly included the value of the share of the deceased in the properties of the bigger HUF at one-third in the principal value of the estate of the deceased passing on his death. Regarding the properties belonging to the smaller HUF, the learned ACED noted that the deceased had executed a will on 5th Dec., 1973 and in such will he had declared himself to be the sole proprietor and owner of the properties belonging to the smaller HUF. Taking into account the will of the deceased, the ACED included the value of all the properties which belonged to the smaller HUF in the principal value of the estate of the deceased passing on his death. In appeal, the learned Appellate CED confirmed the finding recorded by the learned ACED. In second appeal, the Tribunal examined the issue in sufficient detail and held that the deceased and his wife constituted a smaller HUF and since this smaller HUF had one-third share in the bigger HUF only one-sixth share, which the deceased had in be bigger HUF at the time of his death, was includible in the principal value of his estate passing on his death. With regard to the share of the deceased in the smaller HUF, the learned Tribunal held that the deceased had one-half share only in the properties of the smaller HUF and the will executed by the deceased on 5th Dec., 1973 was ineffective qua the interest and share of his wife in the properties belonging to the smaller HUF. The learned Tribunal, therefore, directed that one-half share only which belonged to the deceased in the smaller HUF and which passed on his death should be included in the principal value of the estate of the deceased. In arriving at its conclusion, the learned Tribunal examined the scope and applicability of s. 6, 7 and 39 of the Act and held that the provisions of s. 6 do not stand attracted to the facts of the present case.

2. The learned counsel for the Department urged that since the deceased was the sole surviving male member of the smaller HUF he had one-third share in the properties of the bigger HUF. The said one-third share belonging to the deceased would be deemed to pass on his death and, therefore, the provisions of s. 6 would apply to thepresent case. The learned counsel urged that since the smaller HUF had only one male member, the interest and share of the smaller HUF in the bigger HUF would belong to such sole male member i.e. the deceased and the entire interest would pass on his death. Mr. N.M. Ranka, the learned counsel for the APs, on the other hand, urged that it is not in dispute that the smaller HUF of the deceased had one-third share in the bigger HUF. Since the smaller HUF was constituted by the deceased alongwith his wife, the deceased had only one-sixth share in bigger HUF at the time of his death and the interest of the deceased to that extent only would cease and shall be deemed to pass on his death. Mr. Ranka emphasised that the benefit which accrued or arose by the cessor of the interest of the deceased in the properties belonging to the bigger HUF would be deemed to pass on his death.

3. In order to appreciate the rival submissions of the learned counsel for the parties in right perspective the concepts of “family” and “property” under Hindu Law are required to be clearly understood. Joint and undivided character of a family is the normal condition of Hindu Society. An HUF is ordinarily joint not only in estate but also in food and worship. But existence of joint estate is not an essential requisite to constitute a joint or HUF. Hindus get a joint family status by birth and the joint family property is only an adjunct of the joint family. Ordinarily a joint Hindu family consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. Sex of the members is thus immaterial. One male and one female may constitute it. Even two females may also constitute it. For instance, the death of the father and son leaving behind them their respective wives would not deprive of the widows of their status as members of a joint Hindu family. So long as the widow is capable of bringing a son into existence by adoption the character of the family as a joint Hindu family would be deemed to subsist [Smt. Dhani Devi & Jhawer Mal vs. CED (1973) 89 ITR 96 (Raj)]. The membership of the family may temporarily be reduced to even one member also. Such reduction of the family unit to one individual may temporarily suspend the status of that individual as a member of a joint Hindu family but the suspended status would stand revived on induction into the family of another member by marriage or by adoption. The basis of the rule that there need not be at least two members to constitute an HUF is that the joint family property does not cease to be such simply because of the temporary reduction of the coparcenery unit to a single individual. The basic character of the property remains the same.

A Hindu coparcenary, on the other hand, is a much narrower body than the joint family. It is purely a creature of law and cannot be created by act of parties save to the extent that by adoption a stranger may be introduced as a member thereof. It includes only those persons who acquire by birth an interest in the joint or coparcenary property and ordinarily it extends upto four degrees counted from and inclusive of a common male ancestor. In view of this specific feature of a coparcenary no female can be member of it although she can be a member of a joint Hindu family. Even a wife who is though entitled to maintenance out of her husband’s property and has, to that extent interest in his property, is not her husband’s coparcener. The essence of a coparcenary under Mitakshara Law is unity of ownership. The ownership of the coparcenary property lies in the whole body of coparceners and there is a community of interest and unity of possession between all of them. Their interests are fluctuating capable of being enlarged by deaths and liable to be diminished by birth of sons of coparceners. Conceptually speaking, property, according to Hindu Law, may be divided into two classes namely (1) Joint family property or coparcenary property and (2) seperate property. Seperate property of coparceners thrown into the common coparcenary stock and property jointly acquired by the members of a joint family with the aid of ancestoral property is also joint family property. Property in which a person acquires an interest by birth is called ancestral property but the property the right to which accrues on the death of the last owner without leaving male issue is seperate property. The former devolves by survivership, the latter by succession. However, the concept of coparcenary, as expounded by the ancient law givers, has undergone a sea-change as a result of coming into force of the Hindu Women’s Right to Property Act, 1937 (for short “1937 Act”) and the Hindu Succession Act, 1956.

By these two enactments the Hindu Law relating to devolution of property under certain circumstances stood materially or significantly changed. By s. 3 of 1937 Act the same interest of a widow as her husband was having in the joint family property at the time of his death was statutorily recognised with certain restrictions on alienation. Sub-s. (2) and (3) of s. 3 of 1937 Act provided that : “(2) When a Hindu governed by any school of Hindu law other than the Dayabhaga school or by customary law dies having at the time of his death an interest in a Hindu joint family property, his widow shall, subject to the provisions of sub-s. (3), have in the property the same interest as he himself had; (3) Any interest devolving on a Hindu widow under the provisions of this section shall be the limited interest known as a Hindu woman’s estate, provided however, that she shall have the same right of claiming partition as a male owner.” It may be noted that sub-s. (2) of s. 3 of 1937 Act conferred upon the Hindu widow a new kind of interest in the coparcenary property though in character such interest was what is commonly known as Hindu widow’s estate. The expression `his widow shall……. have the same interest as he himself had” used in the language of sub-s. (3) makes it quite clear that the newly created interest of the Hindu widow was in substitution of her right under the pre-existing Hindu law to claim maintenance. Sub-s. (3) further clarifies her interest and says that though her interest would be a limited interest yet she would have the same right of claiming partition as a male owner had. A combined reading of sub-s. (2) and (3) of s. 3 thus makes it abundantly clear that on the death of her coparcener-husband the widow substitutes him in the coparcenary and no severance of the interest of the deceased coparcener is brought about by his death. By such substitution in the coparcenery her interest does not become defined and that remains a fluctuating one liable to increase by deaths and decrease by births in the family. By virtue of sub-s. (3) she becomes entitled to claim partition of coparcenary property and would be entitled to be allotted the same share as her deceased husband would have been entitled to, had he lived on the date on which she claimed partition. But the conferment of the right of statutory substitution and further right of claiming partition would not raise the status of the Hindu widow to that of a coparcener, though she would continue to be a member of the joint Hindu family as she was before the 1937 Act. The joint family would continue to exist as before subject only to her statutory right. In fact, the interest of the widow, under the 1937 Act, arises neither by inheritance nor by survivorship, but by statutory substitution. Because of statutory substitution of her interest in the coparcenary property in place of her husband she is introduced in the coparcenary whose attribues are community of interest and unity of possession. The right which the other coparcener had under the Hindu law of taking that interest by the rule of survivorship remains suspended so long as the estate enures. On the death of a coparcener, there is no dissolution of coparcenary so as to carve out a defined interest in favour of a coparcener. Accordingly, on the introduction of the widow into the coparcenary her substituted interest would also not get defined. The interest acquired by her would be subject to increase and reduction depending on deaths and births in the joint family and would also be subject to restriction on alienation which are inherent in her estate called Hindu widow’s estate. The right conferred upon the Hindu widow by the 1937 Act got enlarged by s. 14 of the Hindu Succession Act, 1956. Sec. 14 reads as under : “Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as limited owner.”

It may be noted that s. 3 of 1937 Act had put the Hindu widow in place of her husband and conferred upon her the same interest in the coparcenery property as her deceased husband had in such property. Sec. 14 of the Hindu Succession Act, 1956 made her the absolute owner of that estate provided she was possessed of such estate on the coming into force of the said Act. By virtue of s. 14 of the said Act she would have all the rights of a full owner to possess, manage and enjoy exclusively and of disposal of, either by any act inter vivos or by will, the said estate. On her dying intestate her interest in the joint family properties would pass and devolve by succession on her heirs. To conclude, s. 3 of 1937 Act introduced the Hindu widow into coparcenery but by virtue of such introduction she did not become a coparcener notwithstanding the fact that she would continue to be a member of the joint Hindu family. It is to be remembered that both the enactments i.e., 1937 Act and the Hindu Succession Act, 1956 talk of conferment of right on a widow in the joint family property in lieu of earlier rights under ordinary Hindu Law. It is a widow who becomes, in a sense, a substituted coparcener in the coparcenery. A wife does not acquire that status during the life time of her husband. The interest of the Hindu female i.e. the wife in the coparcenary property, is created in her favour only after the death of her husband who was a coparcener in the coparcenery. The position of a widowed mother may somewhat be different depending upon whether she is a sonless mother or not. Since such an issue is not there in the present case, need not discuss it. Any way, as stated earlier, a coparcenery consists of male members only and the wife of the male member does not become coparcener in the coparcenary during the life of her husband. She would undoubtedly be a member of the joint

Hindu family which may be constituted even by herself and her husband only. In the instant case, we think, our views get support from the Supreme Court decisions in the cases of Kotturu Swami vs. Veeravva AIR 1959 SC 577, Laxmiperumallu vs. Krishnavenamma AIR 1965 SC 825 and Satrughan Issar vs. Sabujpari AIR 1967 SC 272. In the instant case, though late Chhillu Ram, the deceased constituted the smaller HUF along with his wife Smt. Kastoori Devi, yet the deceased was the only coparcener of the smaller HUF. The smaller HUF was having one-third share in the joint family properties of the bigger HUF of M/s Jawahar Lal Gainda Lal. The deceased had become a coparcener in the coparcenary of the bigger HUF by birth or may be, by adoption. His wife, on her marriage with him, could not have acquired that status in that coparcenery. She could have become a substituted coparcener in the bigger HUF only after the death of the deceased. It, therefore, necessarily follows that it was the deceased who was having interest to the extent of one-third in the properties of bigger HUF and had a partition been effected just before his death he would have been entitled to his share to that extent only and such interest of deceased would be deemed to pass on his death. Smt. Kastoori did not have any interest in the joint family property of the bigger HUF during the life time of the deceased. Therefore, she cannot claim that had there been a partition of such properties just before the death of her husband she would have been entitled to one-sixth share therein. On the death of the deceased she became a substituted coparcener in the bigger HUF and the interest so conferred upon her although became her limited estate by virtue of s. 3 of 1937 Act and she became the full owner thereof by operation of s. 14 of the Hindu Succession Act, 1956 yet she cannot say that in the life time of her husband Shri Chilloo Ram she was already having one sixth share in the properties of the bigger HUF. It was one- third share of the deceased which would be deemed to have passed to his widow. That being so, the value of the entire one third share of the deceased in the properties of the bigger HUF would be required to be included in the estate liable to pay duty under the ED Act.

4. In so far as the property belonging to the smaller HUF is concerned, the deceased was the sole surviving coparcener and as such having the power to dispose of such property as if it were his own separate property. The entire property belonging to the smaller HUF shall be deemed to pass on his death and liable to pay estate duty. Now, in so far as the question of applicability of s. 6 and/or s. 7 of the ED Act is concerned, it would be worthwhile to refer to the following observation made by Dwivedi, J. of the Allahabad High Court in O.S. Chawla vs. Asstt. CED (1973) 90 ITR 68 (All)(FB) : “The scheme of the Act is two-fold. Firstly, there are properties which pass on the death of a person. Sec. 5(1) imposes duty on their value. Secondly, there are properties in which the deceased had an interest or power of appointment and which really do not pass on his death. The scheme of the Act is to impose duty on the value of such properties also. In the second class fall provisions like ss. 6, 7, 8, 9 and 10. The Act creates a fiction of law to declare that the properties mentioned in those sections will be deemed to pass on the death of a person though they do not `pass’ in fact…… The object of s. 6 is to catch properties in the net of s. 5(1) which do not really pass on the death of a person. For instance, property comprised in a revocable gift is property which the donor is competent to dispose of, whether the gift is revoked or not, and will be covered by s. 6. Similarly, property in respect of which the deceased had a power of appointment will also fall within s. 6.” Sec. 6 of the Act comes into play in those cases wherein the deceased was, at the time of his death, competent to dispose of the property. It is the competence of the deceased to dispose of the property which attracts the provisions contained in s. 6. A sole coparcener is competent to dispose of the coparcenary property. Since the deceased Shri Chilloo Ram, being the sole coparcener in respect of properties belonging to the smaller HUF, was competent to dispose of such properties, the entire property of the smaller HUF shall be deemed to pass on his death and the case would be covered by s. 6 of the ED Act.

5. With regard to the interest of the deceased in the properties of bigger HUF, such interest ceased on his death and would be deemed to pass on his death to the extent the benefit accrued or arose by the cessor of his interest in favour of his widow. In that case, s. 7 would come into play. Sec. 7, 37 and 39 would stand attracted in the cases of coparcenary properties wherein the interest of the dying coparcener ceases on his death and the cessor of his interest results in accrual or arisal of a benefit in favour of other coparcener or coparceners whose interests and shares in coparcenery get increased by deaths and reduced by births in the Hindu joint family. However, the application of either s. 6 or s. 7 in the present case is of academic interest only as the interest of the deceased to the extent of one-third share in the properties of the bigger HUF and the entire properties of the smaller HUF shall be deemed to pass on his death and the value thereof would be required to be included in his estate for the purpose of paying duty under the ED Act.

6. In the course of the arguments, the learned counsel for the parties referred to certain cases to which a reference may be made. In the case of T.R. Ekambaram vs. CED (1967) 66 ITR 67 (AP), the effect of declaration made by the deceased in his will that certain property was his self acquired property was considered. The property covered by the will was found to have been acquired by the deceased with the aid of joint family property. It was held by the Andhra Pradesh High Court that the will did not alter the basic character of the property. In the instant case, the will made by the deceased though does not affect the basic character of the property of the smaller HUF as being joint Hindu family property as the same had been acquired with the nucleus obtained by the deceased on partial partition of the bigger HUF, yet, since the deceased, being sole surviving coparcener in the smaller HUF, was competent to dispose of the said property, the will made by him makes no difference in so far as levy of estate duty is concerned. In the case of Asstt. CED vs. Balakrishna Menon (1967) 64 ITR 223 (Ker)(FB), upon which the Tribunal has placed too much reliance, is, in fact, not relevant to decide the issues involved in the present reference. In that case, the question of devolution of `Asthanam Property’ on the death of an Asthanamdar was considered by the Full Bench of the Kerala High Court. Referring to the history and legal incidence of the Sthanam as was traced by the Supreme Court in Cochunni vs. State of Madras & Kerala AIR 1960 SC 1080, the Full Bench held that s. 7(3) of the Hindu Succession Act had enacted a rule for distribution of Asthanam Property upon the death of a Sthanamdar and not of passing of such property. The object behind enacting such a rule was to do away with the concept of Asthanam Property for future. Their Lordships of Kerala High Court made passing observations to the effect that s. 7 of the ED Act, under which assessment of Asthanam Property used to be made, had not been amended after the passing of the Hindu Succession Act. In view of what was held by their Lordships of the Kerala High Court that case is not of much relevance to the issue involved in the case before us.

In the Rajasthan case of Smt. Dhani Devi & Jhavermal vs. CED (supra) this Court held that a coparcenery continues to subsist so long as there is in existence a widow of the coparcener capable to bring a son into existence by adoption. Under a legal fiction, an adopted son is like a posthumous son who is deemed to have come into existence before the death of the adoptive father so that there is no breach in the continuity of the line. The rights of the adopted son are the same as if he had been in existence at the time when his adopting father died. In that case Budhmal Dugar, the deceased person, along with his brother Simermal Dugar constituted an HUF having ancestral property. There was a partition between brothers in 1938 and the deceased received his share in the family property. He died on 17th March, 1954, leaving his widow, Smt. Dhani Devi who adopted Jhavermal to her husband. After his death, Smt. Dhani Devi and Jhavermal filed a return under the ED Act in which they claimed that the deceased constituted an HUF along with his wife smt. Dhani Devi, and in view of the adoption which she made 11 days after the death of her husband, the deceased was competent to dispose of only one-third of the family property, the reason being that by a legal fiction the adopted son is like a posthumous son who is deemed to come into existence before the death of his father. This Court held that after partition the property received by Budhmal continued to be joint family property in his hand. The son, adopted by his widow, would be deemed to have been in existence at the time of Budhmal’s death. Therefore, at the time of death, the deceased could not have disposed of the joint family property. The Court further held that in view of s. 39, the share of Budhmal in the family property at the time of his death was one-third and this one third alone would be deemed to have passed on his death. Their Lordships had considered the question of the interest of the deceased person in joint family properties at the time of his death, in the light of the decision of their Lordships of the Supreme Court in Krishnamoorthy vs. Dhruva Raj AIR 1962 SC 59. In the case of Krishnamoorthy (supra) their Lordships of the Supreme Court deduced the following principles on the basis of their earlier decision in the case of Srinivas Krishna Rao vs. Naraindevji AIR 1953 SC 379 : “(i) An adopted son is held entitled to take in defeasance of the rights acquired prior to his adoption on the ground that in the eye of law his adoption relates back, by a legal fiction, to the date of the death of his adoptive father, he being put in the position of a posthumous son. (ii) As a preferential heir, an adopted son (a) divests his mother of the estate of his adoptive father; (b) divests his adoptive mother of the estate she gets as an heir of her son who died after the death of her husband. (iii) A coparcenery continues to subsist so long as there is in existence a widow of a coparcener capable to bring a son into existence by adoption; and if the widow made an adoption, the rights of the adopted son are the same as if he had been in existence at the time when his adoptive father died and that his title as coparcener prevails as against the title of any person claiming as heir to the last coparcener. (iv) The principle of relation back applies only when the claim made by the adopted son relates to the estate of his adoptive father. The estate may be definite and ascertained, as and when he is the sole and absolute owner of the properties, or it may be fluctuating as when he is a member of a joint Hindu family in which the interest of the coparceners is liable to increase by death or decrease by birth. In either case, it is the interest of the adoptive father which the adopted son is declared entitled to take as on the date of his death. This principle of relation back cannot be applied when the claim made by the adopted son relates not to the estate of his adoptive father but to that of a collateral. With reference to the claim with respect to the estate of a collateral, the governing principle is that inheritance can never be in abeyance, and that once it devolves on a person who is the nearest heir under the law it is thereafter not liable to be divested. When succession to the properties of a person other than an adoptive father is involved, the principle applicable is not the rule of relation back but the rule that inheritance once vested could not be divested. (v) The estate continues to be the estate of the adoptive father in whosoever’s hands it may be, that is, whether in the hands of one who is the absolute owner or one who is a limited owner. Any one who inherits the estate of the adoptive father is his heir, irrespective of the inheritance having passed through a number of persons, each being the heir of the previous owner. This Court considered the case of Amarendra Mansingh vs. Sanathan Singh 60 Ind App 242 : AIR 1933 PC 155 which related to an impartible Zamindari. The last of its holder was Raja Bibhudendra. He died on 10th Dec., 1922, unmarried. A collateral, Banamalai, succeeded to the estate as the family custom excluded females from succeeding to the Raj. On 18th Dec., 1922, Indumati mother of Bibhudendra adopted Amarendra to her husband, Brajendra. The question for determination, in that case, was whether Amarendra could divest Banamalai of the estate, and it was answered in the positive by the Judicial Committee. This Court said at page 19 (of SCR) : (at p. 386 of AIR) : `The estate claimed was that of his adoptive father, Brajendra, and if the adoption was at all valid, it related back to the date of Brajendra’s death, and enabled Amarendra to divest Banamalai’. The last holder of the estate was not Brajendra, the adoptive father, but Bibhudendra, who may be said to be the adoptive brother. The estate in his hands is described as the estate of Brajendra, the adoptive father. This Court said about the decision in this case; `This decision might be taken at the most to be an authority for the position that when an adoption is made to A, the adopted son is entitled to recover the estate of A not merely when it has vested in his widow who makes the adoption but also in any other heir of his. It is no authority for the contention that he is entitled to recover the estate of B which had vested in his heir prior to his adoption to A.’

Banamalai, heir of Bibhudendra, was considered to be the heir of Brajendra also”. It may be noted that in the case of Sriniwas Krishna Rao (supra), the Supreme Court ruled that when succession to the properties of a person other than an adoptive father is involved, the principle applicable is not the rule of relation back but the rule that inheritance once vested could not be divested. In the case of Dhani Devi & Jhavermal (supra) the deceased Budhmal had died on 17th March, 1954 i.e. before coming into force of the Hindu Succession Act, 1956. In that case Jhavermal had been adopted 11 days after the death of Budhmal and by virtue of the principle of `relation back’, he was considered to be having share in the coparcenery property at the time of the death of Budhmal. No such facts are there in the case before us. In the instant case, it was not brought to our notice that Smt. Kastoori Devi had ever adopted a son after the death of the deceased. That apart, by virtue of operation of s. 14 of the Hindu Succession Act, 1956, Smt. Kastoori Devi became absolute owner of the property inherited by her from the deceased. Inheritance stood vested in her on the death of Budhmal and as held by the apex Court inheritance once vested cannot be divested. Her capability of bringing a son in existence posthumously cannot keep the inheritance in abeyance and cannot suspend or negate her statutory right conferred upon her by and under s. 14. Moreover, in Dhani Devi’s case, the interest of the Hindu widow in the joint family property were not considered with reference to the provisions of 1937 Act. We have pointed out above that the Supreme Court has taken the consistent view that on the death of her husband his widow does not become a coparcener and she simply substitutes her husband in the coparcenery. In our opinion, therefore, since 1937 Act and the Hindu Succession Act, 1956 have made drastic changes in the very concept of `family’ and `coparcenery’ under the Hindu Law and the case of Dhani Devi & Jhavermal (supra) was decided without making any reference to the provisions of the said Acts, the principles laid down therein with regard to the share of the widow of a deceased in the coparcenery property do not afford much help to the accountable persons in the present case after coming the Hindu Succession Act into force. In the case of CIT vs. Reghunandan Saran 1976 CTR (All) 302 : (1977) 108 ITR 818 (All), the Karta was looking after the business of the family and the question was whether the salary paid to the Karta was deductible in determination of the profits of the family business. The facts and the issues arising in that case are totally besides the points which are under our consideration.

In the case of Goswami Vrajraiji Ranchod Lalji Maharaj vs. CED 1977 CTR (Guj) 89 : (1978) 112 ITR 851 (Guj) one Ranchod Lalji had died in 1961 leaving behind his wife Smt. Vraj Priya (the deceased), his son Vraj Raj and his mother Smt. Tali, Smt. Viraj Priya died in 1962. The Asstt. CED held that the deceased was entitled to one- half share in the family property and his order was upheld in appeals. The Tribunal referred the following question to the Gujarat High Court : “Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the deceased widow, as a member of the HUF was the absolute owner of one half of the HUF’s property and that the same passed on her death?” After examining a number of decisions from several High Courts and the Supreme Court their Lordships of the Gujarat High Court held that the widow of a member of a Hindu joint family is put in the place of her husband and the husband’s interest in the joint family property, though indefinite, would vest immediately upon his death, in his widow. The widow who acquired the interest of the deceased husband under s. 3(2) of 1937 Act and who was possessed of the said interest at the time of coming into force of the Hindu Succession Act, 1956 became the absolute owner of that estate by operation of s. 14 of the later Act and thus she would have all the rights of a full owner and would be competent, to dispose of it which is an incident of full ownership. Therefore, her right would be deemed to be property passing on her death under s. 5 or under s. 6 of the ED Act. The right which has been given to a Hindu woman under the 1937 Act is also in lieu of partition. Therefore, if a notional partition were to take place shortly before Smt. Vraj Priya’s death, she would not be entitled to any share except that which she gets under the 1937 Act, subject to the provision of an amount of Rs. 25,000 for the right of maintenance of Rauchod Lal’s mother Smt. Tali. In expressing such views their Lordships of the Gujarat High Court relied upon and followed the following observations of Shah, J. of the Supreme Court in Satrughan Issar’s case (supra) :”The Act seeks to make fundamental changes in the concept of a coparcenery and the right of members of the family in coparcenery property. The Hindu law as laboriously developed by the Anglo-Indian Courts in the light of certain basic concepts expounded by the ancient law givers, had acquired a degree of consistency and symmetry. The Act in investing the widow of a member of acaparcenary with the interest which the member had at the time of his death has introduced changes which are alien to the structure of a coparcenery. The interest of the widow arises not by inheritance, nor by survivorship, but by statutory substitution.” His Lordships further pointed out; “A Hindu coparcenery under the Mitakshra school consists of males alone; it includes only those members who acquire by birth or adoption interest in the coparcenery property. The essence of coparcenery property is unity of ownership which is vested in the whole body of coparceners. While it remains joint, no individual member can predicate of the undivided property that he has a definite share therein. The interest of each coparcener is fluctuating, capable of being enlarged by deaths, and liable to be diminished by the birth of sons to coparceners; it is only on partition that the coparcener can claim that he has become entitled to a definite share. The two principal incidents of coparcenery property are; that the interest of coparceners devolves by survivorship and not by inheritance; and that the male issue of a coparcener acquires an interest in the coparcenery property by birth, not as representing his father but in his own independent right acquired by birth.” “By the Act certain entithetical concepts are sought to be reconciled. A widow of a coparcener is invested by the Act with the same interest which her husband had at the time of his death in the property of the coparcenery. She is thereby introduced into the coparcenery, and between the surviving coparceners of her husband and the widow so introduced, there arises community of interest and unity of possession.

But the widow does not on that account become a coparcener; though invested with the same interest which her husband had in the property she does not acquire the right which her husband could have exercised over the interest of the other coparceners. Because of statutory sustitution of her interest in the coparcenery property in place of her husband the right which the other coparceners had under the Hindu law of the Mitakshara school of taking that interest by the rule of survivorship remains suspended so long as that estate enures. But on the death of a coparcener there is no dissolution of the coparcenery so as to carve out a defined interest in favour of the widow in the coparcenery property…………The interest acquired by her under s. 3(2) is subject to the restrictions on alienation which are inherent in her estate.” “The right which the widow may claim is not different from the right which her husband could claim if he had been alive; therefore, the right of the coparceners to take the joint property by survivorship on the death of a coparcener does not survive a demand for partition by the widow in the coparcenary.” With great respect to their Lordships of the Gujarat High Court we take the same view of the legal position of the subject on hand. In our opinion, the 1937 Act, the Hindu Succession Act, 1956 and the Hindu Adoption Act, 1956 have brought about such radical changes in the basic concepts of Hindu joint family and adoption which were hitherto alien to the original Hindu Law. The right of a Hindu widow to step into the shoes of her deceased husband and take same interest in the Hindu joint family property as her deceased husband had at the time of his death was given statutory recognition by the 1937 Act and later on her such interest was converted into her absolute estate by Hindu Succession Act, 1956. The rights so given to the Hindu widow under the said two Acts also materially affected the doctrine of `relating back’ which by a legal fiction made a posthumously adopted son as living at the time of the death of the deceased adopting father and also made him entitled to have his share in the notional partition which was to be assumed to take place just before the death of the adoptive father. In fact with the allowing of a girl, as being capable of being given and taken in adoption by the Hindu Adoption Act the very concept of continuity of the male line of the deceased person has been substantially and materially affected and accordingly the very object and purpose behind the doctrine of `relating back’ stands adversely affected. It is particularly so in the presence of s. 14 of the Hindu Succession Act, 1956 when the said provision is read in the context of the well settled principle that inheritance does not remain in abeyance and property once vested cannot be divested. In other words, s. 14 of the Hindu Succession Act, 1956 gives a death blow to the very concept of `Hindu women’s life estate’ and `reversioners’ as known under ordinary Hindu Law.

After keeping in view these statutory changes brought about by the Indian legislature and the exposition of law made on the subject by the apex Court we are of the opinion that the Rajasthan case cited (supra), which makes no reference to these legislative changes and the approach adopted by the apex Court in its later decisions, in accepting Hindu female’s interest and share in the Hindu joint family’s property is not of much relevance. The said Rajasthan case is not only distinguishable on facts but also on the changed position of law. In the case before us late Shri Chillu Ram had become a coparcener in the bigger HUF by birth and the subsequent marriage of Smt. Kastoori Bai with him could not make her a coparcener, though she acquired the status of a member of the bigger HUF, she became substituted coparcener after the death of Shri Chillu Ram and by virtue of combined effect of s. 3(2)/(3) of 1937 Act and s. 14 of the Hindu Succession Act, 1956 her share got defined to 1/3rd which her late husband was entitled to in a deemed partition just before his death and of which she became the absolute owner. Prior to the death of Shri Chilloo Ram and, for that matter, in the notional partition assumed or deemed to take place just before the death of Shri Chilloo Ram, she had no interest and share of her own in the properties of the bigger HUF. The same was her position with regard to the properties of the smaller HUF in which Shri Chilloo Ram was the sole coparcener and as such competent to dispose of the entire property.

The irresistible conclusion of the above discussion is that Shri Chilloo Ram’s interest at 1/3rd in the properties of the bigger HUF and his sole ownership interest in the properties of his smaller HUF passed on his death under ss. 7 and 6 of the ED Act. The value of his such interests in the two categories of properties is includible in his estate passing on his death for the purposes of paying duty under the Act. Therefore, all the three questions, as reproduced above, are required to be answered in the negative i.e. for the Revenue and against the Accountable Persons. In view of the above discussion we answer the referred questions in the following manner : Question No. 1 : The Tribunal was justified in holding that s. 6 of the ED Act, 1953 is not applicable in so far as the interest of the deceased in the properties of the bigger HUF passing on his death is concerned. However, we further hold that the Tribunal was not justified in holding that s. 6 of the ED Act, 1953 is not applicable to the passing of the interest of the deceased in the properties of the smaller HUF. Question No. 2 : The Tribunal was not right in holding that the cessor of interest deemed to pass on the death of the deceased in respect of property held by the smaller HUF was to be one-half. We hold that the entire property, held by the smaller HUF, passed on the death of the deceased under s. 6 of the Act and is liable to pay duty under the ED Act. Question No. 3 : The Tribunal was not justified in holding that the share of the deceased in the larger HUF was one sixth and his share to that extent only passed on his death. We hold that the share of the deceased in the properties of the bigger HUF was one third and such one third share is liable to pay duty under the ED Act. We thus, answer all the three questions, in effect, for the Revenue and against the Accountable Persons. Let our answers, along with the record of the Tribunal, if requisitioned, be communicated to the Tribunal for further action according to law. V.K. SINGHAL, J. :

9. I agree with the conclusion arrived at by my learned Brother Hon’ble Khan J. but I would like to add few more lines as under : Sec. 39(1) of the ED Act provides that the value of the benefit accruing or arising from the cessor of a coparcenary interest in any joint family property governed by the Mitakshara school of Hindu Law which ceases on the death of a member thereof shall be the principal value of the share in the joint family property which would have been allotted to the deceased had there been a partition immediately before his death. The principal value of the share in the bigger joint family property which would have been allotted to the deceased had there been a partition immediately before his death would have been 1/3 and not 1/6. In respect of smaller HUF since the deceased and his wife were the only persons and there were no two coparceners there could not have been any partition as such the entire value of the property of smaller HUF would pass. Under s. 6 property which the deceased was at the time of his death competent to dispose of is deemed to pass on his death. The deceased was the sole coparcener and as such the property of smaller HUF would be included in its entirety. This conclusion is duly supported by the decision of Madhya Pradesh High Court in the case of Ramratan vs. CED (1982) 27 CTR (MP) 152 (FB) : (1983) 142 ITR 863 (MP)(FB), wherein a Full Bench of the Madhya Pradesh High Court observed that— “The ownership in the property obtained by the deceased on partition was not shared by his wife although the deceased and his wife constituted an HUF. The deceased had no son. There was thus no coparcener in his family excepting himself. The deceased was the sole coparcener in his family. Speaking generally, female members in an HUF have no ownership in the property belonging to the family. The ownership of such a property is held by a smaller body which is called the coparcenery and in case there is only one coparcener, it is he alone who owns the entire property. It is true that for purposes of assessment of income-tax, the status of the deceased was that of an HUF, as he and his wife constituted a family but different considerations prevail for finding out as to whether the entire property of the family or a share in it passed on the death of the deceased. As the entire ownership in the property vested in the deceased and as no part of it was shared by the wife who was the only other member in the family, the entire property passed on the death of the deceased within the meaning of s. 5 of the Act. The deceased being the sole coparcener had a disposing power under the Hindu law in respect of the entire property and even under s. 6 of the Act the entire property would be deemed to have passed on his death for purposes of estate duty. Sec. 7 which applies when a coparcenery interest in a joint family property ceases on death and s. 39(1) which lays down the mode of valuation of such interest can apply only when the joint family property is vested in more than one person. It is only then that an interest in the joint family property ceases on the death of a coparcener and the valuation of such an interest has to be ascertained on the basis of the principal value of the share which would have been allotted to the deceased had there been a partition immediately before his death. When the entire property vested in the deceased because the deceased was the sole coparcener, there is no question of any other person getting any interest or share on a notional division immediately before his death and ss. 7 and 39 have no application to such a case. As earlier stated, the whole of the property in such cases passes under s. 5 r/w s. 6. The view that we have taken is fully supported by the decision of the Allahabad High Court in CED vs. Smt. Kalawati Devi (1980) 18 CTR (All) 269 : (1980) 125 ITR 762 (All), with which we entirely agree”.

[Citation : 230 ITR 362]

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