published in http://judis.nic.in/supremecourt/imgst.aspx?filename=8997
PETITIONER:
COMMISSIONER OF WEALTH TAX. KANPUR ETC. ETC.
Vs.
RESPONDENT:
CHANDER SEN ETC.
DATE OF JUDGMENT16/07/1986
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
PATHAK, R.S.
CITATION:
1986 AIR 1753 1986 SCR (3) 254
1986 SCC (3) 567 1986 SCALE (2)75
CITATOR INFO :
F 1987 SC 558 (10)
RF 1991 SC1654 (27)
ACT:
Hindu Succession Act, 1956-ss. 4, 8 and 19-Property of
father who dies intestate-Whether devolves on son, who
separated by partition from his father, in individual
capacity or Karta of his HUF.
Wealth Tax Act, 1957-ss. 3 and 4-Property inherited
under s 8 Hindu Succession Act, 1956-Whether HUF or
individual property.
Income Tax Act, 1961/Income Tax Act, 1922-Income from
as sets inherited by son from father-Whether assessable as
individual income.
HEADNOTE:
Rangi Lal and his son Chander Sen constituted a Hindu
undivided family. They had some immovable property and the
family business. By a partial partition the HUF business was
divided between the two and thereafter it was carried on by
a partnership consisting of the two. The house property of
the family continued to remain joint. The firm was assessed
to income-tax as a registered firm and the two partners were
separately assessed in respect of their share of income. The
mother and wife of Rangi Lal having pre-deceased him, when
he died he left behind him his only son Chander Sen and his
grandsons. On his death there was a credit balance of
Rs.1,85,043 in his account in the books of the firm.
In the wealth tax assessment for the assessment year
1966-67, Chander Sen, who constituted a joint family with
his own sons, filed a return of his net-wealth by including
the property of the family which u on the death of Rangi Lal
passed on to him by survivorship and, also the assets of the
business which devolved upon him on the death of his father.
The sum of R.S.. l ,85,0 13 standing to the credit of Rangi
Lal was, however, not included in the net-wealth of the
assessee-family. Similarly, in the wealth tax assessment for
the assessment year 1967-68 a sum of Rs.1,82,742 was not
included, in the net wealth of the assessee family. It was
contended that these amounts devolved on Chander Sen
255
in his individual capacity and were not the property of the
assessee family. The Wealth-tax officer did not accept this
contention and held that these sums also belonged to the
assessee-family.
A sum of Rs.23,330 was also credited to the account of
late Rangi Lal on account of interest accruing on his credit
balance. In the proceedings under the Income Tax Act for the
assessment year 1367-68 this sum was claimed as deduction on
the same ground. The Income-tax officer disallowed the claim
on the ground that it was a payment made by Chander Sen to
himself.
On appeal, the Appellate Assistant Commissioner of
Income-tax accepted the assessee's claim in full and held
that the capital in the name of Rangi Lal devolved on
Chander Sen in his individual capacity and as such was not
to be included in the wealth of the assessee family. The sum
of Rs.23,330 on account of interest was also directed to be
allowed as deduction.
The Income-tax Appellate Tribunal dismissed the appeals
filed by the Revenue and its orders were affirmed by the
High Court.
On the question: "Whether the income or asset which a
son inherits from his father when separated by partition
should be assessed as income of the Hindu Undivided Family
consisting of his own branch including his sons or his
individual income", dismissing the appeals and Special Leave
Petition of the Revenue, the Court,
^
HELD: 1. The sums standing to the credit of Rangi Lal
belong to Chander Sen in his individual capacity and not the
Joint Hindu Family. The interest of Rs.23,330 was an
allowable deduction in respect of the income of the family
from the business. [268C-D]
2.1 Under s. 8 of the Hindu Succession Act, 1956, the
property of the father who dies intestate devolves on his
son in his individual capacity and not as Karta of his own
family. Section 8 lays down the scheme of succession to the
property of a Hindu dying intestate. The Schedule classified
the heirs on whom such property should devolve. Those
specified in class I took simultaneously to the exclusion of
all other heirs. A son's son was not mentioned as an heir
under class I of the Schedule, and, therefore, he could not
get any right in the property of his grandfather under the
provision. [265F-G]
256
2.2 The right of a son's son in his grandfather's
property during the lifetime of his father which existed
under the Hindu law as in force before the Act, was not
saved expressly by the Act, and therefore, the earlier
interpretation of Hindu law giving a right by birth in such
property "ceased to have effect". So construed, s. 8 of the
Act should be taken as a self-contained provision laying
down the scheme of devolution of the property of a Hindu
dying intestate. Therefore, the property which devolved on a
Hindu on the death of his father intestate after the coming
into force of the Hindu Succession Act, 1356, did not
constitute HUF property consisting of his own branch
including his sons. [265G-H; 266A-C]
2.3 The Preamble to the Act states that it was an Act
to amend and codify the law relating to intestate succession
among Hindus. Therefore, it is not possible when the
Schedule indicates heirs in class I and only includes son
and does not include son's son but does include son of a
predeceased-son, to say that when son inherits the property
in the situation contemplated by s. 8, he takes it as Karta
of his own undivided family. [267C-D]
2.4 The Act makes it clear by s. 4 that one should look
to the Act in case of doubt and not to the pre-existing
Hindu law. It would be difficult to hold today that the
property which devolved on a Hindu under s. X of the Act
would be HUF in his hand vis-a-vis his own son; that would
amount to creating two classes among the heirs mentioned in
class I, the male heirs in whose hands it will be joint
Hindu family property and vis-a-vis sons and female heirs
with respect to whom no such concept could be applied or
contemplated. [267E-G]
2.5 Under the Hindu law, the property of a male Hindu
devolved on his death on his sons and the grandsons as the
grandsons also have an interest in the property. However, by
reason of s. 8 of the Act, the son's son gets excluded and
the son alone inherits the properly to the exclusion of his
son. As the effect of s. 8 was directly derogatory of the
law established according to Hindu law, the statutory
provisions must prevail in view of the unequivocal intention
in the statute itself, expressed in s. 4(1) which says that
to the extent to which provisions have been made in the Act,
those provisions shall override the established provisions
in the texts of Hindu Law. [264G-H; 265A-B]
2.6 The intention to depart from the pre-existing Hindu
law was again made clear by s. 19 of the Hindu Succession
Act which stated that
257
if two or more heirs succeed together to the property of an
intestate, they should take the property as tenants-in-
common and not as joint tenants and according to the Hindu
law as obtained prior to Hindu Succession Act two or more
sons succeeding to their father's property took a joint
tenants and not tenants-in-common. The Act, however, has
chosen to provide expressly that they should take as
tenants-in-common. Accordingly the property which devolved
upon heirs mentioned in class I of the Schedule under s. 8
constituted the absolute properties and his sons have no
right by birth in such properties. [266F-H]
Commissioner of Income-tax, U. P. v. Ram Rakshpal,
Ashok Kumar, 67 I.T.R. 164; Additional Commissioner of
Income-tax, Madras v. P.L. Karuppan Chettiar, 114 I.T.R.
523; Shrivallabhdas Modani v. Commissioner of Income-Tax,
M.P-I., 138 I.T.R. 673 and Commissioner of Wealth-Tax A.P.
II v. Mukundgirji 144 I.T.R. 18, approved.
Commissioner of Income-tax, Gujarat-l v. Dr. Babubhai
Mansukhbai (Deceased), 108 I.T.R. 417, overruled.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 166870
of 1974 etc.
From the Judgment and order dated 17.8.1973 of the
Allahabad High Court in W.T. Reference No. 371 of 1971 and
I.T. Reference No. 452 of 1971.
V.S. Desai, and Miss A. Subhashini for the Appellants.
P.K. Mukharjee and A. K. Sengupta for the Respondents.
The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. These appeals arise by special
leave from the decision of the High Court of Allahabad dated
17th August, 1973. Two of these appeals are in respect of
assessment years 1966-67 and 1967-68 arising out of the
proceedings under the Wealth Tax Act, 1957. The connected
reference was under the Income-Tax Act, 1961 and related to
the assessment year 1968-69. A common question of law arose
in all these cases and these were disposed of by the High
Court by a common judgment.
One Rangi Lal and his son Chander Sen constituted a
Hindu
258
undivided family. This family had some immovable property
and the business carried on in the name of Khushi Ram Rangi
Lal. On October 10, 1961, there was a partial partition in
the family by which the business was divided between the
father and the son, and thereafter, it was carried on by a
partnership consisting of the two. The firm was assessed to
income-tax as a registered firm and the two partners were
separately assessed in respect of their share of income. The
house property of the family continued to remain joint. On
July 17, 1965, Rangi Lal died leaving behind his son,
Chander Sen, and his grandsons, i.e. the sons of Chander
Sen. His wife and mother predeceased him and he had no other
issue except Chander Sen. On his death there was a credit
balance of Rs.1,85,043 in his account in the books of the
firm. For the assessment year 1966-67 (valuation date
October 3, 1965), Chander Sen, who constituted a joint
family with his own sons, filed a return of his net wealth.
The return included the property of the family which on the
death of Rangi Lal passed on to Chander Sen by survivorship
and also the assets of the business which devolved upon
Chander Sen on the death of his father. The sum of
Rs.1,85,043 standing to the credit of Rangi Lal was not
included in the net wealth of the family of Chander Sen
(hereinafter referred to as 'the assessee-family') on the
ground that this amount devolved on Chander Sen in his
individual capacity and was not the property of the
assessee-family. The Wealth-tax officer did not accept this
contention and held that the sum of Rs.1,85,043 also
belonged to the assessee-family.
At the close of the previous year ending on October 22,
1962, relating to the assessment year 1967-68, a sum of
Rs.23,330 was credited to the account of late Rangi Lal on
account of interest accruing on his credit balance. In the
proceedings under the Income-tax Act for the assessment year
1967-68, the sum of R.S.. 23,330 was claimed as deduction.
It was alleged that interest was due to Chander Sen in his
individual capacity and was an allowable deduction in the
computation of the business income of the assessee-faimly.
At the end of the year the credit balance in the account of
Rangi Lal stood at Rs.1,82,742 which was transferred to the
account of Chander Sen. In the wealth-tax assessment for the
assessment year 1967-68, it was claimed, as in the earlier
year, that the credit balance in the account of Rangi Lal
belonged to Chander Sen in his individual capacity and not
to the assessee-family. The Income-tax officer who completed
the assessment disallowed the claim relating to interest on
the ground that it was a payment made by Chander Sen to
himself. Likewise, in the wealth-tax assessment, the sum of
Rs.1,82,742 was included by the Wealth-tax officer in the
net wealth of the assessee-family. On appeal the Appellate
Assistant Commissioner of Income-tax accepted the assessee's
claim in
259
full. He held that the capital in the name of Rangi Lalluded
in the wealth of the assessee-family. He also directed that
in the income-tax assessment the sum of Rs.23,330 on account
of interest should be allowed as deduction. The revenue felt
aggrieved and filed three appeals before the Income-tax
Appellate Tribunal, two against the assessments under the
Wealth-tax Act for the assessment years 1966-67 and 1967-68
and one against the assessment under Income-tax Act for the
assessment year 1967-68. The Tribunal dismissed the
revenue's appeals.
The following question was referred to the High Court
for its opinion:
"Whether, on the facts and in the circumstances of
the case, the conclusion of the Tribunal that the
sum of Rs.1,85,043 and Rs.1,82,742 did not
constitute the assets of the assessee-Hindu
undivided family is correct?"
Similarly in the reference under the Income-tax Act,
the following question was referred:
"Whether, on the facts and in the circumstances of
the case, the interest of Rs,23,330 is allowable
deduction in the computation of the business
profits of the assessee joint family?"
The answer to the questions would depend upon whether
the amount standing to the credit of late Rangi Lal was
inherited, after his death, by Chander Sen in his individual
capacity or as a Karta of the assessee joint family
consisting of himself and his sons.
The amount in question represented the capital allotted
to Rangi Lal on partial partition and accumulated profits
earned by him as his share in the firm. While Rangi Lal was
alive this amount could not be said to belong to any joint
Hindu family and qua Chander Sen and his sons, it was the
separate property of Rangi Lal. On Rangi Lal's death the
amount passed on to his son, Chander Sen, by inheritance.
The High Court was of the opinion that under the Hindu Law
when a son inherited separate and self-acquired property of
his father, it assumed the character of joint Hindu family
property in his hands qua the members of his own family. But
the High Court found that this principle has been modified
by section 8 of the Hindu Succession Act, 1956.
260
Section 8 of the said Act provides, inter alia, that the
property of a male Hindu dying intestate devolved according
to the provisions of that Chapter in the Act and indicates
further that it will devolve first upon the heirs being the
relatives specified in class I of the Schedule. Heirs in the
Schedule Class I includes and provides firstly son and
thereafter daughter, widow and others. It is not necessary
in view of the facts of this case to deal with other clauses
indicated in section 8 or other heirs mentioned in the
Schedule. In this case as the High Court noted that the son,
Chander Sen was the only heir and therefore the property was
to pass to him only.
The High Court in the judgment under appeal relied on a
bench decision of the said High Court rendered previously.
Inadvertently, in the judgment of the High Court, it had
been mentioned that the judgment was in Khudi Ram Laha v.
Commissioner of Income-tax U.P, 67 I.T.R. 364. but that was
a case which dealt with entirely different problem. The
decision which the High Court had in mind and on which in
fact the High Court relied was a decision in the case of
Commissioner of Income-tax, U. P. v. Ram Rakshpal, Ashok
Kumar, 67 I.T.R. 164. In the said decision the Allahabad
High Court held that in view of the provisions of the Hindu
Succession Act, 1956, the income from assets inherited by a
son from his father from whom he had separated by partition
could not be assesssed as the income of the Hindu undivided
family of the son. The High Court relied on the commentary
in Mulla's Hindu Law, Thirteenth Edition page 248. The High
Court also referred to certain passages from Dr. Derret's
"Introduction to Modern Hindu Law" (paragraph 411, at page
252). Reliance was also placed on certain observations of
this Court and the Privy Council as well as on Mayne's
'Hindu Law'. After discussing all these aspects the Court
came to the conclusion that the position of the Hindu Law
was that partition took away by way of coparcenary the
character of coparcener property which meant that the share
of another coparcener upon the divisions although the
property obtained by a coparcener by a partition continued
to be coparcenary property for him and his unseparated
issue. In that case what had happened was one Ram Rakshpal
and his father, Durga Prasad, constituted a Hindu undivided
family which was assessed as such. Ram Rakshpal separated
from his father by partition on October 11, 1948. Thereafter
Ram Rakshpal started business of his own, income whereof was
assessed in the hands of the assessee-family. Shri Durga
Prasad also started business of his own after partition in
the name and style of M/s Murlidhar Mathura Prasad which was
carried on by him till his death.
261
Durga Prasad died on March 29, 1958 leaving behind him his
widow, Jai Devi, his married daughter, Vidya Wati and Ram
Rakshpal and Ram Rakshpal's son, Ashok Kumar, as his
survivors. The assets left behind by Durga Prasad devolved
upon three of them in equal shares by succession under the
Hindu Succession Act, 1956. Vidya Wati took away her 1/3rd
share, while Jai Devi and Shri Ram Rakshpal continued the
aforesaid business inherited by them in partnership with
effect from April, 1, 1958 under a partnership deed dated
April 23, 1958. The said firm was granted registration for
the assessment year 1958-59. The share of profit of Shri Ram
Rakshpal for the assessment year under reference was
determined at Rs.4,210. The assessee-family contended before
the Income-tax Officer that this profit was the personal
income of Ram Rakshpal and could not be taxed in the hands
of the Hindu undivided family of Ram Rakshpal, and held that
Ram Rakshpal contributed his ancestral funds in the
partnership business of Murli Dhar Mathura Prasad and that,
hence, the income therefrom was taxable in the hands of the
assessee family. The High Court finally held on these facts
in C.I.T v. Ram Rakshpal (supra) that the assets of the
business left by Durga Prasad in the hands of Ram Rakshpal
would be governed by section 8 of the Hindu Succession Act,
1956.
The High Court in the Judgment under appeal was of the
opinion that the facts of this case were identical with the
facts in the case of Commissioner of Income-tax, U.P.
(supra) and the principles applicable would be the same. The
High Court accordingly answered the question in the
affirmative and in favour of the assessee so far as
assessment of wealth-tax is concerned. The High Court also
answered necessarily the question on the income-tax
Reference affirmatively and in favour of the assessee.
The question here, is, whether the income or asset
which a son inherits from his father when separated by
partition the same should be assessed as income of the Hindu
undivided family of son or his individual income. There is
no dispute among the commentators on Hindu Law nor in the
decisions of the Court that under the Hindu Law as it is,
the son would inherit the same as karta of his own family.
But the question, is, what is the effect of section 8 of the
Hindu Succession Act, 1956? The Hindu Succession Act, 1956
lays down the general rules of succession in the case of
males. The first rule is that the property of a male Hindu
dying intestate shall devolve according to the provisions of
Chapter II and class I of the Schedule provides that if
there is a male heir of class I then upon the heirs
mentioned in class I of
262
the Schedule. Class I of the Schedule reads as follows:
"Son; daughter; widow; mother; son of a pre-
deceased son; daugther of a predeceased son; son
of a pre-deceased daughter, daughter of a pre-
deceased daughter; widow of a pre-deceased son;
son of a pre-deceased son of a pre-deceased son;
daughter of a pre-deceased son of a pre-deceased
son; widow of a pre-deceased son of a pre-deceased
son."
The heirs mentioned in class I of the Schedule are son,
daughter etc. including the son of a pre-deceased son but
does not include specifically the grandson, being a son of a
son living. Therefore, the short question, is, when the son
as heir of class I of the Schedule inherits the property,
does he do so in his individual capacity or does he do so as
karta of his own undivided family?
Now the Allahabad High Court has noted that the case of
Commissioner of Income-tax, U.P. v. Ram Rakshpal, Ashok
Kumar (supra) after referring to the relevant authorities
and commentators had observed at page 171 of the said report
that there was no scope for consideration of a wide and
general nature about the objects attempted to be achieved by
a piece of legislation when interpreting the clear words of
the enactment. The learned judges observed referring to the
observations of Mulla's Commentary on Hindu Law, and the
provisions of section 6 of the Hindu Succession Act that in
the case of assets of the business left by father in the
hands of his son will be governed by section 8 of the Act
and he would take in his individual capacity. In this
connection reference was also made before us to section 4 of
the Hindu Succession Act. Section 4 of the said Act provides
for overriding effect of Act. Save as otherwise expressly
provided in the Act, any text, rule or interpretation of
Hindu Law or any custom or usage as part of that law in
force immediately before the commencement of this Act shall
cease to have effect with respect to any matter for which
provision is made in the Act and any other law in force
immediately before the commencement of the Act shall cease
to apply to Hindus in so far it is inconsistent with any of
the provisions contained in the Act. Section 6 deals with
devolution of interest in coparcenary property and it makes
it clear that when a male Hindu dies after the commencement
of the Act having at the time of his death an interest in a
Mitakshara coparcenary property, his interest in the
property shall devolve by survivorship upon the surviving
members of the coparcenary and not
263
in accordance with the Act. The proviso indicates that if
the deceased had left him surviving a female relative
specified in class I of the Schedule or a male relative
specified in that class who claims through such female
relative, the interest of the deceased in Mitakshara
coparcenary property shall devolve by testamentary or
intestate succession, as the case may be, under this Act and
not by survivorship.
Section 19 of the said Act deals with the mode of
succession of two or more heirs. If two or more heirs
succeed together to the property of an intestate, they shall
take the property per capita and not per stripes and as
tenants-in-common and not as joint tenants.
Section 30 stipulates that any Hindu may dispose of by
will or other testamentary disposition any property, which
is capable of being so disposed of by him in accordance with
the provisions of the Indian Succession Act, 1925.
It is clear that under the Hindu law, the moment a son
is born, he gets a share in the father's property and
becomes part of the comparcenary. His right accrues to him
not on the death of the father or inheritance from the
father but with the very fact of his birth. Normally,
therefore whenever the father gets a property from whatever
source from the grandfather or from any other source, be it
separated property or not, his son should have a share in
that and it will become part of the joint family of his son
and grandson and other members who form joint Hindu family
with him. But the question is; is the position affected by
section 8 of the Succession Act, 1956 and if so, how? The
basic argument is that section 8 indicates the heirs in
respect of certain property and class I of the heirs
includes the son but not the grandson. It includes, however,
the son of the predeceased son. It is this position which
has mainly induced the Allahabad High Court in the two
judgments, we have noticed, to take the view that the income
from the assets inherited by son from his father from whom
he has separated by partition can be assessed as income of
the son individually. Under section 8 of the Hindu
Succession Act, 1956 the property of the father who dies
intestate devolves on his son in his individual capacity and
not as karta of his own family. On the other hand, the
Gujarat High Court has taken the contrary view.
In Commissioner of Income-tax, Gujarat-I v. Dr.
Babubhai Mansukhbhai (Deceased), 108 I.T.R. 417 the Gujarat
High Court held that in the case of Hindus governed by the
Mitakshara law, where a son
264
inherited the self-acquired property of his father, the son
took it as the joint family property of himself and his son
and not as his separate property. The correct status for the
assessment to income-tax of the son in respect of such
property was as representing his Hindu undivided family. The
Gujarat High Court could not accept the view of the
Allahabad High Court mentioned hereinbefore. The Gujarat
High Court dealt with the relevant provisions of the Act
including section 6 and referred to Mulla's Commentary and
some other decisions.
Before we consider this question further, it will be
necessary to refer to the view of the Madras High Court.
Before the full bench of Madras High Court in Additional
Commissioner of Income-tax, Madras v. P.L. Karappan
Chettiar, 114 I.T.R. 523, this question arose. There, on a
partition effected on March 22, 1954, in the Hindu undivided
family consisting of P, his wife, their sons, K and their
daughter-in-law, P was allotted certain properties as and
for this share and got separated. The partition was accepted
by the revenue under section 25A of the Indian Income-tax
Act, 1922. K along with his wife and their subsequently born
children constituted a Hindu undivided family which was
being assessed in that status. P died on September 9, 1963,
leaving behind his widow and divided son, K, who was the
karta of his Hindu undivided family, as his legal heirs and
under section 8 of the Hindu Seccession Act, 1956, the
Madras High Court held, that these two persons succeeded to
the properties left by the deceased, P, and divided the
properties among themselves. In the assessment made on the
Hindu undivided family of which K was the karta, for the
assessment year 1966-67 to 1970-71, the Income-tax Officer
included for assessment the income received from the
properties inherited by K from his father, P. The inclusion
was confirmed by the Appellate Assistant Commissioner but,
on further appeal, the Tribunal held that the properties did
not form part of the joint family properties and hence the
income therefrom could not be assessed in the hands of the
family. On a reference to the High Court at the instance of
the revenue, it was held by the Full bench that under the
Hindu law, the property of a male Hindu devolved on his
death on his sons and grandsons as the grandsons also have
an interest in the property. However, by reason of section 8
of the Hindu Succession Act, 1956, the son's son gets
excluded and the son alone inherits the property to the
exclusion of his son. No interest would accrue to the
grandson of P in the property left by him on his death. As
the effect of section 8 was directly derogatory of the law
established according to Hindu law, the statutory provision
must prevail in view of the unequivocal intention in the
statute itself,
265
expressed in section 4(1) which says that to the extent to
which provisions have been made in the Act, those provisions
shall override the established provisions in the texts of
Hindu law. Accordingly, in that case, K alone took the
properties obtained by his father, P, in the partition
between them, and irrespective of the question as to whether
it was ancestral property in the hands of K or not, he would
exclude his son. Further, since the existing grandson at the
time of the death of the grandfather had been excluded, an
after-born son of the son will also not get any interest
which the son inherited from the father. In respect of the
property obtained by K on the death of his father, it is not
possible to visualise or envisage any Hindu undivided
family. The High Court held that the Tribunal was,
therefore, correct in holding that the properties inherited
by K from his divided father constituted his separate and
individual properties and not the properties of the joint
family consisting of himself, his wife, sons and daughters
and hence the income therefrom was not assessable in the
hands of the assessee-Hindu undivided family. This view is
in consonance with the view of the Allahabad High Court
noted above.
The Madhya Pradesh High Court had occasion to consider
this aspect in Shrivallabhdas Modani v. Commissioner of
Income-Tax, M.P.-I, 138 I.T.R. 673, and the Court held that
if there was no coparcenary subsisting between a Hindu and
his sons at the time of death of his father, property
received by him on his father's death could not be so
blended with the property which had been allotted to his
sons on a partition effected prior to the death of the
father. Section 4 of the Hindu Succession Act, 1956, clearly
laid down that "save as expressly provided in the Act, any
text, rule or interpretation of Hindu law or any custom or
usage as part of that law in force immediately before the
commencement of the Act should cease to have effect with
respect to any matter for which provision was made in the
Act". Section 8 of the Hindu Succession Act, 1956 as noted
before, laid down the scheme of succession to the property
of a Hindu dying intestate. The schedule classified the
heirs on whom such property should devolve. Those specified
in class I took simultaneously to the exclusion of all other
heirs. A son's son was not mentioned as an heir under class
I of the schedule, and, therefore, he could not get any
right in the property of his grandfather under the
provision. The right of a son's son in his grandfather's
property during the lifetime of his father which existed
under the Hindu law as in force before the Act, was not
saved expressly by the Act, and therefore, the earlier
interpretation of Hindu law giving a right by birth in such
property "ceased to have effect". The Court
266
further observed that in construing a Codification Act, the
law which was in a force earlier should be ignored and the
construction should be confined to the language used in the
new Act. The High Court felt that so construed, section 8 of
the Hindu Succession Act should be taken as a self-contained
provision lying down the scheme of devolution of the
property of a Hindu dying intestate. Therefore, the property
which devolved on a Hindu on the death of his father
intestate after the coming into force of the Hindu
Succession Act, 1956, did not constitute HUF property
consisting of his own branch including his sons. It followed
the full bench decision of the Madras High Court as well as
the view of the Allahabad High Court in the two cases noted
above including the judgment under appeal.
The Andhra Pradesh High Court in the case of
Commissioner of Wealth-Tax, A.P.-II v. Mukundgirji, 144
I.T.R. 18, had also to consider the aspect. It held that a
perusal of the Hindu Succession Act, 1956 would disclose
that Parliament wanted to make a clean break from the old
Hindu law in certain respects consistent with modern and
egalitarian concepts. For the sake of removal of any doubts,
therefore, section 4(1)(a) was inserted. The High Court was
of the opinion that it would, therefore, not be consistent
with the spirit and object of the enactment to strain
provisions of the Act to accord with the prior notions and
concepts of Hindu law. That such a course was not possible
was made clear by the inclusion of females in class I of the
Schedule, and according to the Andhra Pradesh High Court, to
hold that the property which devolved upon a Hindu under
section 8 of the Act would be HUF property in his hands vis-
a-vis his own sons would amount to creating two classes
among the heirs mentioned in class I, viz., the male heirs
in whose hands it would be joint family property vis-a-vis
their sons; and female heirs with respect to whom no such
concept could be applied or contemplated. The intention to
depart from the pre-existing Hindu law was again made clear
by section 19 of the Hindu Succession Act which stated that
two or more heirs succeed together to the property of an
intestate, they should take the property as tenants-in-
common and not as joint tenants and according to the Hindu
law as obtained prior to Hindu Succession Act two or more
sons succeeding to their father's property took a joint
tenants and not tenants-in-common. The Act, however, has
chosen to provide expressly that they should take as
tentants-in-common. Accordingly the property which devolved
upon heirs mentioned in class I of the Schedule under
section 8 constituted the absolute properties and his sons
have no right by birth in such properties. This decision,
however,
267
is under appeal by certificate to this Court. The aforesaid
reasoning of the High Court appearing at pages 23 to 26 of
Justice Reddy's view in 144 I.T.R. appears to be convincing.
We have noted the divergent views expressed on this
aspect by the Allahabad High Court, Full Bench of the Madras
High Court, Madhya Pradesh and Andhra Pradesh High Courts on
one side and the Gujarat High Court on the other.
It is necessary to bear in mind the Preamble to the
Hindu Succession Act, 1956. The Preamble states that it was
an Act to amend and codify the law relating to intestate
succession among Hindus.
In view of the preamble to the Act, i.e., that to
modify where necessary and to codify the law, in our opinion
it is not possible when Schedule indicates heirs in class I
and only includes son and does not include son's son but
does include son of a predeceased son, to say that when son
inherits the property in the situation contemplated by
section 8 he takes it as karta of his own undivided family.
The Gujarat High Court's view noted above, if accepted,
would mean that though the son of a predeceased son and not
the son of a son who is intended to be excluded under
section 8 to inherit, the latter would by applying the old
Hindu law get a right by birth of the said property contrary
to the scheme outlined in section 8. Furthermore as noted by
the Andhra Pradesh High Court that the Act makes it clear by
section 4 that one should look to the Act in case of doubt
and not to the pre-existing Hindu law. It would be difficult
to hold today the property which devolved on a Hindu under
section 8 of the Hindu Succession would be HUF in his hand
vis-a-vis his own son; that would amount to creating two
classes among the heirs mentioned in class I, the male heirs
in whose hands it will be joint Hindu family property and
vis-a-vis son and female heirs with respect to whom no such
concept could be applied or contemplated. It may be
mentioned that heirs in class I of Schedule under section 8
of the Act included widow, mother, daughter of predeceased
son etc.
Before we conclude we may state that we have noted the
obervations of Mulla's Commentary on Hindu law 15th Edn.
dealing with section 6 of the Hindu Succession Act at page
924-26 as well as Mayne's on Hindu Law, 12th Edition pages
918-919.
The express words of section 8 of The Hindu Succession
Act,
268
1956 cannot be ingorned and must prevail. The preamble to
the Act reiterates that the Act is, inter alia, to 'amend'
the law, with that background the express language which
excludes son's son but included son of a predeceased son
cannot be ignored.
In the aforesaid light the views expressed by the
Allahabad High Court, the Madras High Court, Madhya Pradesh
High Court, and the Andhra Pradesh High Court, appear to us
to be correct. With respect we are unable to agree with the
views of the Gujarat High Court noted hereinbefore.
In the premises the judgment and order of the Allahabad
High Court under appeal is affirmed and the appeals Nos.
1668-1669 of 1974 are dismissed with costs. Accordingly
Appeal No. 1670 of 1974 in Income-tax Reference which must
follow as a consequence in view of the findings that the
sums standing to the credit of Rangi Lal belongs to Chander
Sen in his individual capacity and not the joint Hindu
family, the interest of Rs. 23,330 was an allowable
deduction in respect of the income of the family from the
business. This appeal also fails and is dismissed with
costs.
The Special Leave Petition No. 5327 of 1978 must also
fail and is dismissed. There will be no order as to costs of
this.
A.P.J. Appeals and Petition dismissed.
269
PETITIONER:
COMMISSIONER OF WEALTH TAX. KANPUR ETC. ETC.
Vs.
RESPONDENT:
CHANDER SEN ETC.
DATE OF JUDGMENT16/07/1986
BENCH:
MUKHARJI, SABYASACHI (J)
BENCH:
MUKHARJI, SABYASACHI (J)
PATHAK, R.S.
CITATION:
1986 AIR 1753 1986 SCR (3) 254
1986 SCC (3) 567 1986 SCALE (2)75
CITATOR INFO :
F 1987 SC 558 (10)
RF 1991 SC1654 (27)
ACT:
Hindu Succession Act, 1956-ss. 4, 8 and 19-Property of
father who dies intestate-Whether devolves on son, who
separated by partition from his father, in individual
capacity or Karta of his HUF.
Wealth Tax Act, 1957-ss. 3 and 4-Property inherited
under s 8 Hindu Succession Act, 1956-Whether HUF or
individual property.
Income Tax Act, 1961/Income Tax Act, 1922-Income from
as sets inherited by son from father-Whether assessable as
individual income.
HEADNOTE:
Rangi Lal and his son Chander Sen constituted a Hindu
undivided family. They had some immovable property and the
family business. By a partial partition the HUF business was
divided between the two and thereafter it was carried on by
a partnership consisting of the two. The house property of
the family continued to remain joint. The firm was assessed
to income-tax as a registered firm and the two partners were
separately assessed in respect of their share of income. The
mother and wife of Rangi Lal having pre-deceased him, when
he died he left behind him his only son Chander Sen and his
grandsons. On his death there was a credit balance of
Rs.1,85,043 in his account in the books of the firm.
In the wealth tax assessment for the assessment year
1966-67, Chander Sen, who constituted a joint family with
his own sons, filed a return of his net-wealth by including
the property of the family which u on the death of Rangi Lal
passed on to him by survivorship and, also the assets of the
business which devolved upon him on the death of his father.
The sum of R.S.. l ,85,0 13 standing to the credit of Rangi
Lal was, however, not included in the net-wealth of the
assessee-family. Similarly, in the wealth tax assessment for
the assessment year 1967-68 a sum of Rs.1,82,742 was not
included, in the net wealth of the assessee family. It was
contended that these amounts devolved on Chander Sen
255
in his individual capacity and were not the property of the
assessee family. The Wealth-tax officer did not accept this
contention and held that these sums also belonged to the
assessee-family.
A sum of Rs.23,330 was also credited to the account of
late Rangi Lal on account of interest accruing on his credit
balance. In the proceedings under the Income Tax Act for the
assessment year 1367-68 this sum was claimed as deduction on
the same ground. The Income-tax officer disallowed the claim
on the ground that it was a payment made by Chander Sen to
himself.
On appeal, the Appellate Assistant Commissioner of
Income-tax accepted the assessee's claim in full and held
that the capital in the name of Rangi Lal devolved on
Chander Sen in his individual capacity and as such was not
to be included in the wealth of the assessee family. The sum
of Rs.23,330 on account of interest was also directed to be
allowed as deduction.
The Income-tax Appellate Tribunal dismissed the appeals
filed by the Revenue and its orders were affirmed by the
High Court.
On the question: "Whether the income or asset which a
son inherits from his father when separated by partition
should be assessed as income of the Hindu Undivided Family
consisting of his own branch including his sons or his
individual income", dismissing the appeals and Special Leave
Petition of the Revenue, the Court,
^
HELD: 1. The sums standing to the credit of Rangi Lal
belong to Chander Sen in his individual capacity and not the
Joint Hindu Family. The interest of Rs.23,330 was an
allowable deduction in respect of the income of the family
from the business. [268C-D]
2.1 Under s. 8 of the Hindu Succession Act, 1956, the
property of the father who dies intestate devolves on his
son in his individual capacity and not as Karta of his own
family. Section 8 lays down the scheme of succession to the
property of a Hindu dying intestate. The Schedule classified
the heirs on whom such property should devolve. Those
specified in class I took simultaneously to the exclusion of
all other heirs. A son's son was not mentioned as an heir
under class I of the Schedule, and, therefore, he could not
get any right in the property of his grandfather under the
provision. [265F-G]
256
2.2 The right of a son's son in his grandfather's
property during the lifetime of his father which existed
under the Hindu law as in force before the Act, was not
saved expressly by the Act, and therefore, the earlier
interpretation of Hindu law giving a right by birth in such
property "ceased to have effect". So construed, s. 8 of the
Act should be taken as a self-contained provision laying
down the scheme of devolution of the property of a Hindu
dying intestate. Therefore, the property which devolved on a
Hindu on the death of his father intestate after the coming
into force of the Hindu Succession Act, 1356, did not
constitute HUF property consisting of his own branch
including his sons. [265G-H; 266A-C]
2.3 The Preamble to the Act states that it was an Act
to amend and codify the law relating to intestate succession
among Hindus. Therefore, it is not possible when the
Schedule indicates heirs in class I and only includes son
and does not include son's son but does include son of a
predeceased-son, to say that when son inherits the property
in the situation contemplated by s. 8, he takes it as Karta
of his own undivided family. [267C-D]
2.4 The Act makes it clear by s. 4 that one should look
to the Act in case of doubt and not to the pre-existing
Hindu law. It would be difficult to hold today that the
property which devolved on a Hindu under s. X of the Act
would be HUF in his hand vis-a-vis his own son; that would
amount to creating two classes among the heirs mentioned in
class I, the male heirs in whose hands it will be joint
Hindu family property and vis-a-vis sons and female heirs
with respect to whom no such concept could be applied or
contemplated. [267E-G]
2.5 Under the Hindu law, the property of a male Hindu
devolved on his death on his sons and the grandsons as the
grandsons also have an interest in the property. However, by
reason of s. 8 of the Act, the son's son gets excluded and
the son alone inherits the properly to the exclusion of his
son. As the effect of s. 8 was directly derogatory of the
law established according to Hindu law, the statutory
provisions must prevail in view of the unequivocal intention
in the statute itself, expressed in s. 4(1) which says that
to the extent to which provisions have been made in the Act,
those provisions shall override the established provisions
in the texts of Hindu Law. [264G-H; 265A-B]
2.6 The intention to depart from the pre-existing Hindu
law was again made clear by s. 19 of the Hindu Succession
Act which stated that
257
if two or more heirs succeed together to the property of an
intestate, they should take the property as tenants-in-
common and not as joint tenants and according to the Hindu
law as obtained prior to Hindu Succession Act two or more
sons succeeding to their father's property took a joint
tenants and not tenants-in-common. The Act, however, has
chosen to provide expressly that they should take as
tenants-in-common. Accordingly the property which devolved
upon heirs mentioned in class I of the Schedule under s. 8
constituted the absolute properties and his sons have no
right by birth in such properties. [266F-H]
Commissioner of Income-tax, U. P. v. Ram Rakshpal,
Ashok Kumar, 67 I.T.R. 164; Additional Commissioner of
Income-tax, Madras v. P.L. Karuppan Chettiar, 114 I.T.R.
523; Shrivallabhdas Modani v. Commissioner of Income-Tax,
M.P-I., 138 I.T.R. 673 and Commissioner of Wealth-Tax A.P.
II v. Mukundgirji 144 I.T.R. 18, approved.
Commissioner of Income-tax, Gujarat-l v. Dr. Babubhai
Mansukhbai (Deceased), 108 I.T.R. 417, overruled.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 166870
of 1974 etc.
From the Judgment and order dated 17.8.1973 of the
Allahabad High Court in W.T. Reference No. 371 of 1971 and
I.T. Reference No. 452 of 1971.
V.S. Desai, and Miss A. Subhashini for the Appellants.
P.K. Mukharjee and A. K. Sengupta for the Respondents.
The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. These appeals arise by special
leave from the decision of the High Court of Allahabad dated
17th August, 1973. Two of these appeals are in respect of
assessment years 1966-67 and 1967-68 arising out of the
proceedings under the Wealth Tax Act, 1957. The connected
reference was under the Income-Tax Act, 1961 and related to
the assessment year 1968-69. A common question of law arose
in all these cases and these were disposed of by the High
Court by a common judgment.
One Rangi Lal and his son Chander Sen constituted a
Hindu
258
undivided family. This family had some immovable property
and the business carried on in the name of Khushi Ram Rangi
Lal. On October 10, 1961, there was a partial partition in
the family by which the business was divided between the
father and the son, and thereafter, it was carried on by a
partnership consisting of the two. The firm was assessed to
income-tax as a registered firm and the two partners were
separately assessed in respect of their share of income. The
house property of the family continued to remain joint. On
July 17, 1965, Rangi Lal died leaving behind his son,
Chander Sen, and his grandsons, i.e. the sons of Chander
Sen. His wife and mother predeceased him and he had no other
issue except Chander Sen. On his death there was a credit
balance of Rs.1,85,043 in his account in the books of the
firm. For the assessment year 1966-67 (valuation date
October 3, 1965), Chander Sen, who constituted a joint
family with his own sons, filed a return of his net wealth.
The return included the property of the family which on the
death of Rangi Lal passed on to Chander Sen by survivorship
and also the assets of the business which devolved upon
Chander Sen on the death of his father. The sum of
Rs.1,85,043 standing to the credit of Rangi Lal was not
included in the net wealth of the family of Chander Sen
(hereinafter referred to as 'the assessee-family') on the
ground that this amount devolved on Chander Sen in his
individual capacity and was not the property of the
assessee-family. The Wealth-tax officer did not accept this
contention and held that the sum of Rs.1,85,043 also
belonged to the assessee-family.
At the close of the previous year ending on October 22,
1962, relating to the assessment year 1967-68, a sum of
Rs.23,330 was credited to the account of late Rangi Lal on
account of interest accruing on his credit balance. In the
proceedings under the Income-tax Act for the assessment year
1967-68, the sum of R.S.. 23,330 was claimed as deduction.
It was alleged that interest was due to Chander Sen in his
individual capacity and was an allowable deduction in the
computation of the business income of the assessee-faimly.
At the end of the year the credit balance in the account of
Rangi Lal stood at Rs.1,82,742 which was transferred to the
account of Chander Sen. In the wealth-tax assessment for the
assessment year 1967-68, it was claimed, as in the earlier
year, that the credit balance in the account of Rangi Lal
belonged to Chander Sen in his individual capacity and not
to the assessee-family. The Income-tax officer who completed
the assessment disallowed the claim relating to interest on
the ground that it was a payment made by Chander Sen to
himself. Likewise, in the wealth-tax assessment, the sum of
Rs.1,82,742 was included by the Wealth-tax officer in the
net wealth of the assessee-family. On appeal the Appellate
Assistant Commissioner of Income-tax accepted the assessee's
claim in
259
full. He held that the capital in the name of Rangi Lalluded
in the wealth of the assessee-family. He also directed that
in the income-tax assessment the sum of Rs.23,330 on account
of interest should be allowed as deduction. The revenue felt
aggrieved and filed three appeals before the Income-tax
Appellate Tribunal, two against the assessments under the
Wealth-tax Act for the assessment years 1966-67 and 1967-68
and one against the assessment under Income-tax Act for the
assessment year 1967-68. The Tribunal dismissed the
revenue's appeals.
The following question was referred to the High Court
for its opinion:
"Whether, on the facts and in the circumstances of
the case, the conclusion of the Tribunal that the
sum of Rs.1,85,043 and Rs.1,82,742 did not
constitute the assets of the assessee-Hindu
undivided family is correct?"
Similarly in the reference under the Income-tax Act,
the following question was referred:
"Whether, on the facts and in the circumstances of
the case, the interest of Rs,23,330 is allowable
deduction in the computation of the business
profits of the assessee joint family?"
The answer to the questions would depend upon whether
the amount standing to the credit of late Rangi Lal was
inherited, after his death, by Chander Sen in his individual
capacity or as a Karta of the assessee joint family
consisting of himself and his sons.
The amount in question represented the capital allotted
to Rangi Lal on partial partition and accumulated profits
earned by him as his share in the firm. While Rangi Lal was
alive this amount could not be said to belong to any joint
Hindu family and qua Chander Sen and his sons, it was the
separate property of Rangi Lal. On Rangi Lal's death the
amount passed on to his son, Chander Sen, by inheritance.
The High Court was of the opinion that under the Hindu Law
when a son inherited separate and self-acquired property of
his father, it assumed the character of joint Hindu family
property in his hands qua the members of his own family. But
the High Court found that this principle has been modified
by section 8 of the Hindu Succession Act, 1956.
260
Section 8 of the said Act provides, inter alia, that the
property of a male Hindu dying intestate devolved according
to the provisions of that Chapter in the Act and indicates
further that it will devolve first upon the heirs being the
relatives specified in class I of the Schedule. Heirs in the
Schedule Class I includes and provides firstly son and
thereafter daughter, widow and others. It is not necessary
in view of the facts of this case to deal with other clauses
indicated in section 8 or other heirs mentioned in the
Schedule. In this case as the High Court noted that the son,
Chander Sen was the only heir and therefore the property was
to pass to him only.
The High Court in the judgment under appeal relied on a
bench decision of the said High Court rendered previously.
Inadvertently, in the judgment of the High Court, it had
been mentioned that the judgment was in Khudi Ram Laha v.
Commissioner of Income-tax U.P, 67 I.T.R. 364. but that was
a case which dealt with entirely different problem. The
decision which the High Court had in mind and on which in
fact the High Court relied was a decision in the case of
Commissioner of Income-tax, U. P. v. Ram Rakshpal, Ashok
Kumar, 67 I.T.R. 164. In the said decision the Allahabad
High Court held that in view of the provisions of the Hindu
Succession Act, 1956, the income from assets inherited by a
son from his father from whom he had separated by partition
could not be assesssed as the income of the Hindu undivided
family of the son. The High Court relied on the commentary
in Mulla's Hindu Law, Thirteenth Edition page 248. The High
Court also referred to certain passages from Dr. Derret's
"Introduction to Modern Hindu Law" (paragraph 411, at page
252). Reliance was also placed on certain observations of
this Court and the Privy Council as well as on Mayne's
'Hindu Law'. After discussing all these aspects the Court
came to the conclusion that the position of the Hindu Law
was that partition took away by way of coparcenary the
character of coparcener property which meant that the share
of another coparcener upon the divisions although the
property obtained by a coparcener by a partition continued
to be coparcenary property for him and his unseparated
issue. In that case what had happened was one Ram Rakshpal
and his father, Durga Prasad, constituted a Hindu undivided
family which was assessed as such. Ram Rakshpal separated
from his father by partition on October 11, 1948. Thereafter
Ram Rakshpal started business of his own, income whereof was
assessed in the hands of the assessee-family. Shri Durga
Prasad also started business of his own after partition in
the name and style of M/s Murlidhar Mathura Prasad which was
carried on by him till his death.
261
Durga Prasad died on March 29, 1958 leaving behind him his
widow, Jai Devi, his married daughter, Vidya Wati and Ram
Rakshpal and Ram Rakshpal's son, Ashok Kumar, as his
survivors. The assets left behind by Durga Prasad devolved
upon three of them in equal shares by succession under the
Hindu Succession Act, 1956. Vidya Wati took away her 1/3rd
share, while Jai Devi and Shri Ram Rakshpal continued the
aforesaid business inherited by them in partnership with
effect from April, 1, 1958 under a partnership deed dated
April 23, 1958. The said firm was granted registration for
the assessment year 1958-59. The share of profit of Shri Ram
Rakshpal for the assessment year under reference was
determined at Rs.4,210. The assessee-family contended before
the Income-tax Officer that this profit was the personal
income of Ram Rakshpal and could not be taxed in the hands
of the Hindu undivided family of Ram Rakshpal, and held that
Ram Rakshpal contributed his ancestral funds in the
partnership business of Murli Dhar Mathura Prasad and that,
hence, the income therefrom was taxable in the hands of the
assessee family. The High Court finally held on these facts
in C.I.T v. Ram Rakshpal (supra) that the assets of the
business left by Durga Prasad in the hands of Ram Rakshpal
would be governed by section 8 of the Hindu Succession Act,
1956.
The High Court in the Judgment under appeal was of the
opinion that the facts of this case were identical with the
facts in the case of Commissioner of Income-tax, U.P.
(supra) and the principles applicable would be the same. The
High Court accordingly answered the question in the
affirmative and in favour of the assessee so far as
assessment of wealth-tax is concerned. The High Court also
answered necessarily the question on the income-tax
Reference affirmatively and in favour of the assessee.
The question here, is, whether the income or asset
which a son inherits from his father when separated by
partition the same should be assessed as income of the Hindu
undivided family of son or his individual income. There is
no dispute among the commentators on Hindu Law nor in the
decisions of the Court that under the Hindu Law as it is,
the son would inherit the same as karta of his own family.
But the question, is, what is the effect of section 8 of the
Hindu Succession Act, 1956? The Hindu Succession Act, 1956
lays down the general rules of succession in the case of
males. The first rule is that the property of a male Hindu
dying intestate shall devolve according to the provisions of
Chapter II and class I of the Schedule provides that if
there is a male heir of class I then upon the heirs
mentioned in class I of
262
the Schedule. Class I of the Schedule reads as follows:
"Son; daughter; widow; mother; son of a pre-
deceased son; daugther of a predeceased son; son
of a pre-deceased daughter, daughter of a pre-
deceased daughter; widow of a pre-deceased son;
son of a pre-deceased son of a pre-deceased son;
daughter of a pre-deceased son of a pre-deceased
son; widow of a pre-deceased son of a pre-deceased
son."
The heirs mentioned in class I of the Schedule are son,
daughter etc. including the son of a pre-deceased son but
does not include specifically the grandson, being a son of a
son living. Therefore, the short question, is, when the son
as heir of class I of the Schedule inherits the property,
does he do so in his individual capacity or does he do so as
karta of his own undivided family?
Now the Allahabad High Court has noted that the case of
Commissioner of Income-tax, U.P. v. Ram Rakshpal, Ashok
Kumar (supra) after referring to the relevant authorities
and commentators had observed at page 171 of the said report
that there was no scope for consideration of a wide and
general nature about the objects attempted to be achieved by
a piece of legislation when interpreting the clear words of
the enactment. The learned judges observed referring to the
observations of Mulla's Commentary on Hindu Law, and the
provisions of section 6 of the Hindu Succession Act that in
the case of assets of the business left by father in the
hands of his son will be governed by section 8 of the Act
and he would take in his individual capacity. In this
connection reference was also made before us to section 4 of
the Hindu Succession Act. Section 4 of the said Act provides
for overriding effect of Act. Save as otherwise expressly
provided in the Act, any text, rule or interpretation of
Hindu Law or any custom or usage as part of that law in
force immediately before the commencement of this Act shall
cease to have effect with respect to any matter for which
provision is made in the Act and any other law in force
immediately before the commencement of the Act shall cease
to apply to Hindus in so far it is inconsistent with any of
the provisions contained in the Act. Section 6 deals with
devolution of interest in coparcenary property and it makes
it clear that when a male Hindu dies after the commencement
of the Act having at the time of his death an interest in a
Mitakshara coparcenary property, his interest in the
property shall devolve by survivorship upon the surviving
members of the coparcenary and not
263
in accordance with the Act. The proviso indicates that if
the deceased had left him surviving a female relative
specified in class I of the Schedule or a male relative
specified in that class who claims through such female
relative, the interest of the deceased in Mitakshara
coparcenary property shall devolve by testamentary or
intestate succession, as the case may be, under this Act and
not by survivorship.
Section 19 of the said Act deals with the mode of
succession of two or more heirs. If two or more heirs
succeed together to the property of an intestate, they shall
take the property per capita and not per stripes and as
tenants-in-common and not as joint tenants.
Section 30 stipulates that any Hindu may dispose of by
will or other testamentary disposition any property, which
is capable of being so disposed of by him in accordance with
the provisions of the Indian Succession Act, 1925.
It is clear that under the Hindu law, the moment a son
is born, he gets a share in the father's property and
becomes part of the comparcenary. His right accrues to him
not on the death of the father or inheritance from the
father but with the very fact of his birth. Normally,
therefore whenever the father gets a property from whatever
source from the grandfather or from any other source, be it
separated property or not, his son should have a share in
that and it will become part of the joint family of his son
and grandson and other members who form joint Hindu family
with him. But the question is; is the position affected by
section 8 of the Succession Act, 1956 and if so, how? The
basic argument is that section 8 indicates the heirs in
respect of certain property and class I of the heirs
includes the son but not the grandson. It includes, however,
the son of the predeceased son. It is this position which
has mainly induced the Allahabad High Court in the two
judgments, we have noticed, to take the view that the income
from the assets inherited by son from his father from whom
he has separated by partition can be assessed as income of
the son individually. Under section 8 of the Hindu
Succession Act, 1956 the property of the father who dies
intestate devolves on his son in his individual capacity and
not as karta of his own family. On the other hand, the
Gujarat High Court has taken the contrary view.
In Commissioner of Income-tax, Gujarat-I v. Dr.
Babubhai Mansukhbhai (Deceased), 108 I.T.R. 417 the Gujarat
High Court held that in the case of Hindus governed by the
Mitakshara law, where a son
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inherited the self-acquired property of his father, the son
took it as the joint family property of himself and his son
and not as his separate property. The correct status for the
assessment to income-tax of the son in respect of such
property was as representing his Hindu undivided family. The
Gujarat High Court could not accept the view of the
Allahabad High Court mentioned hereinbefore. The Gujarat
High Court dealt with the relevant provisions of the Act
including section 6 and referred to Mulla's Commentary and
some other decisions.
Before we consider this question further, it will be
necessary to refer to the view of the Madras High Court.
Before the full bench of Madras High Court in Additional
Commissioner of Income-tax, Madras v. P.L. Karappan
Chettiar, 114 I.T.R. 523, this question arose. There, on a
partition effected on March 22, 1954, in the Hindu undivided
family consisting of P, his wife, their sons, K and their
daughter-in-law, P was allotted certain properties as and
for this share and got separated. The partition was accepted
by the revenue under section 25A of the Indian Income-tax
Act, 1922. K along with his wife and their subsequently born
children constituted a Hindu undivided family which was
being assessed in that status. P died on September 9, 1963,
leaving behind his widow and divided son, K, who was the
karta of his Hindu undivided family, as his legal heirs and
under section 8 of the Hindu Seccession Act, 1956, the
Madras High Court held, that these two persons succeeded to
the properties left by the deceased, P, and divided the
properties among themselves. In the assessment made on the
Hindu undivided family of which K was the karta, for the
assessment year 1966-67 to 1970-71, the Income-tax Officer
included for assessment the income received from the
properties inherited by K from his father, P. The inclusion
was confirmed by the Appellate Assistant Commissioner but,
on further appeal, the Tribunal held that the properties did
not form part of the joint family properties and hence the
income therefrom could not be assessed in the hands of the
family. On a reference to the High Court at the instance of
the revenue, it was held by the Full bench that under the
Hindu law, the property of a male Hindu devolved on his
death on his sons and grandsons as the grandsons also have
an interest in the property. However, by reason of section 8
of the Hindu Succession Act, 1956, the son's son gets
excluded and the son alone inherits the property to the
exclusion of his son. No interest would accrue to the
grandson of P in the property left by him on his death. As
the effect of section 8 was directly derogatory of the law
established according to Hindu law, the statutory provision
must prevail in view of the unequivocal intention in the
statute itself,
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expressed in section 4(1) which says that to the extent to
which provisions have been made in the Act, those provisions
shall override the established provisions in the texts of
Hindu law. Accordingly, in that case, K alone took the
properties obtained by his father, P, in the partition
between them, and irrespective of the question as to whether
it was ancestral property in the hands of K or not, he would
exclude his son. Further, since the existing grandson at the
time of the death of the grandfather had been excluded, an
after-born son of the son will also not get any interest
which the son inherited from the father. In respect of the
property obtained by K on the death of his father, it is not
possible to visualise or envisage any Hindu undivided
family. The High Court held that the Tribunal was,
therefore, correct in holding that the properties inherited
by K from his divided father constituted his separate and
individual properties and not the properties of the joint
family consisting of himself, his wife, sons and daughters
and hence the income therefrom was not assessable in the
hands of the assessee-Hindu undivided family. This view is
in consonance with the view of the Allahabad High Court
noted above.
The Madhya Pradesh High Court had occasion to consider
this aspect in Shrivallabhdas Modani v. Commissioner of
Income-Tax, M.P.-I, 138 I.T.R. 673, and the Court held that
if there was no coparcenary subsisting between a Hindu and
his sons at the time of death of his father, property
received by him on his father's death could not be so
blended with the property which had been allotted to his
sons on a partition effected prior to the death of the
father. Section 4 of the Hindu Succession Act, 1956, clearly
laid down that "save as expressly provided in the Act, any
text, rule or interpretation of Hindu law or any custom or
usage as part of that law in force immediately before the
commencement of the Act should cease to have effect with
respect to any matter for which provision was made in the
Act". Section 8 of the Hindu Succession Act, 1956 as noted
before, laid down the scheme of succession to the property
of a Hindu dying intestate. The schedule classified the
heirs on whom such property should devolve. Those specified
in class I took simultaneously to the exclusion of all other
heirs. A son's son was not mentioned as an heir under class
I of the schedule, and, therefore, he could not get any
right in the property of his grandfather under the
provision. The right of a son's son in his grandfather's
property during the lifetime of his father which existed
under the Hindu law as in force before the Act, was not
saved expressly by the Act, and therefore, the earlier
interpretation of Hindu law giving a right by birth in such
property "ceased to have effect". The Court
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further observed that in construing a Codification Act, the
law which was in a force earlier should be ignored and the
construction should be confined to the language used in the
new Act. The High Court felt that so construed, section 8 of
the Hindu Succession Act should be taken as a self-contained
provision lying down the scheme of devolution of the
property of a Hindu dying intestate. Therefore, the property
which devolved on a Hindu on the death of his father
intestate after the coming into force of the Hindu
Succession Act, 1956, did not constitute HUF property
consisting of his own branch including his sons. It followed
the full bench decision of the Madras High Court as well as
the view of the Allahabad High Court in the two cases noted
above including the judgment under appeal.
The Andhra Pradesh High Court in the case of
Commissioner of Wealth-Tax, A.P.-II v. Mukundgirji, 144
I.T.R. 18, had also to consider the aspect. It held that a
perusal of the Hindu Succession Act, 1956 would disclose
that Parliament wanted to make a clean break from the old
Hindu law in certain respects consistent with modern and
egalitarian concepts. For the sake of removal of any doubts,
therefore, section 4(1)(a) was inserted. The High Court was
of the opinion that it would, therefore, not be consistent
with the spirit and object of the enactment to strain
provisions of the Act to accord with the prior notions and
concepts of Hindu law. That such a course was not possible
was made clear by the inclusion of females in class I of the
Schedule, and according to the Andhra Pradesh High Court, to
hold that the property which devolved upon a Hindu under
section 8 of the Act would be HUF property in his hands vis-
a-vis his own sons would amount to creating two classes
among the heirs mentioned in class I, viz., the male heirs
in whose hands it would be joint family property vis-a-vis
their sons; and female heirs with respect to whom no such
concept could be applied or contemplated. The intention to
depart from the pre-existing Hindu law was again made clear
by section 19 of the Hindu Succession Act which stated that
two or more heirs succeed together to the property of an
intestate, they should take the property as tenants-in-
common and not as joint tenants and according to the Hindu
law as obtained prior to Hindu Succession Act two or more
sons succeeding to their father's property took a joint
tenants and not tenants-in-common. The Act, however, has
chosen to provide expressly that they should take as
tentants-in-common. Accordingly the property which devolved
upon heirs mentioned in class I of the Schedule under
section 8 constituted the absolute properties and his sons
have no right by birth in such properties. This decision,
however,
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is under appeal by certificate to this Court. The aforesaid
reasoning of the High Court appearing at pages 23 to 26 of
Justice Reddy's view in 144 I.T.R. appears to be convincing.
We have noted the divergent views expressed on this
aspect by the Allahabad High Court, Full Bench of the Madras
High Court, Madhya Pradesh and Andhra Pradesh High Courts on
one side and the Gujarat High Court on the other.
It is necessary to bear in mind the Preamble to the
Hindu Succession Act, 1956. The Preamble states that it was
an Act to amend and codify the law relating to intestate
succession among Hindus.
In view of the preamble to the Act, i.e., that to
modify where necessary and to codify the law, in our opinion
it is not possible when Schedule indicates heirs in class I
and only includes son and does not include son's son but
does include son of a predeceased son, to say that when son
inherits the property in the situation contemplated by
section 8 he takes it as karta of his own undivided family.
The Gujarat High Court's view noted above, if accepted,
would mean that though the son of a predeceased son and not
the son of a son who is intended to be excluded under
section 8 to inherit, the latter would by applying the old
Hindu law get a right by birth of the said property contrary
to the scheme outlined in section 8. Furthermore as noted by
the Andhra Pradesh High Court that the Act makes it clear by
section 4 that one should look to the Act in case of doubt
and not to the pre-existing Hindu law. It would be difficult
to hold today the property which devolved on a Hindu under
section 8 of the Hindu Succession would be HUF in his hand
vis-a-vis his own son; that would amount to creating two
classes among the heirs mentioned in class I, the male heirs
in whose hands it will be joint Hindu family property and
vis-a-vis son and female heirs with respect to whom no such
concept could be applied or contemplated. It may be
mentioned that heirs in class I of Schedule under section 8
of the Act included widow, mother, daughter of predeceased
son etc.
Before we conclude we may state that we have noted the
obervations of Mulla's Commentary on Hindu law 15th Edn.
dealing with section 6 of the Hindu Succession Act at page
924-26 as well as Mayne's on Hindu Law, 12th Edition pages
918-919.
The express words of section 8 of The Hindu Succession
Act,
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1956 cannot be ingorned and must prevail. The preamble to
the Act reiterates that the Act is, inter alia, to 'amend'
the law, with that background the express language which
excludes son's son but included son of a predeceased son
cannot be ignored.
In the aforesaid light the views expressed by the
Allahabad High Court, the Madras High Court, Madhya Pradesh
High Court, and the Andhra Pradesh High Court, appear to us
to be correct. With respect we are unable to agree with the
views of the Gujarat High Court noted hereinbefore.
In the premises the judgment and order of the Allahabad
High Court under appeal is affirmed and the appeals Nos.
1668-1669 of 1974 are dismissed with costs. Accordingly
Appeal No. 1670 of 1974 in Income-tax Reference which must
follow as a consequence in view of the findings that the
sums standing to the credit of Rangi Lal belongs to Chander
Sen in his individual capacity and not the joint Hindu
family, the interest of Rs. 23,330 was an allowable
deduction in respect of the income of the family from the
business. This appeal also fails and is dismissed with
costs.
The Special Leave Petition No. 5327 of 1978 must also
fail and is dismissed. There will be no order as to costs of
this.
A.P.J. Appeals and Petition dismissed.
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