LAW FOR ALL

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.