FIRST INCOME TAX OFFICER v. M. JESWANTHARAJ
[Citation -1984-LL-0430-7]

Citation 1984-LL-0430-7
Appellant Name FIRST INCOME TAX OFFICER
Respondent Name M. JESWANTHARAJ
Court ITAT
Relevant Act Income-tax
Date of Order 30/04/1984
Assessment Year 1978-79
Judgment View Judgment
Keyword Tags joint family property • status of individual • hindu succession act • individual property • adopted child • hindu widow
Bot Summary: The property got by the assessee in the said partition was treated as individual property till the assessment year 1977-78. During the assessment year 1978-79, he claimed that income from the properties got in partition on 30-10-1970 should be assessed in the status of HUF. The ITO held that the properties which came to the share of Smt. Anchi Bai became her absolute property by virtue of the provisions of section 14 of the Hindu Succession Act, 1956. Thereafter, the property got by the assessee in 1970 became HUF property and so the status has been rightly taken as HUF by the AAC. He placed reliance on the decision in Hirabai v. Babu Manika Ingale AIR 1980 Bom. The property which she got on partition was HUF property. Smt. Anchi Bai does not get absolute right in the property got in partition on 24-10-1965 as that property was HUF property belonging to her and her adopted son who were members of the family at that time. We have come to the conclusion, on the authority of these pronouncements coming from the highest Court and interpreting the terms of the enactment as we find that the character of coparcenary and its property is not affected, that its inalienable attributes are retained notwithstanding the declaration by which a Hindu female is placed in the same position as any other Hindu male would be with regard to such property. Summarising, because of the incidents and inalienable attributes of the property and because of adoption implying the voluntary act of the taker and because we feel that there is no conflict with the provisions of section 14 of the Succession Act and such taking and its effect, we are of the view that upon adoption, the adopted child gets interest in the joint family property from the date of its adoption.


There was bigger HUF consisting of two brothers, Shri J. Bhanwarlal and Shri Motilal. Shri Motilal died leaving behind his wife, Smt. Anchi Bai. In 1964 she adopted Shri Jeswantharaj, assessee. On 24-10-1965 there was partition between Smt. Anchi Bai and Shri J. Bhanwarlal. Under said partition she got her husband's share of property. After that, family consisted of herself and her adopted son, assessee. Thereafter, there was partition on 30-10-1970 between Smt. Anchi Bai and assessee under which assessee got 50 per cent share. property got by assessee in said partition was treated as individual property till assessment year 1977-78. assessee got married on 25-6-1975. During assessment year 1978-79, he claimed that income from properties got in partition on 30-10-1970 should be assessed in status of HUF. ITO held that properties which came to share of Smt. Anchi Bai became her absolute property by virtue of provisions of section 14 of Hindu Succession Act, 1956. On 30-10-1970 when assessee was given 50 per cent share of assets, it has to be treated as gift only and not partition as claimed by assessee and as such assessee's status of HUF cannot be accepted. income arising from properties received by assessee on 30-10-1970 is assessable in status of individual only. On appeal, AAC accepted assessee's claim and directed ITO to assess assessee in status of HUF. Against same, revenue has preferred this appeal. 2. learned departmental representative submitted that after partition in 1965, Smt. Anchi Bai got absolute right in property after Hindu Succession Act. property given to assessee in 1970 can only be treated as gift. Thus, income from property got by assessee in 1970 has to be assessed only in status of 'individual'. learned counsel for assessee kly urged that assessee was adopted in 1964. After that there was partition on 24-10-1965 between Shri Bhanwarlal and Smt. Anchi Bai. property got by Smt. Anchi Bai belonged to HUF of which assessee is coparcener. So, he had right in HUF property. There was partition in 1970 wherein assessee got 50 per cent share of HUF property. assessee got married in 1975. Thereafter, property got by assessee in 1970 became HUF property and so status has been rightly taken as HUF by AAC. He placed reliance on decision in Hirabai v. Babu Manika Ingale AIR 1980 Bom. 315. 3. We have considered rival submissions. As stated already, assessee was adopted by Smt. Anchi Bai on 2-11-1964. Thereafter, assessee became adopted son and coparcener of HUF. There was partition between Shri Bhanwarlal and Smt. Anchi Bai on 24-10-1965 under which Smt. Anchi Bai got her husband's share of property. property which she got on partition was HUF property. members of HUF were herself and her adopted son. Her adopted son had right in said property. In case of adoption by widow, adopted child becomes absorbed in adoptive family to which widow belonged. In Smt. Sitabai v. Ramehandra AIR 1970 SC 343, Supreme Court held that child adopted by widow becomes adopted son of husband of widow and it is necessary implication of sections 12 and 14 of Hindu Succession Act that son adopted by widow becomes son not only of widow but also of deceased husband, and adopted child becomes child of both spouses. Applying above ratio, it has to be held that assessee, Shri Jeswantharaj, who was adopted by Smt. Anchi Bai in 1964 became adopted son of herself and her deceased husband, Motilal. He becomes coparcener of HUF and gets share in property. Smt. Anchi Bai does not get absolute right in property got in partition on 24-10-1965 as that property was HUF property belonging to her and her adopted son who were members of family at that time. Under section 14 any property possessed by female Hindu, whether acquired before or after commencement of this Act, shall be held by her as full owner thereof and not as limited owner. This section has no application to present case as in partition on 24-10-1965 property got by Smt. Anchi Bai belonged to her as well as to her son as it was HUF property. Hence, she does not get absolute right in entire property got on partition on 24-10-1965. She has only half share in property. Subsequently, on 30-10- 1970 there was partition between Smt. Anchi Bai and assessee under which each got 50 per cent share in HUF property. Thus, property got by assessee in partition on 30-10-1970 becomes joint family property in his hands after he got married in 1975. Thus, income from property got in partition has to be assessed in hands of assessee in status of HUF in this year. 4. In Hirabai's case Bombay High Court held that effect of adoption obviously is, when adoption is by widow, to make adopted son to be member of family of deceased husband of widow. By reason of adoption, interest in property would arise from date of such adoption, subject, however, that other members of family would not be divested of estate vested in them. Dealing with rights of widow, Bombay High Court, after considering section 14, observed as under: " It is obvious that notwithstanding fact that property comes in hands of Hindu widow, it does not lose its character as one that belongs to Hindu joint family. This is more so when Hindu widow can be prospective mother because of legal capacity to adopt child to herself and to her deceased husband. That capacity involves, as we have indicated earlier, to have adoptive child to herself and to her husband and to confer him with similar status as one that of natural born child, which event has legal effect of creating interest in joint family property if such property exists at date when adoption takes effect and it begins to operate on principles of prospective furthering. entire process is voluntary. Once event is achieved effect follows. Only because particular legal effect ensues, initial character of voluntary act does not cease to be so and has to be continued even for purpose of result from that perspective." It was further observed that though section 14(1) declares that property shall be held by female Hindu as full owner thereof, it has not effect of changing basic character of coparcenary property. As soon as person is born or child is born by legal device, resulting interest in his favour would ensue and possibility of such interest coming into life and becoming operative is always there by reason of character of property. In Hirabai's case it was observed as under: " . . We have, therefore, come to conclusion, on authority of these pronouncements coming from highest Court and interpreting terms of enactment as we find that character of coparcenary and its property is not affected, that its inalienable attributes are retained notwithstanding declaration by which Hindu female is placed in same position as any other Hindu male would be with regard to such property. Such view does not run counter, nor does it conflict with express statement of law available in section 14(1) of Succession Act. " Again, it was observed as under: " . . Summarising, because of incidents and inalienable attributes of property and because of adoption implying voluntary act of taker and because we feel that there is no conflict with provisions of section 14 of Succession Act and such taking and its effect, we are of view that upon adoption, adopted child gets interest in joint family property from date of its adoption. " Thus, it was held therein that adopted child gets interest in joint family property from date of his adoption. above decision is directly on point and squarely covers instant case. In our view assessee, Shri M. Jeswantharaj, after his adoption in 1964 became member of adoptive family and got interest in joint family property from date of his adoption. Thus, in properties got by Smt. Anchi Bai in partition on 24-10-1965, assessee as adopted son got interest. Subsequently, those properties were partitioned between assessee and Smt. Anchi Bai, each getting 50 per cent share. Thus, property got by assessee in partition on 30-10-1970 became joint family property. After his marriage on 25-6-1975, family consisted of assessee and his wife. Thus, income from properties got in partition in 1970 has to be assessed in status of HUF. Thus, we uphold order of AAC. 5. In result, appeal fails and is dismissed. *** FIRST INCOME TAX OFFICER v. M. JESWANTHARAJ
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