DELHI D BENCH LT. GEN. HAR v. INCOME TAX OFFICER PRASHAD May 22, 1984 JUDGMENT PerKapur - assessment years involved in thisbatch of appeals are 1968-69, 1975-76, 1977-78 and 1978-79 and all these havebeen preferred by assessee through legal heirs and status shown isresident-individual. Common issue involved is about ownership of immovableproperty commonly known as 19, Darya Ganj, New Delhi.The assessee claims it to be belonging to his HUF, while learned lowerauthorities have held it to be belonging assesseein his individual status. 2.To give fair and faithful background of facts of case, we reproducehereunder in verbatim facts from assessment order, dated 13- 2-1981,made in relation to assessment year 1968-69: "Thisis first time that assessee has claimed HUF status in respect of houseproperty. Income from this property has all along been assessed in hands ofthe assessee from assessment year 1957-58. assessee stated that hereceived property from his father under will, dated 12-11-1953, and henceis ancestral property in his hands. No doubt property received from father,grandfather and great grandfather is ancestral but thequestion is different when it is received under will and property wasself-acquired by testator. In such case, intention of testator isto be seen. Whether he intended it to be bequeathed absolutely to legateeor whether he intended it to be enjoyed by legatee and his family as theirjoint family property. Supreme Court in ArunachalamMudaliar v. Muruganathareferred to on page 250, para 5, of Principles ofHindu Law, 13th edition, has held that no presumption one way or othercan be made as to intention of testator. intention has to begathered from wording of will. Theassessee is relying on clause 1 of will which says that property No.19, Darya Ganj, is given to assessee wholly andsolely to be held by him, his heirs, his executors and assignees for ever. Apart from this, assessee has produced noevidence to show that property received by him from his father was intendedto be treated as ancestral property. On other hand, assessee hastreated it as his individual property and he has been showing his status inrespect of this property as individual all along. very words on which theassessee has placed reliance to treat this property ancestral make it amplyclear that assessee was to hold property exclusively. It is common languagein drafting wills/gifts, etc., to say that property will be held solely byhim, his heirs, executors and assignees for ever. Thissentence cannot establish intention of giving property to legateeas HUF property. contention of assessee to treat income from fixeddeposit as HUF income is, therefore, rejected. Asregards status of HUF, I have already discussed hereinbefore that theclaim cannot be accepted and consequently status with regard to interestincome, income from property and capital gains is that of 'individual'." 3. will, which is subject-matter of controversy andinterpretation reads as under: "Beit known to all concerned by these presents that, I, JagatPrasad, son of Lala AjudhyaPrasad, deceased Jain Aggarwal, Hindu by religion and caste, residing atpresent at 19-C, Ansari Road, Daryaganj, Delhi, andgoverned by Hindu law as applicable to Jain Aggarwalasacquired various properties by my own work and effort and on income whereof Ihave paid income-tax in 'individual' capacity. Most of this property Idistributed by will and codicils, referred to in gift deed dated 4-9-1961,in favour of my son, Padam Prasad, but later in viewof failing health and desirous of settling my affairs in my own lifetime, Imade gifts'one of Bangalow No. 20, Hardinge Avenue, New Delhi, in favour of my son, Inder Prasad, by written and registered gift deed andanother gift of house known as 19-C, Ansari Road, Daryaganj,Delhi (now bearing Municipal No. 4633) by gift deed dated 7-2-1953; and Whereasby deeds in favour of Padam Prasad and Inder Prasad intended to exclude two donees from all further share in my property movable orimmovable and by gift deed in favour of Narayan Prasad intended to includehim from share in immovable property; and WhereasI also gifted away to my daughter, Mrs. Atwa Charan, newly building house at back of my House No.19, Ansari Road, Daryaganj (now bearing Municipal No.4634/2), and whereas I am now left with remaining part of premises No.19, Daryaganj, marked as ABCD in annexed plan. Inow make this my last will and testament as follows: ClauseI Ibequeath my House No. 19, Daryaganj (bearingMunicipal No. 4634/1), with land and quarters attached thereto to my son Lt.Colonel Har Prasad at present attached to National Defence Services Staff College, Wellington, wholly andsolely to be held by him, his heirs, executors and assignees for ever: ClauseII Ihave spent about Rs. 25,000 from sale proceeds of shares held by me in theImperial Bank on construction of property belonging to NiranjanPrasad and situated near Nizamuddin. This money ishis property and it will not form part of my estate in any manner. ClauseIII a.Thefirst charge on remaining property of mine will be: i.expensesfor taking out probate of my will; ii.rupees five thousand(5,000) or such balance or up to Rs. 5,000 as may be left will be distributedto charity or charities as my executors may wish and decide upon. b.Thebalance of my property except articles of personal use (as provided hereinafter),if any, is to be shared by my sons, Niranjan Prasadand Har Prasad, in equal shares. ClauseIV Ido not consider it necessary to provide for disposed of articles of personaluse including cloths, furniture, etc., save that mycar will go to my son, Padam Prasad, and otherchildren will have no share in car. ClauseV Ihold shares in Karan Singh Woollen Mills and JamnagarWoollen Mills and scrip of these shares has been handed by me to my son PadamPrasad. These shares will go and belong to him for what they may be worth. Iappoint my son Padam Prasad and son-in-law Dr. M.L.Soni, as my executors who will have power to decide all matters mutually, outof court and also to choose third person, they may like as arbitrator, incase of difference of opinion between them. In witness whereof I, said JagatPrasad, have to this last will and testament set my hand this twelfth day ofNovember in year of our Lord, One Thousand Nine Hundred and Fifty-three. Signedby testator and acknowledged by him to be his last will and testament inthe presence of us present at same time and subscribed by us as witnessesin presence of said testator and of each other. Sd/- Jagat Prasad Testator 1.Sd/- DigamberPrasad Jain, 19, Daryaganj, Delhi. 2.Sd/- DayaChand, 19, Daryaganj, Delhi Witnesses." 4.With above background, assessee wants us to uphold his stand, while therevenue wants us to uphold orders of lower authorities. We have heard atlength learned authorised representatives of theparties. Shri J.R. Malhotra, learned departmentalrepresentative, took us through 'will' as also reasoning of lowerauthorities and while supporting impugned orders, has contended that theintention of assessee was clear enough to hold that property belongedto him in his individual status since for years he has been declaring it so inhis returns of income; also that there was no coparcener in existence, quathe claim of assessee as HUF since assessee has had no male issue. ShriMalhotra also contended that although propertycame to assessee's hands by way of will, it mightbe ancestral but certainly not belonging to assessee's HUF but belonging tothe assessee in his individual status inasmuch as stand of assessee forearlier years and will proves it. He has emphasisedthe wording in will to strengthen his stand that there was no intention ofthe father of assessee to will out propertyto assessee's HUF and further that in hands of father of theassessee also, property was self-acquired and belonging to individual. Thelearned authorised representative of assessee,however, distinguished ratio of decision of Hon'ble Supreme Courtin case of Surjit Lal Chhabda v. CIT [1975] and forcefully contendedthat orders of lower authorities were misconceived on facts and in law. Hevehemently stressed need of holding property to be belonging toassessee's HUF inasmuch as property was ancestraland assessee had besides himself his wife and two unmarried daughters and,accordingly, like every married Hindu he constituted HUF with his wife anddaughters. He also contended that in case of SurjitLal Chhabda, individual property was blended withthe character of joint property while here property was ancestral,qua assessee in appeal before us since it came to him from hisfather through will. In short, contentions raisedbefore lower authorities were reiterated before us. 5.Our own High Court, Hon'ble Delhi High Court, in case of CIT v. Shambhu Ram Soni [IT Reference No. 76 of1975, decided on 19-5-1982] and as stands reported in [1982] was seized ofmatter like one before us and facts of said case were on all fourswith facts of case with which we are seized of and in this view of thematter, we respectfully follow reasoning, conclusions and ratiolaid down by their Lordships. Before their Lordships of Hon'ble Delhi HighCourt, facts were as under: "Theassessee, individual, claimed that he had received one-half share in theproperty of his father by virtue of will executed by his father and as suchthe property is of HUF consisting of assessee and his minor son. TheITO did not accept claim of assessee and assessed half share in theseproperties as assessee's income in his individual hand. TheTribunal, after interpreting various terms of will and after consideringvarious cases cited, came to conclusion that properties in questionwere taken by assessee in his capacity as kartaof joint Hindu family consisting of himself, his wife and son. Thejustifiability of same is point in issue. Beforethe High Court, it was contended on behalf of revenue that there were noclear words in will describing kind of interest which assessee wasto take. Therefore, Court was called upon to collect intention of thetestator from language of document taken along with surroundingcircumstances in accordance with well-known canons of construction."(p. 334) Theconclusions of their Lordships were as under: "i.Thefact that all properties earned by father of assessee were hisself-acquired properties is not in dispute. incidents of separate orself- acquired property of Hindu are well-established and may be stated. Suchproperty belongs exclusively to him in which no other member of thecoparcenary, not even his male issues, acquires any interest by birth. He maydispose it of in any manner whatsoever without any limitation or restriction.He may sell it, he may transfer it by way of gift orbequeath it by will to any person including his sons. If he dies intestate,then property is inherited by law of succession. If Hindu diesintestate, that property which is inherited by his male issue would becomeancestral property in hands of male issues. ii.Theproperty gifted or bequeathed by father to his son cannot become ancestralproperty in hands of son simply by reason of fact that he got itfrom his father. father is quite competent when he makes gift or abequest to provide expressly either that son would take it exclusively forhimself or that gift or bequest would be for benefit of his branch ofthe family headed by son. If there are express terms or provisions to thateffect in deed of gift or will, interest which son would take inthe properties would depend on terms of grant. In absence of theclear words, question would be one of construction of gift deed or thewill. question would be whether grantor really wanted to make gift ofhis properties or to partition same. As it is open to father to make agift or partition of his properties as he himself chooses, there is, strictlyspeaking, no presumption that he intended either one or other'C.N. Arunachala Mudaliar v. C.A.Muruganatha Mudaliar[1954] SCR 243 followed. iii.Taking documentas whole and all relevant facts into consideration, it cannot be saidthat testator intended that bequest was integral part of scheme ofpartition and what was given to sons was really share of property,which would normally be allotted to him or them and in his or their branch ofthe family on partition. testator asserts his absolute right to dispose ofthe properties. testator does not treat his self-acquired properties asancestral properties and then proceed to allot to his sons and their familiesas in partition. In will, testator is conscious of fact that he ispossessed of properties detailed therein and shall remain owner till hisdeath. Then testator mentions his family as consisting of his wife, twosons and four daughters. There is absence of mention of grandsons asforming part of family headed, respectively, by two sons. testator thenconsidered it advisable to make will for disposal of property afterhis death. disposal suggests settlement of self- acquiredproperties. Further, appointment of executors and trustees is anindication that residue allotted to two sons was not in scheme ofpartition but bequest. testator bequeathed property in mannerdescribed by him in various clauses of will. He directed that restof property shall be shared equally by his two sons. It cannot be said thatthe intention of testator was to divide his remaining property as in apartition and to allow his two sons equally for themselves and as representingtheir branch of family. words of allotment of rest of property,movable and immovable, to 'be shared equally by two sons' clearly points to anintention on part of testator to make it absolute and exclusive to thesons to extent of their share. words 'whatsoever' and 'wheresoever' are not merely in consonance with schemeof partition, but go equally to disposal of property absolutely ofthe testator at time of his demise. On careful construction of thedocument as whole, there is no indication of intention of testator thatthe property shared by two sons equally be taken by them as ancestralproperty in their hands. Accordingly, Tribunal did not come to correctconstruction of law in will." (p. 334) TheirLordships referred cases as stand reported in C.N. ArunachalaMudaliar v. C.A. MuruganathaMudaliar [1954] SCR 243 (SC), CIT v. Khimji Teju Kaya [1978] (SC) and S. Parthasarathiv. CIT AIR 1967 Mad. 227. 6.On facts and in circumstances of case and deriving desiredstrength from decision of Hon'ble Delhi High Court, referred to above,we do hold that there being no indication of intention of testator thatthe bequeathed property should go to HUF, property on proper constructionof will coupled with conduct of assessee belong to him in hisindividual capacity. orders of lower authorities as such are upheld.All appeals fail and stand dismissed. *** Lt. Gen. Har Prashad v. Income-tax Officer