MADHUSUDAN I. DALAL v. SEVENTH WEALTH TAX OFFICER
[Citation -1987-LL-0120-13]

Citation 1987-LL-0120-13
Appellant Name MADHUSUDAN I. DALAL
Respondent Name SEVENTH WEALTH TAX OFFICER
Court ITAT
Relevant Act Wealth-tax
Date of Order 20/01/1987
Assessment Year 1980-81
Judgment View Judgment
Keyword Tags sole surviving coparcener • joint family property • unmarried daughter • personal property • lineal descendant • family partition • sole coparcener • valuation date • mitakshara law
Bot Summary: The AAC, relying upon the judgment of the Madhya Pradesh High Court in the case of CIT vs. Vishnukumar Bhayya 35 CTR 38: 142 ITR 357, held the view that the asset continued to be his personal property even after marriage as there was no son in existence as on 31st March, , 1980. Shri Jhaveri, arguing for the assessee, contended that the property which originally belonged to the coparcenery of the assessee and his father and allotted to the share of the assessee in the partition, continued to have the same complexion after his marriage on 7th Nov., 1979 in as much as there was a joint family comprising of husband and wife. Shri Jhaveri cited to point out that it dealt with a case where personal property had been thrown into the common stock of the family consisting of himself, his wife and unmarried daughter and the income of that property, even after conversion, should be charged to tax as his undivided income. In one case, the joint family property was allotted to coparcener at a partition while in the other, on the death of the father, the son became the sole surviving coparcener. If A has no son, son's son, or son's son s son in existence at the time when he inherits the property, he holds the property as absolute owner thereof, and he can deal with it as he pleases. Surjitlal Chhabda's case states that the property thrown into the common stock by a coparcener remained to be his self- acquired property inasmuch as he had no son in existence. Their Lordships further point out in Surjitlal Chhabda's case 1976 CTR 140 at 154: 101 ITR 777 at 795 that the property which the coparcener had put into the common stock may change its legal incidents on the birth of a son but until that event happens the property, in the eye of law, is really his.


BALASUBRAMANYAM, J.M.: There is before us appeal by assessee raising interesting question of law. assessment is 1980-81 and related valuation date is 31st March, 1980. assessee was coparcener of bigger HUF Ishwarlal Dalal. At partition in family, assets of value of Rs. 3,93,547 had been allotted to t h e share of assessee (Madhusudan I. Dalal) who was, at that time unmarried. partition had been accepted by Department under s. 171(3) of ITA. assessee got married on 12th Nov., 1979. assessee was showing this asset (wealth of Rs. 3,93,547) in his individual return before asst. yr. 1980-81. Since he was married as on relevant valuation date 31st March, 1980, he excluded this asset in his individual assessment for 1980-81. He had maintained books of account of HUF from 7th Nov., 1979 and accounting period of this smaller HUF ended on 7th Nov., 1980, and this asset was shown in HUF return for 1981-82. It was claimed before WTO that this wealth was asset of HUF consisting of himself and his wife as on valuation date 31st March, 1980 and, therefore, it was not includible in his personal assessment. WTO rejected contention and his order reads that it was not acceptable in view of provisions of s. 4(1)(A)(b) of WTA. In appeal, AAC confirmed WTO's finding. AAC, relying upon judgment of Madhya Pradesh High Court in case of CIT vs. Vishnukumar Bhayya (1983) 35 CTR (MP) 38: (1983) 142 ITR 357 (MP), held view that asset continued to be his personal property even after marriage as there was no son in existence as on 31st March, , 1980. Aggrieved by same, assessee is in further appeal to Tribunal. Shri Jhaveri, arguing for assessee, contended that property which originally belonged to coparcenery of assessee and his father (Ishwarlal M. Dalal) and allotted to share of assessee in partition, continued to have same complexion after his marriage on 7th Nov., 1979 in as much as there was joint family comprising of husband and wife. catena of decisions of Supreme Court was cited by him, in addition to decision of Allahabad High Court in case of Premkumar vs. CIT (1980) 121 ITR 347 (All) which has taken view opposite to that of MP High Court in CIT vs. Vishnukumar Bhayya (1983) 35 CTR (MP) 38: (1983) 142 ITR 357 (MP). facts are simple and plain. assessee and his father once constituted joint family. In partition effected prior to 31st Dec., 1978, family assets of Rs.3,95,547 were allotted to share of assessee. He was then unmarried. He was married on 7th Nov., 1979 and son was born on 16th Aug., 1980. question is about character of property (Rs. 3,93,547) in hands of assessee as on valuation date concerned to this assessment, namely 31st March, 1980. Shri Jhaveri drew support from decisions of Supreme Court in cases of Gowli Buddanna vs. CIT(1966) 60 ITR 293 (SC) & N.V. Narendranath vs. CIT (1969) 74 ITR 190 (SC) to contend that there need not be at least two male members to form HUF and that joint family could be composed of single coparcener and his wife like case of assessee before us. For that he stated that there could be joint family consisting of only lady members, relying upon Supreme Court's decision in CIT vs. RM. AR. AR. Veerappa Chettiar's case (1970) 76 ITR 467 (SC). In case of C. Krishana Prasad vs. CIT 1975 CTR (SC) 7: (1974) 97 ITR 493 (SC) what is pointed out by Supreme Court is that "plurality of persons is essential attribute of family". case of Surjitlal Chhabda vs. CIT 1976 CTR (SC) 140:(1975) 101 ITR 777 (SC). Shri Jhaveri cited to point out that it dealt with case where personal property had been thrown into common stock of family consisting of himself, his wife and unmarried daughter and income of that property, even after conversion, should be charged to tax as his undivided income. It is certain that there need not be more than one coparcener to constitute joint family in Hindu society. single coparcener and his wife could constitute joint family. Both in case of Gowli Buddana (supra) and N.V. Narendra Nath (supra), there was pre-existing joint family. In one case, joint family property was allotted to coparcener at partition while in other, on death of father, son became sole surviving coparcener. What is distinguishable is joint family continued without histus after sole coparcener got property either by survivorship or on allotment at partition. But Supreme Court has in clear terms ruled in C. Krishna Prasad's case (supra) that single person, male or female, does not constitute family. After partition in December, 1978, assessee (Madhusudan I.Dalal) was sole member left out from branch and there ceased to be joint family till he was married on 7th Nov., 1979. fact situation in case before u s is that property was got by coparcener at partition when he was unmarried. In Mulla's Hindu Law 15th Edn., p. 301, "property obtained as share on partition by coparcener who has no male issue: is listed as one of items of separate property--see Art. 230(6), Again in Art. 223, it is observed-- essential feature of ancestral property according to mitakshara law is that sons, grandson's and great grandsons of person who inherits it, acquire interest in it by birth. Their rights attach to it at moment of their birth. Thus if inherits property whether movable or immovable, from his father or father's father or father's father's father, it is ancestral property as regards his male issue. If has no son, son's son, or son's son s son in existence at time when he inherits property, he holds property as absolute owner thereof, and he can deal with it as he pleases. But if he has son, son's sons, or son's son s son is born to him subsequently, they become entitled to interest in it by mere fact of their birth in family, and cannot claim to hold property as absolute owner nor can he deal with property as he likes". Thus, when coparcener who gets property to his share owing to allotment at family partition or acquires by right of survivorship, it would be ancestral property only in regard to his male issue and so long as single coparcener or sole surviving coparcener has no male lineal descendant, it would be his separate property. Surjitlal Chhabda's case (supra) states that property thrown into common stock by coparcener remained to be his self- acquired property inasmuch as he had no son in existence. Their Lordships further point out in Surjitlal Chhabda's case 1976 CTR (SC) 140 at 154: (1975) 101 ITR 777 at 795 (SC) that property which coparcener had put into common stock may change its legal incidents on birth of son but until that event happens property, in eye of law, is really his. It is clear that property got by assessee (Madhusudan I Dalal) at partition remained his separate property and if at all there is any change in its complexion, it was only when son was born to him on 16th Aug., 1980, day after valuation date. For above premises, we are of view that decision of Madhya Pradesh High Court in case of Vishnukumar Bhayya (supra) accords with true situation in law and should be followed in preference to contrary view taken by Allahabad High Court in (1980) 121 ITR 347 (All). We conclude that impugned assets were separate property of assessee as on 31st March, 1980 and inclusion thereof in his personal assessment is justified. appeal fails. It is dismissed. *** MADHUSUDAN I. DALAL v. SEVENTH WEALTH TAX OFFICER
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