LATE AMBALAL THROUGH RAJENDRAKUMAR v. WEALTH-TAX OFFICER
[Citation -1987-LL-0127-3]

Citation 1987-LL-0127-3
Appellant Name LATE AMBALAL THROUGH RAJENDRAKUMAR
Respondent Name WEALTH-TAX OFFICER
Court ITAT
Relevant Act Wealth-tax
Date of Order 27/01/1987
Assessment Year 1980-81
Judgment View Judgment
Keyword Tags sole surviving coparcener • disallowance of interest • joint family property • coparcenary interest • hindu succession act • accountable person • joint hindu family • family arrangement • partial partition • sole coparcener • total partition • female member • share income • estate duty • karta
Bot Summary: The Department placed reliance on the Madras High Court decision in the case of V.V.S. Natrajan vs. CIT 1978 CTR 106: 111 ITR 539 where it was held that there could not be any partition effected by the Karta in regard to the family members where the members are only females and he is the only surviving male coparcener. Their Lordships of the Punjab Haryana High Court were considering a situation of partial partition effected through family arrangement comprising of Karta as the only male member and came to the conclusion that the Karta being of a coparcener was entitled to claim the partition and the partition was valid. The issue for consideration before Their Lordships was whether on the facts and in the circumstances of the case the entire property received by the deceased at the time of partial partition in his bigger HUF passed on his death Their Lordships considered the Full Bench decision in the case of CED vs. Smt. Ranibahu 25 CTR 332: 142 ITR 843 another Full Bench of the M.P. High Court. Their Lordships considered the matter from the time of the partition of the bigger HUF. According to Their Lordships the share that should have been received by HUF. According to Their Lordships the share that should have been received by the wife at the time of original partition should be considered to have been included in the share received by the husband and thus forming the HUF nucleus. Excluding therefrom the share which the wife would have received at the time of the partition of the bigger HUF. They come to the conclusion that there could be no partition by any method between the Karta and his wife. The observation of Their Lordships in the case of Smt. Ranibahu is reproduced below as it has lot of bearing in the conclusions arrived at in the present case: The principle enunciated in Munnalal's case, AIT 1962 SC 149, was applied by one of us in Bhawarsingh vs. Pilabal AIT 1972 MP 204. The learned Judges in that case referred to a passage in Krishna Prasad's case 97 ITR 494, where it is stated that the plea that there must be at least two male members to form an HUF as a taxable entity has not force and that a joint family may consist of a single male member and a female member but the same passage makes a distinction between a joins Hindu family and a Hindu coparcenary which is a much narrower body than the joint family and which includes only those persons who acquire by birth an interest in the coparcenary property.


This is appeal by assessee. issue involved in this appeal is one of legal nature which is whether there could be partition of HUF comprising of husband as Karta and his wife as member. brief facts of case are: assessee was partner in firm M/s. Motilal with one-third share and it is accepted by Department that share income is assessable as that of HUF comprising of Shri Ambalal (now expired) and his wife Smt. Anandibai. On 1st Jan., 1978, assessee claimed that there was family arrangement between himself and his wife by which arrangement sum of Rs. 1,24,131 was allowed to wife of assessee as representing her share. On basis of this family arrangement, assessee claimed that there was total partition of HUF and, therefore income arising out of firm to extent of share given to wife does not belong to him and also his wealth is reduced to that extent. This claim of assessee was negatived by WTO on ground that there cannot be any such partition in which there is only one male member. Department placed reliance on Madras High Court decision in case of V.V.S. Natrajan vs. CIT 1978 CTR (Mad) 106: (1978) 111 ITR 539 (Mad) where it was held that there could not be any partition effected by Karta in regard to family members where members are only females and he is only surviving male coparcener. Aggrieved by this offer assessee too up matter in appeal to AAC who had observed in his order that since under IT proceedings appeal having been rejected by AAC, he follows order passed by Tribunal. income-tax appeal in case of M/s Motilal Maneklal in ITA No. 44/Ind/86 was also heard along with this appeal in which issue was disallowance of interest under s. 40(b) paid to Smt. Anandibai by treating it as amount paid to HUF of assessee. Before us argument of counsel for assessee, Mr. A.L. Jain, was that Department is not disputing fact there was HUF comprising of assessee as Karta and his wife as only member. According to him, since there was HUF it be prerogative of Karta to partition HUF which has been done by means of family arrangement for which purpose he relied on order of Tribunal of this Bench in case of B.K. Sethi, HUF, in ITA No. 854/Ind. 1981 dt. 25th May, 1982. He drew our attention to paragraph 6 of order where ld. Members of Tribunal observed that by means of family arrangement in similar situation partition could be effected and such partitions are valid. During course or argument attention of counsel or assessee was drawn to Madras High Court decision relied on by Department as also to M.P. Full Bench decision in case of Ramratan vs. CED (1982) 27 CTR (MP) 152 (FB) (1983) 142 ITR 863 (MP) (FB) where full Bench of M.P. High Court had considered scope of effected partition in similar situation and held to contrary. ld. counsel submitted that since there had been difference of opinion on this matter by different Benches few that is favourable to assessee should be taken. For Department contention was mainly by placing reliance on orders of authorities below. We have very carefully considered submissions of parties and various materials that had been brought on record. At out set various judgments which have been relied upon by members in case of B.K. Sethi (supra) HUF, is mainly on issue of whether there could be HUF comprising of Karta as sole member with females only. Further in that case there was no application under s. 171 sought for HUF and in paragraph 6 of order ld. Members had observed that claim of assessee was not that there was any partition and, therefore, s. 171 application was never made. However, family arrangement could be course permissible in view of representation made by representative of assessee. This conclusion was arrived at on basis of CIT vs. Narain Dass Wadhwa (1980) 14 CTR (P&H) 99: (1980) 123 ITR 281 (P&H) and CIT vs. Dara Seshavataram (1980) 16 CTR (AP) 371: (1981) 129 ITR 339 (AP) relied on by he counsel for assessee in that case. In CIT vs. Narain Dass Wadhwa (1980) 14 CTR (P&H) 99: (1980) 123 ITR 2 8 1 (P&H). Their Lordships of Punjab & Haryana High Court were considering situation of partial partition effected through family arrangement comprising of Karta as only male member and came to conclusion that Karta being of coparcener was entitled to claim partition and, therefore, partition was valid. Madras High Court in case of V.V.S. Natarajan vs. CIT 1978 CTR (Mad) 106: (1978) 111 ITR 539 (!978) (Mad) had observed that there is no coparcener in family apart from Karta. Therefore, basic requirement of there being any male member who could be coparcener is absent in present case and there could be no possibility of partition. They have further observed that there could definitely be some provision for maintenance of wife but it was not case of assessee that amount is given to wife in lieu of her maintenance. They have further observed that partition is impossible in family like that. Since these two decisions much water had flown. This very issue came up for consideration in Estate Duty matter by Their Lordships of Madhya Pradesh High Court in case of Ramratan vs. CED (1982) 27 CTR 152 (MP) (FB): (1983) 142 ITR 863 (MP) (FB). In this case Karta of HUF had left behind his wife as female member of family. issue for consideration before Their Lordships was "whether on facts and in circumstances of case entire property received by deceased at time of partial partition in his bigger HUF passed on his death?" Their Lordships considered Full Bench decision in case of CED vs. Smt. Ranibahu (1981) 25 CTR (MP) 332 (FB): (1983) 142 ITR 843 (MP) (FB) another Full Bench of M.P. High Court. In this case there was partition of bigger HUF at which time wife did not claim her share. share received by husband of lady was treated as HUF property on ground that there was possibility of sons being born to them. question that was considered by Their Lordships "Whether Tribunal was justified in accepting that only half of property will be deemed to h v e passed on death of Chotelal?". other questions that were considered were "when there was death of sole surviving coparcener is deemed partition to be considered and, therefore, wife gets share equal to son and whether Tribunal was right in interpreting provisions of s. 39(1) of ED Act?" Their Lordships considered several decisions and did not, however, consider Punjab & Haryana High Court and Madras Court decisions. Their Lordships considered matter from time of partition of bigger HUF. According to Their Lordships share that should have been received by HUF. According to Their Lordships share that should have been received by wife at time of original partition should be considered to have been included in share received by husband and thus forming HUF nucleus. On death of only sole surviving coparcener it would be wrong to come to conclusion that half share passed to wife and in fact entire property which vested in husband as if he was owner of property passed on his death. However, excluding therefrom share which wife would have received at time of partition of bigger HUF. They, therefore, come to conclusion that there could be no partition by any method between Karta and his wife. observation of Their Lordships in case of Smt. Ranibahu (supra) is reproduced below as it has lot of bearing in conclusions arrived at in present case: "The principle enunciated in Munnalal's case, AIT 1962 SC 149, was applied by one of us (Singh, C.J.) in Bhawarsingh vs. Pilabal AIT 1972 MP 204. In that case, wife was not impleaded in suit for partition and preliminary decree was passed without declaring her share. Still it was held that on passing of preliminary decree wife got right to obtain her due share by instituting suit for partition and that this right was property which vested in her absolutely and passed on her death, which took place before passing of final decree to her heirs in accordance with s. 15(1) of Act. In holding so, it was said (p. 205): "Simply because parties to partition do not assign any share to woman, who on partition is entitled to share, she cannot be deprived of her rightful share and she can sue for it (Radhabai vs. Pandharinath AIR 1941 Nag. 135)". Thus, her right to share must be taken to accrue immediately partition is made, although in that partition she is not assigned any share. Now, as decided in Munnalal's case, AIR 1962 SC 1493, this right to share has not to wait for its accrual till property is actually divided but declared by preliminary decree. Therefore, moment preliminary decree for partition was passed in suit right to share in property accrued. wife did not sue for partition. She lived as member of joint Hindu family with her husband, deceased was sole coparcener in this family but still in view of change in law, brought about but Hindu Succession Act, she had right to share 1/6th in property which deceased obtained in partition. property that passed on death of deceased within meaning of s. 5 of ED Act was only his 5/6th share estate that he got on partition and which he held the time of his death, reason being that 1/6th of this estate was held by deceased's wife, accountable person. estate duty could not be charged on whole of estate but only on 5/6th which passed on death of deceased under s. 5. Even applying s. 7 and s. 39 same result follows. coparcenary interest held by deceased could not include interest which was held by wife and had there been partition between deceased and his wife immediately before his death, wife would have got 1/6th share. Tribunal was, however, wrong in holding that interest of wife was one-half in estate which came to deceased on partition and that only half of property would be deemed to have passed on death of deceased. learned counsel for accountable person relied upon decision of Division Bench of this Court in Smt, Ramkunwar Bai vs. CED, MCC No. 137 of 1976, dt. 3rd Aug., 1977 (see p. 852 infra) in support of Tribunal's finding that wife's interest in property was half. learned Judges in that case referred to passage in Krishna Prasad's case (!974) 97 ITR 494 (SC), where it is stated that plea that there must be at least two male members to form HUF as taxable entity has not force and that joint family may consist of single male member and female member but same passage makes distinction between joins Hindu family and Hindu coparcenary which is much narrower body than joint family and which includes only those persons who acquire by birth interest in coparcenary property. decision in C. Krishna Prasad vs. CIT 1975 CTR (SC) 7: (1974) 97 ITR 493 (SC) does not support conclusion that in family consisting of deceased and his wife, where deceased was only coparcener and owner of entire coparcenary interest, property passing on his death is only half property and not entire property. It appears to us that in Smt. Ramkunwar Bai vs. CED (1983) 142 ITR 852 (MP) (infra) to was admitted or conceded probably under same mistake that wife of deceased had half interest in joint family property and conclusion could be supported on that admission. learned Judges towards end of para 8 of judgment in Ramkunwar Bai's case said (p.856): It is only deceased's share in joint Hindu family, admittedly half will be property which passed on his death. These observations give rise to inference that deceased's share was admitted to be half and it was not contended that he owned entire joint family property. learned counsel for accountable person also relied upon decisions of Supreme Court in Gowli Buddanna vs. CIT (1966) 60 ITR 293 (SC) and N.V. Narendranath vs. CWT (1969) 74 ITR 190 (SC). These decisions relate to question of status. In Gowli Buddanna's case A, his wife, his two unmarried daughters and B, his adopted son, consisted HUF. On A's death, question arose whether property ceased to be joint family property and whether, when B was only male member in family, family could be assessed as HUF under IT Act. Supreme Court held that under Hindu law it is not necessary for constituting HUF that there must be more than one male member and such family may consist of male member and his wife and daughters. It was also held that joint family property did not lose t h t character even though B became sole surviving coparcener and possessed rights of owner. perusal of this case would show that question in this case was only of status. case cannot be said to decide that female members of such family share ownership of property. N.V. Narednranath's case (1969) 74 ITR 190 (SC) (supra) is also similar case of status under WT Act. Reliance was also placed on case of Attorney-General of Ceylon vs. Arunachalam Chettiar 34 (ED) 42 (PC). In this case it was held that property of family consisting of sole surviving coparcener and some female members was joint property of HUF within meaning of s. 37 of Ed Act of Ceylon. Here also it was not held that females who were entitled to maintenance only were owners or that on that death of sole surviving coparcener entire property did not pass on his death. case, therefore, is not helpful to accountable person". In earlier case of Shri B.K. Sethi (supra) decided by Tribunal Full Bench decisions as above could not be considered as they were not reported at time of that order. In view of fact we are bound by decisions of Madhya Pradesh high Court and that too of Full Bench we have necessarily to follow said decision of Madhya Pradesh High Court in preference to Tribunal's own order on issue of family arrangement and value of wealth to be assessed in hands of assessee. Respectfully following said decision of Madhya Pradesh High Court (supra), following conclusions are arrived at: (a) In case if wife of assessee, now deceased had any rights on property of bigger HUF which was not allowed to her, then to that extent it could be said so belonging to her and that it is included in property of HUF which quantum had not been determined. WTO is hereby directed to examine partition of bigger HUF to determine what was quantum of share they would have allowed to Smt. Anandibaim then that amount only should be treated as belonging to Smt. Anandibai. (b) There could be no effect of partition either by family arrangement or otherwise in respect of property belonging to HUF having sole surviving coparcener and, therefore, family arrangement of 1st Nov., 1978 would have no effect of reducing quantum of wealth or income in hands or HUF. WTO is hereby directed to determine quantum that is excludible from hands of assessee as per directions above and in result appeals of assessee shall be treated to be partly allowed on this basis. *** LATE AMBALAL THROUGH RAJENDRAKUMAR v. WEALTH-TAX OFFICER
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