Rajasthan High Court - Jaipur
Controller Of Estate Duty vs Radhey Shyam on 9 May, 1996
Equivalent citations: [1998]230ITR362(RAJ)
JUDGMENT M.A.A. Khan, J.
1. The Income-tax Appellate Tribunal, Jaipur Bench (for short "the Appellate Tribunal"), has referred the following questions to this court for its opinion :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that Section 6 of the Estate Duty Act, 1953, is not applicable in this case ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the cesser of interest deemed to pass on the death of the deceased in respect of the property held by the smaller Hindu undivided family is to be one-half and not full ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the share of the deceased in the larger Hindu undivided family on the basis of deemed partition should have been 1/6th and not 1/3rd ?"
2. The case stated by the Appellate Tribunal under Section 64(1) of the Estate Duty Act, 1953 (hereinafter referred to as "the Act"), is as under :
The late Shri Chillu Ram, the deceased, constituted a Hindu undivided family (HUF) along with his wife, Smt. Kastoori Devi. This Hindu undivided family of the deceased held certain movable and immovable properties and had also a one-third share in the properties owned and held by the bigger Hindu undivided family of Jawahar Lal Gainda Lal. The bigger Hindu undivided family was assessed as such till the assessment year 1954-55. A partial partition of the bigger Hindu undivided family took place and was recognised by the Income-tax Officer on January 4, 1958. The deceased in his capacity of "karta" of his smaller Hindu undivided family, became a partner to the extent of 1/3rd share in a firm styled as Jawahar Lal Gainda Lal.
3. Shri Chillu Ram died on January 29, 1974. At the time of his death, the deceased had, as mentioned above, 1/3rd share in certain properties of the bigger Hindu undivided family and was also having share in the properties belonging to his own smaller Hindu undivided family. After the death of the deceased, the accountable persons filed the return of the estate which belonged to the deceased and passed on his death. In such return, the accountable persons had shown the share of the deceased in the bigger Hindu undivided family at 1/6th (one-sixth) and in the smaller Hindu undivided family at one-half which, according to them, was includi-ble in the principal value of the estate of the deceased passing on his death.
4. The Assistant Controller of Estate Duty, however, noted that the deceased had no male issue. He, therefore, held the view that the entire share at one-third which the deceased along with his wife had in the bigger Hindu undivided family would pass on his death. He, accordingly, included the value of the share of the deceased in the properties of the bigger Hindu undivided family at one-third in the principal value of the estate of the deceased passing on his death.
5. Regarding the properties belonging to the smaller Hindu undivided family, learned Assistant Controller of Estate Duty noted that the deceased had executed a will on December 5, 1973, and in such will he had declared himself to be the sole proprietor and owner of the properties belonging to the smaller Hindu undivided family. Taking into account the will of the deceased, the Assistant Controller of Estate Duty included the value of all the properties which belonged to the smaller Hindu undivided family in the principal value of the estate of the deceased passing on his death. In appeal, learned Appellate Controller of Estate Duty confirmed the finding recorded by the learned Assistant Controller of Estate Duty.
6. In second appeal, the Appellate Tribunal examined the issues in sufficient detail and held that the deceased and his wife constituted a smaller Hindu undivided family and since this smaller Hindu undivided family had a one-third share in the bigger Hindu undivided family only a one-sixth share, which the deceased had in the bigger Hindu undivided family at the time of his death, was includible in the principal value of his estate passing on his death. With regard to the share of the deceased in the smaller Hindu undivided family, the learned Appellate Tribunal held that the deceased had a one-half share only in the properties of the smaller Hindu undivided family and the will executed by the deceased on December 5, 1973, was ineffective qua the interest and share of his wife in the properties belonging to the smaller Hindu undivided family. The learned Appellate Tribunal, therefore, directed that one-half share only which belonged to the deceased in the smaller Hindu undivided family and which passed on his death should be included in the principal value of the estate of the deceased. In arriving at its conclusion, the learned Appellate Tribunal examined the scope and applicability of Sections 6, 7 and 39 of the Act and held that the provisions of Section 6 do not stand attracted to the facts of the present case.
7. Learned counsel for the Department urged that since the deceased was the sole surviving male member of the smaller Hindu undivided family, he had a one-third share in the properties of the bigger Hindu undivided family. The said one-third share belonging to the deceased would be deemed to pass on his death and, therefore, the provisions of Section 6 would apply to the present case. Learned counsel urged that since the smaller Hindu undivided family had only one male member, the interest and share of the smaller Hindu undivided family in the bigger Hindu undivided family would belong to such sole male member, i.e., the deceased, and the entire interest would pass on his death.
8. Mr. N.M. Ranka, learned counsel for the accountable persons, on the other hand, urged that it is not in dispute that the smaller Hindu undivided family of the deceased had a one-third share in the bigger Hindu undivided family. Since the smaller Hindu undivided family was constituted by the deceased along with his wife, the deceased had only a one-sixth share in the bigger Hindu undivided family at the time of his death and the interest of the deceased to that extent only would cease and shall be deemed to pass on his death. Mr. Ranka emphasised that the benefit which accrued or arose by the cesser of the interest of the deceased in the properties belonging to the bigger Hindu undivided family would be deemed to pass on his death.
9. In order to appreciate the rival submissions of learned counsel for the parties in the right perspective the concepts of "family" and "property" under the Hindu law are required to be clearly understood. Joint and undivided character of a family is the normal condition of the Hindu society. An undivided Hindu family is ordinarily joint not only in estate but also in food and worship. But existence of joint estate is not an essential requisite to constitute a joint or undivided Hindu family. Hindus get a joint family status by birth and the joint family property is only an adjunct of the joint family. Ordinarily, a joint Hindu family consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. The sex of the members is thus immaterial. One male and one female may constitute it. Even two females may also constitute it. For instance, the death of the father and son leaving behind them their respective wives would not deprive the widows of their status as members of a joint Hindu family. So long as the widow is capable of bringing a son into existence by adoption the character of the family as a joint Hindu family would be deemed to subsist, Smt. Dhani Devi and Jhavermal v. CED [1973] 89 ITR 96 (Raj).
10. The membership of the family may temporarily be reduced to even one member also. Such reduction of the family unit to one individual may temporarily suspend the status of that individual as a member of a joint Hindu family but the suspended status would stand revived on induction into the family of another member by marriage or by adoption. The basis of the rule that there need not be at least two members to constitute a Hindu undivided family is that the joint family property does not cease to be such simply because of the temporary reduction of the coparcenary unit to a single individual. The basic character of the property remains the same.
11. A Hindu coparcenary, on the other hand, is a much narrower body than the joint family. It is purely a creature of law and cannot be created by act of parties, save to the extent that by adoption a stranger may be introduced as member thereof. It includes only those persons who acquire by birth an interest in the joint or coparcenary property and ordinarily it extends up to four degrees counted from and inclusive of a common male ancestor. In view of this specific feature of a coparcenary no female can be member of it although she can be a member of a joint Hindu family. Even a wife who is entitled to maintenance out of her husband's property and has, to that extent interest in his property, is not her husband's coparcener.
12. The essence of a coparcenary under Mitakshara law is unity of ownership. The ownership of the coparcenary property lies in the whole body of coparceners and there is a community of interest and unity of possession between all of them. Their interests are fluctuating, capable of being enlarged by deaths and liable to be diminished by birth of sons of coparceners.
13. Conceptually speaking, property, according to Hindu law, may be divided into two classes, namely, (1) joint family property or coparcenary property, and (2) separate property. Separate property of coparceners thrown into the common coparcenary stock and property jointly acquired by the members of a joint family with the aid of ancestral property is also joint family property. Property in which a person acquires an interest by birth is called ancestral property but the property the right to which accrues on the death of the last owner without leaving male issue is separate property. The former devolves by survivorship, the latter by succession.
14. However, the concept of coparcenary, as expounded by the ancient law givers, has undergone a sea change as a result of the coming into force of the Hindu Women's Right to Property Act, 1937 (for short "the 1937 Act"), and the Hindu Succession Act, 1956. By these two enactments, the Hindu law relating to devolution of property under certain circumstances stood materially or significantly changed. By Section 3 of the 1937 Act, the same interest of a widow as her husband was having in the joint family property at the time of his death was statutorily recognised with certain restrictions on alienation. Sub-sections (2) and (3) of Section 3 of the 1937 Act provided that :
"(2) When a Hindu governed by any school of Hindu law other than the Dayabhaga school or by customary law dies having at the time of his death an interest in a Hindu joint family property, his widow shall, subject to the provisions of Sub-section (3), have in the property the same interest as he himself had.
(3) Any interest devolving on a Hindu widow under the provisions of this section shall be the limited interest known as a Hindu woman's estate, provided however that she shall have the same right of claiming partition as a male owner."
15. It may be noted that Sub-section (2) of Section 3 of the 1937 Act conferred upon the Hindu widow a new kind of interest in the coparcenary property though in character such interest was what is commonly known as the Hindu widow's estate. The expression "his widow shall . . . have the same interest he himself had" used in the language of Sub-section (3) makes it quite clear that the newly created interest of the Hindu widow was in substitution of her right under the pre-existing Hindu law to claim maintenance. Sub-section (3) further clarifies her interest and says that though her interest would be a limited interest yet she would have the same right of claiming partition as a male owner had. A combined reading of Sub-sections (2) and (3) of Section 3 thus makes it abundantly clear that on the death of her coparcener-husband the widow substitutes him in the coparcenary and no severance of the interest of the deceased coparcener is brought about by his death: By such substitution in the coparcenary her interest does not become defined and that remains a fluctuating one liable to increase by deaths and decrease by births in the family. By virtue of Sub-section (3) she becomes entitled to claim partition of coparcenary property and would be entitled to be allotted the same share as her deceased husband would have been entitled to, had he lived on the date on which she claimed partition. But the conferment of the right of statutory substitution and the further right of claiming partition would not raise the status of the Hindu widow to that of a coparcener, though she would continue to be a member of the joint Hindu family as she was before the 1937 Act. The joint family would continue to exist as before subject only to her statutory right. In fact, the interest of the widow, under the 1937 Act, arises neither by inheritance nor by survivorship, but by statutory substitution. Because of statutory substitution of her interest in the coparcenary property in place of her husband, she is introduced in the coparcenary whose attributes are community of interest and unity of possession. The right which the other coparceners had under the Hindu law of taking that interest by the rule of survivorship remains suspended so long as the estate enures. On the death of a coparcener, there is no dissolution of the coparcenary so as to carve out a defined interest in favour of a coparcener. Accordingly, on the introduction of the widow into the coparcenary her substituted interest would also not get defined. The interest acquired by her would be subject to increase and reduction depending on deaths and births in the joint family and would also be subject to restriction on alienation which are inherent in her estate called the Hindu widow's estate.
16. The right conferred upon the Hindu widow by the 1937 Act got enlarged by Section 14 of the Hindu Succession Act, 1956. Section 14 reads as under :
"Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner."
17. It may be noted that Section 3 of the 1937 Act had put the Hindu widow in the place of her husband and conferred upon her the same interest in the coparcenary properly as her deceased husband had in such property. Section 14 of the Hindu Succession Act, 1956, made her the absolute owner of that estate provided she was possessed of such estate on the coming into force of the said Act. By virtue of Section 14 of the said Act she would have all the rights of a full owner to possess, manage and enjoy exclusively and of disposal of, either by any act inter vivos or by will, the said estate. On her dying intestate her interest in the joint family properties would pass and devolve by succession on her heirs.
18. To conclude, Section 3 of the 1937 Act introduced the Hindu widow into the coparcenary but by virtue of such introduction she did not become a coparcener notwithstanding the fact that she would continue to be a member of the joint Hindu family. It is to be remembered that both the enactments, i.e., the 1937 Act and the Hindu Succession Act, 1956, talk of conferment of rights on a widow in the joint family property in lieu of the earlier rights under the ordinary Hindu law. It is a widow who becomes, in a sense, a substituted coparcener in the coparcenary. A wife does not acquire that status during the lifetime of her husband. The interest of the Hindu female, i.e., the wife in the coparcenary property, is created in her favour only after the death of her husband who was a coparcener in the coparcenary. The position of a widowed mother may somewhat be different depending upon whether she is a sonless mother or not. Since such an issue is not there in the present case, we need not discuss it. Anyway, as stated earlier, a coparcenary consists of male members only and the wife of the male member does not become a coparcener in the coparcenary during the life time of her husband. She would undoubtedly be a member of the joint Hindu family which may be constituted even by herself and her husband only. In the instant case, we think, our views get support from the Supreme Court decisions in the cases of Gummalapura Taggina Matada Kotturu Swami v. Setra Veeravva, AIR 1959 SC 577, Potti Lakshmi Perumallu v. Potti Krishnavenamma, AIR 1965 SC 825 and Satrughan Isser v. Sabujpari, AIR 1967 SC 272.
19. In the instant case, though the late Chhillu Ram, the deceased, constituted the smaller Hindu undivided family along with his wife, Smt. Kastoori Devi, yet the deceased was the only coparcener of the smaller Hindu undivided family. The smaller Hindu undivided family was having a one-third share in the joint family properties of the bigger Hindu undivided family of Jawahar Lal Gainda Lal. The deceased had become a coparcener in the coparcenary of the bigger Hindu undivided family by birth or, may be, by adoption. His wife, on her marriage with him, could not have acquired that status in that coparcenary. She could have become a substituted coparcener in the bigger Hindu undivided family only after the death of the deceased. It, therefore, necessarily follows that it was the deceased who was having interest to the extent of one-third in the properties of the bigger Hindu undivided family and had a partition been effected just before his death he would have been entitled to his share to that extent only and such interest of the deceased would be deemed to pass on his death. Smt. Kastoori did not have any interest in the joint family property of the bigger Hindu undivided family during the lifetime of the deceased. Therefore, she cannot claim that had there been a partition of such properties just before the death of her husband she would have been entitled to a one-sixth share therein. On the death of the deceased, she became a substituted coparcener in the bigger Hindu undivided family and although the interest so conferred upon her became her limited estate by virtue of Section 3 of the 1937 Act and she became the full owner thereof by operation of Section 14 of the Hindu Succession Act, 1956, yet she cannot say that in the lifetime of her husband, Shri Chillu Ram, she was already having a one-sixth share in the properties of the bigger Hindu undivided family. It was the one-third share of the deceased which would be deemed to have passed to his widow. That being so, the value of the entire one-third share of the deceased in the properties of the bigger Hindu undivided family would be required to be included in the estate liable to duty under the Estate Duty Act.
20. In so far as the property belonging to the smaller Hindu undivided family is concerned, the deceased was the sole surviving coparcener and as such having the power to dispose of such property as if it were his own separate property. The entire property belonging to the smaller Hindu undivided family shall be deemed to pass on his death and liable to pay estate duty.
21. Now, in so far as the question of applicability of Section 6 and/or Section 7 of the Estate Duty Act is concerned, it would be worthwhile to refer to the following observation made by Dwivedi J. of the Allahabad High Court in O. S. Chawala's case [1973] 90 ITR 68 [FB] (page 71) :
"The scheme of the Act is twofold. Firstly, there are properties which pass on the death of a person. Section 5(1) imposes duty on their value. Secondly, there are properties in which the deceased had an interest or power of appointment and which really do not pass on his death. The scheme of the Act is to impose duty on the value of such properties also. In the second class will fall provisions like Sections 6, 7, 8, 9 and 10. The Act creates a fiction of law to declare that the properties mentioned in those sections will be deemed to pass on the death of a person, though they do not 'pass' in fact . . .
The object of Section 6 is to catch properties in the net of section 5(1) which do not really pass on the death of a person. For instance, property comprised in a revocable gift is property which the donor is competent to dispose of, whether the gift is revoked or not and will be covered by Section 6. Similarly, property in respect of which the deceased had a power of appointment will also fall within Section 6."
22. Section 6 of the Act comes into play in those cases wherein the deceased was, at the time of his death, competent to dispose of the property. It is the competence of the deceased to dispose of the property which attracts the provisions contained in Section 6. A sole coparcener is competent to dispose of the coparcenary property. Since the deceased, Shri Chillu Ram, being the sole coparcener in respect of the properties belonging to the smaller Hindu undivided family, was competent to dispose of such properties, the entire property of the smaller Hindu undivided family shall be deemed to pass on his death and the case would be covered by Section 6 of the Estate Duty Act.
23. With regard to the interest of the deceased in the properties of the bigger Hindu undivided family, such interest ceased on his death and would be deemed to pass on his death to the extent the benefit accrued or arose by the cesser of his interest in favour of his widow, In that case, Section 7 would come into play. Sections 7, 37 and 39 would stand attracted in the cases of coparcenary properties wherein the interest of the dying coparcener ceases on his death and the cesser of his interest results in accrual or arisal of a benefit in favour of other coparcener or coparceners whose interests and shares in coparcenary get increased by deaths and reduced by births in the Hindu joint family.
24. However, the application of either Section 6 or Section 7 in the present case is of academic interest only as the interest of the deceased to the extent of a one-third share in the properties of the bigger Hindu undivided family and the entire properties of the smaller Hindu undivided family shall be deemed to pass on his death and the value thereof would be required to be included in his estate for the purpose of paying duty under the Estate Duty Act.
25. In the course of the arguments, learned counsel for the parties referred to certain cases to which a reference may be made. In the case of T.R. Ekambaram v. CED [1967] 66 ITR 67 (AP), the effect of declaration made by the deceased in his will that certain property was his self-acquired property was considered. The property covered by the will was found to have been acquired by the deceased with the aid of joint family property. It was held by the Andhra Pradesh High Court that the will did not alter the basic character of the property. In the instant case, though the will made by the deceased does not affect the basic character of the property of the smaller Hindu undivided family as being joint Hindu family property as the same had been acquired with the nucleus obtained by the deceased on partial partition of the bigger Hindu undivided family, since the deceased, being sole surviving coparcener in the smaller Hindu undivided family, was competent to dispose of the said property, the will made by him makes no difference in so far as levy of estate duty is concerned.
26. In the case of Asst. CED v. Balakriahna Menon [1967] 64 ITR 223 (Ker) [FB], upon which the Tribunal has placed too much reliance, is, in fact, not relevant to decide the issues involved in the present reference. In that case, the question of devolution of a "sthanam property" on the death of an sthanamdar was considered by the Full Bench of the Kerala High Court. Referring to the history and legal incidence of the sthanam as was traced by the Supreme Court in Kavalappara Kottarathil Kochunni v. State of Kerala, AIR i960 SC 1080, the Full Bench held that Section 7(3) of the Hindu Succession Act had enacted a rule for distribution of a sthanam property upon the death of a sthnamdar and not of passing of such property. The object behind enacting such a rule was to do away with the concept of a sthanam property in the future. Their Lordships of the Kerala High Court made passing observations to the effect that Section 7 of the Estate Duty Act, under which assessment of a sthanam property used to be made, had not been amended after the passing of the Hindu Succession Act. In view of what was held by their Lordships of the Kerala High Court, that case is not of much relevance to the issue involved in the case before us.
27. In the Rajasthan case of Smt. Dhani Devi and Jhavermal v. CED [1973] 68 ITR 96, this court held that a coparcenary continues to subsist so long as there is in existence a widow of the coparcener capable of bringing a son into existence by adoption. Under a legal fiction an adopted son is like a posthumous son who is deemed to have come into existence before the death of the adoptive father so that there is no breach in the continuity of the line. The rights of the adopted son are the same as if he had been in existence at the time when his adoptive father died. In that case Budhumal Dugar, the deceased person, along with his brother, Sumermal Dugar, constituted a Hindu undivided family having ancestral property. There was a partition between the brothers in 1938 and the deceased received his share in the family properties. He died on March 17, 1954, leaving his widow, Smt. Dhani Devi, who adopted Jhavermal to her husband. After his death, Smt. Dhani Devi and Jhavermal filed a return under the Estate Duty Act in which they claimed that the deceased constituted a Hindu undivided family along with his wife, Smt. Dhani Devi, and in view of the adoption which she made 11 days after the death of her husband, the deceased was competent to dispose of only one-third of the family properties, the reason being that by a legal fiction the adopted son is like a posthumous son, who is deemed to come into existence before the death of his father. This court held that after partition the property received by Budhumal continued to be joint family property in his hands. The son, adopted by his widow, would be deemed to have been in existence at the time of Budhumal's death. Therefore, at the time of death, the deceased could not have disposed of the joint family property. The court further held that in view of Section 39, the share of Budhumal in the family property at the time of his death was one-third and this one-third alone would be deemed to have passed on his death. Their Lordships had considered the question of the interest of the deceased person in joint family properties at the time of his death, in the light of the decision of their Lordships of the Supreme Court in Krishnamurthi Vasudeorao Deshpande v. Dhruwaraj, AIR 1962 SC 59. In the case of Krishnamurthi, AIR 1962 SC 59, their Lordships of the Supreme Court deduced the following principles on the basis of their earlier decision in the case of Srinivas Krishnarao Kongo v. Narayan Devji Kango, AIR 1954 SC 379 (at page 61 of AIR 1962 SC 1962) :
"(i) An adopted son is held entitled to take in defeasance of the rights acquired prior to his adoption on the ground that in the eye of law his adoption relates back, by a legal fiction, to the date of the death of his adoptive father, he being put in the position of a posthumous son.
(ii) As a preferential heir, an adopted son (a) divests his mother of the estate of his adoptive father ; (b) divests his adoptive mother of the estate she gets as an heir of her son who died after the death of her husband.
(iii) A coparcenary continues to subsist so long as there is in existence a widow of a coparcener capable of bringing a son into existence by adoption; and if the widow made an adoption, the rights of the adopted son are the same as if he had been in existence at the time when his adoptive father died and that his title as coparcener prevails as against the title of any person claiming as heir to the last coparcener.
(iv) The principle of relation back applies only when the claim made by the adopted son relates to the estate of his adoptive father. The estate may be definite and ascertained, as when he is the sole and absolute owner of the properties, or it may be fluctuating as when he is a member of a joint Hindu family in which the interest of the coparceners is liable to increase by death or decrease by birth. In either case, it is the interest of the adoptive father which the adopted son is declared entitled to take as on the date of his death. This principle of relation back cannot be applied when the claim made by the adopted son relates not to the estate of his adoptive father but to that of a collateral. With reference to the claim with respect to the estate of a collateral, the governing principle is that inheritance can never be in abeyance, and that once it devolves on a person who is the nearest heir under the law, it is thereafter not liable to be divested. When succession to the properties of a person other than an adoptive father is involved, the principle applicable is not the rule of relation back but the rule that inheritance once vested could not be divested.
(v) The estate continues to be the estate of the adoptive father in whosoever's hands it may be, that is, whether in the hands of one who is the absolute owner or one who is a limited owner. Any one who inherits the estate of the adoptive father is his heir, irrespective of the inheritance having passed through a number of persons, each being the heir of the previous owner. This court considered the case of Amarendra Man Singh Bhramarbar v. Sanatan Singh [1933] 60 Ind App 242 ; AIR 1933 PC 155, which related to an impartible zamindari. The last of its holders was Raja Bibhudendra. He died on December 10, 1922, unmarried. A collateral, Banamali, succeeded to the estate as the family custom excluded females from succeeding to the Raj. On December 18, 1922, Indumati, mother of Bibhudendra adopted Amarendra to her husband, Brajendra. The question for determination, in that case, was whether Amarendra could divest Banamali of the estate, and it was answered in the positive by the Judicial Committee. This court said at page 19 of SCR (at page 386 of AIR) :
"The estate claimed was that of his adoptive father, Brajendra, and if the adoption was at all valid, it related back to the date of Brajendra's death, and enabled Amarendra to divest Banamali.' The last holder of the estate was not Brajendra, the adoptive father, but Bibhudendra, who may be said to be the adoptive brother. The estate in his hands is described as the estate of Brajendra, the adoptive father. This court said about the decision in this case :
'This decision might be taken at the most to be an authority for the position that when an adoption is made to A, the adopted son is entitled to recover the estate of A not merely when it has vested in his widow who makes the adoption but also in any other heir of his. It is no authority for the contention that he is entitled to recover the estate of B which had vested in his heir prior to his adoption to A.' Banamali, heir of Bibhudendra, was considered to be the heir of Brajendra also."
28. It may be noted that in the case of Srinivas Krishnarao, AIR 1954 SC 379, the Supreme Court ruled that when succession to the properties of a person other than an adoptive father is involved, the principle applicable is not the rule of relation back but the rule that inheritance once vested could not be divested.
29. In the case of Smt. Dhani Devi and Jhavemtal [1973] 89 ITR 96 (Raj), the deceased Budhmal had died on March 17, 1954, i.e., before the coming into force of the Hindu Succession Act, 1956. In that case Jhavermal had been adopted 11 days after the death of Budhmal and by virtue of the principle of "relation back" he was considered to be having a share in the coparcenary property at the time of the death of Budhmal. No such facts are there in the case before us. In the instant case, it was not brought to our notice that Smt. Kastoori Devi had ever adopted a son after the death of the deceased. That apart, by virtue of operation of Section 14 of the Hindu Succession Act, 1956, Smt. Kastoori Devi became an absolute owner of the property inherited by her from the deceased. Inheritance stood vested in heir on the death of Chillu Ram and as held by the apex court inheritance once vested cannot be divested. Her capability of bringing a son in existence posthumously cannot keep the inheritance in abeyance and cannot suspend or negate her statutory right conferred upon her by and under Section 14. Moreover, in Dhani Devi's case [1973] 89 ITR 96 (Raj), the interest of the Hindu widow in the joint family property was not considered with reference to the provisions of the 1937 Act. We have pointed out above that the Supreme Court has taken the consistent view that on the death of her husband, his widow does not become a coparcener and she simply substitutes her husband in the coparcenary. In our opinion, therefore, since the 1937 Act and the Hindu Succession Act, 1956, have made drastic changes in the very concept of "family" and "coparcenary" under the Hindu law and the case of Dhani Devi and Jhavermal [1973] 89 ITR 96 (Raj), was decided without making any reference to the provisions of the said Acts, the principles laid down therein with regard to the share of the widow of a deceased in the coparcenary property do not afford much help to the accountable persons in the present case after the coming of the Hindu Succession Act into force.
30. In the case of CIT v. Raghunandan Saran [1977] 108 ITR 818 (All), the karta was looking after the business of the family and the question was whether the salary paid to the karta was deductible in determination of the profits of the family business. The facts and the issues arising in that case are totally beside the points which are under our consideration.
31. In the case of Goswami Vrajraiji Ranchhodlalji Maharaj v. CED [1978] 112 ITR 851 (Guj) one Ranchhodlalji had died in 1961 leaving behind his wife, Smt. Vraj Priya (the deceased) his son, Vraj Raj, and his mother, Smt. Tati. Smt. Vraj Priya died in 1962. The Assistant Controller of Estate Duty held that the deceased was entitled to one-half share in the family property and his order was upheld in appeals. The Tribunal referred the following question to the Gujarat High Court (page 852) :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the deceased widow, as a member of the Hindu undivided family, was the absolute owner of one-half of the Hindu undivided family's property and that the same passed on her demise."
32. After examining a number of decisions from several High Courts and the Supreme Court their Lordships of the Gujarat High Court held that the widow of a member of a Hindu joint family is put in the place of her husband and the husband's interest in the joint family property, though indefinite, would vest immediately upon his death, in his widow. The widow who acquired the interest of the deceased husband under Section 3(2) of the 1937 Act and who was possessed of the said interest at the time of the coming into force of the Hindu Succession Act, 1956, became the absolute owner of that estate by operation of Section 14 of the latter Act and thus she would have all the rights of a full owner and would be competent to dispose of it which is an incident of full ownership. Therefore, her right would be deemed to be property passing on her death under section 5 or under Section 6 of the Estate Duty Act. The right which has been given to a Hindu woman under the 1937 Act is also in lieu of partition. Therefore, if a notional partition were to take place shortly before Smt. Vraj Priya's death, she would not be entitled to any share except that which she gets under the 1937 Act, subject to the provision of an amount of Rs. 25,000 for the right of maintenance of Ranchhodlal's mother, Smt. Tati. In expressing such views their Lordships of the Gujarat High Court relied upon and followed the following observations of Shah J., of the Supreme Court in Satrughan Isser's case, AIR 1967 SC 272 (page 856) :
"'The Act seeks to make fundamental changes in the concept of a coparcenary and the rights of members of the family in coparcenary property. The Hindu law as laboriously developed by the Anglo-Indian courts in the light of certain basic concepts expounded by the ancient law givers, had acquired a degree of consistency and symmetry. The Act in investing the widow of a member of a coparcenary with the interest which the member had at the time of his death has introduced changes which are alien to the structure of a coparcenary. The interest of the widow arises not by inheritance, nor by survivorship, but by statutory substitution."
33. His Lordship further pointed out (pages 856, 857) :
"'A Hindu coparcenery under the Mitakshara school consists of males alone ; it includes only those members who acquire by birth or adoption interest in the coparcenary property. The essence of coparcenary property is unity of ownership which is vested in the whole body of coparceners. While it remains joint, no individual member can predicate of the undivided property that he has a definite share therein. The interest of each coparcener is fluctuating, capable of being enlarged by deaths, and liable to be diminished by the birth of sons to coparceners ; it is only on partition that the coparcener can claim that he has become entitled to a definite share. The two principal incidents of coparcenary property are : that the interest of coparceners devolves by survivorship and not by inheritance ; and that the male issue of a coparcener acquires an interest in the coparcenary property by birth, not as representing his father but in his own independent right acquired by birth'.
By the Act certain antithetical concepts are sought to be reconciled. A widow of a coparcener is invested by the Act with the same interest which her husband had at the time of his death in the property of the coparcenary. She is thereby introduced into the coparcenary, and between the surviving coparceners of her husband and the widow so introduced, there arises community of interest and unity of possession. But the widow does not on that account become a coparcener ; though invested with the same interest which her husband had in the property she does not acquire the right which her husband could have exercised over the interest of the other coparceners. Because of statutory substitution of her interest in the coparcenary property in the place of her husband, the right which the other coparceners had under the Hindu law of the Mitakshara school of taking that interest by the rule of survivorship remains suspended so long as that estate enures. But on the death of a coparcener there is no dissolution of the coparcenary so as to carve out a defined interest in favour of the widow in the coparcenary property ... The interest acquired by her under Section 3(2) is subject to the restrictions on alienation which are inherent in her estate'.
The right which the widow may claim is not different from the right which her husband could claim if he had been alive ; therefore, the right of the coparceners to take the joint property by survivorship on the death of a coparcener does not survive a demand for partition by the -widow in the coparcenary."
34. With great respect to their Lordships of the Gujarat High Court we take the same view of the legal position of the subject on hand. In our opinion, the 1937 Act, the Hindu Succession Act, 1956, and the Hindu Adoption Act, 1956, have brought about such radical changes in the basic concepts of Hindu joint family and adoption which were hitherto alien to the original Hindu law. The right of a Hindu widow to step into the shoes of her deceased husband and take the same interest in the Hindu joint family property as her deceased husband had at the time of his death was given statutory recognition by the 1937 Act and later on her such interest was converted into her absolute estate by the Hindu Succession Act, 1956. The rights so given to the Hindu widow under the said two Acts also materially affected the doctrine of "relating back" which by a legal fiction made a posthumously adopted son as living at the time of the death of the deceased adoptive father and also made him entitled to have his share in the notional partition which was to be assumed to take place just before the death of the adoptive father. In fact with the allowing of a girl, as being capable of being given and taken in adoption by the Hindu Adoption Act, the very concept of continuity of the male line of the deceased person has been substantially and materially affected and accordingly the very object and purpose behind the doctrine of "relating back" stands adversely affected. It is particularly so in the presence of Section 14 of the Hindu Succession Act 1956, when the said provision is read in the context of the well settled principle that inheritance does not remain in abeyance and property once vested cannot be divested. In other words, Section 14 of the Hindu Succession Act, 1956, gives a death blow to the very concept of "Hindu women's life estate" and "reversioners" as known under ordinary Hindu law.'
35. After keeping in view these statutory changes brought about by the Indian Legislature and the exposition of law made on the subject by the apex court we are of the opinion that the Rajasthan case (see [1973] 89 ITR 96), which makes no reference to these legislative changes and the approach adopted by the apex court in its later decisions, in accepting the Hindu female's interest and share in the Hindu joint family property is not of much relevance. The said Rajasthan case is not only distinguishable on the facts but also on the changed position of law. In the case before us the late Shri Chillu Ram had become a coparcener in the bigger Hindu undivided family by birth and the subsequent marriage of Smt. Kastoori Bai with him could not make her a coparcener, though she acquired the status of a member of the bigger Hindu undivided family. She became a substituted coparcener after the death of Shri Chillu Ram and by virtue of the combined effect of Section 3(2), (3) of the 1937 Act and Section 14 of the Hindu Succession Act, 1956, her share got defined to 1/3rd which her late husband was entitled to in a deemed partition just before his death and of which she became the absolute owner. Prior to the death of Shri Chillu Ram and, for that matter, in the notional partition assumed or deemed to take place just before the death of Shri Chillu Ram, she had no interest and share of her own in the properties of the bigger Hindu undivided family. The same was her position with regard to the properties of the smaller Hindu undivided family in which Shri Chillu Ram was the sole coparcener and as such competent to dispose of the entire property.
36. The irresistible conclusion of the above discussion is that Shri Chillu Ram's interest at 1/3rd in the properties of the bigger Hindu undivided family and his sole ownership interest in the properties of his smaller Hindu undivided family passed on his death under sections 7 and 6 of the Estate Duty Act. The value of his such interests in the two categories of properties is includible in his estate passing on his death for the purposes of paying duty under the Act. Therefore, all the three questions, as reproduced above, are required to be answered in the negative, i.e., for the Revenue and against the accountable persons.
37. In view of the above discussion we answer the referred questions in the following manner :
Question No. 1 :
The Tribunal was justified in holding that Section 6 of the Estate Duty Act, 1953, is not applicable in so far as the interest of the deceased in the properties of the bigger Hindu undivided family passing on his death is concerned. However, we further hold that the Tribunal was not justified in holding that Section 6 of the Estate Duty Act, 1953, is not applicable to the passing of the interest of the deceased in the properties of the smaller Hindu undivided family.
Question No. 2 :
The Tribunal was not right in holding that the cesser of interest deemed to pass on the death of the deceased in respect of property held by the smaller Hindu undivided family was to be one-half. We hold that the entire property, held by the smaller Hindu undivided family, passed on the death of the deceased under Section 6 of the Act and is liable to pay duty under the Estate Duty Act.
Question No. 3 :
The Tribunal was not justified in holding that the share of the deceased in the larger Hindu undivided family was one-sixth and his share to that extent only passed on his death. We hold that the share of the deceased in the properties of the bigger Hindu undivided family was one-third and such one-third share is liable to pay duty under the Estate Duty Act.
38. We thus, answer all the three questions, in effect, for the Revenue and against the accountable persons.
39. Let our answers, along with the record of the Tribunal, if requisitioned, be communicated to the Tribunal for further action according to law.
V. K. Singhal, J.
40. I agree with the conclusion arrived at by my learned brother Khan J. but I would like to add few more lines as under.
41. Section 39(1) of the Estate Duty Act provides that the value of the benefit accruing or arising from the cesser of a coparcenary interest in any joint family property governed by the Mitakshara school of Hindu law which ceases on the death of a member thereof shall be the principal value of the share in the joint family property which would have been allotted to the deceased had there been a partition immediately before his death. The principal value of the share in the bigger joint family property which would have been allotted to the deceased had there been a partition immediately before his death would have been 1/3rd and not 1/6th.
42. In respect of the smaller Hindu undivided family since the deceased and his wife were the only persons and there were no two coparceners there could not have been any partition, as such the entire value of the property of the smaller Hindu undivided family would pass. Under Section 6 property which the deceased was at the time of his death competent to dispose of is deemed to pass on his death. The deceased was the sole coparcener and as such the property of the smaller Hindu undivided family would be included in its entirety. This conclusion is duly supported by the decision of the Madhya Pradesh High Court in the case of Ramratan v. CED [1983] 142 ITR 863, wherein a Full Bench of the Madhya Pradesh High Court observed that (page 866) :
"The ownership in the property obtained by the deceased on partition was not shared by his wife although the deceased and his wife onstituted an Hindu undivided family. The deceased had no son. There was thus no coparcener in his family excepting himself. The deceased was the sole coparcener in his family. Speaking generally, female members in an Hindu undivided family have no ownership in the property belonging to the family. The ownership of such a property is held by a smaller body which is called the coparcenary and in case there is only one coparcener, it is he alone who owns the entire property. It is true that for purposes of assessment of income-tax, the status of the deceased was that of an Hindu undivided family, as he and his wife constituted a family but different considerations prevail for finding out as to whether the entire property of the family or a share in it passed on the death of the deceased. As the entire ownership in the property vested in the deceased and as no part of it was shared by the wife who was the only other member in the family, the entire property passed on the death of the deceased within the meaning of section 5 of the Act. The deceased being the sole coparcener had a disposing power under the Hindu law in respect of the entire property and even under Section 6 of the Act the entire property would be deemed to have passed on his death for purposes of estate duty. Section 7 which applies when a coparcenary interest in a joint family property ceases on death and Section 39(1) which lays down the mode of valuation of such interest, can apply only when the joint family property is vested in more than one person. It is only then that an interest in the joint family property ceases on the death of a coparcener and the valuation of such an interest has to be ascertained on the basis of the principal value of the share which would have been allotted to the deceased had there been a partition immediately before his death. When the entire property vested in the deceased because the deceased was the sole coparcener, there is no question of any other person getting any interest or share on a notional division immediately before his death and sections 7 and 39 have no application to such a case. As earlier stated, the whole of the property in such cases passes under section 5 read with Section 6. The view that we have taken is fully supported by the decision of the Allahabad High Court in CED v. Smt. Kalawati Devi [1980] 125 ITR 762, with which we entirely agree."