Gujarat High Court
Darbar Pratapsinhji, Ahmedabad vs Commissioner Of Income-Tax, Gujarat on 4 October, 1974
JUDGMENT Mehta, J.
1. The following three questions have been referred to us for our opinion :
"(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the properties in question were the individual or separate properties of the assessee ?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the income derived by the assessee from the said properties was his personal income and not that of his 'HUF' ?
(iii) Whether the Tribunal was right in holding that the assessee's status should be taken as that of an 'individual' ?"
2. These three questions arise in the following circumstances :
The assessee's father, Narendrasinhji, was the Ruler or Darbar of the erstwhile State of Patdi in Saurashtra, he died in the year 1941, and the assessee ascended to the Gaddi and became the ruler or Darbar of the said State of Patdi. The assessee inherited the properties in question and other properties also which formed part of the impartible estate. The relevant assessment years for the purposes of this reference are 1965-66 and 1966-67, the years of accounts being S.Ys. 2020 and 2021, respectively. The assessee was filing returns of his income as an individual right from the assessment year 1949-50 to the assessment year 1964-65, and he was assessed accordingly. For the assessment year 1965-66, the assessee filed his return of income as an individual. However, in the course of assessment proceedings, the assessee claimed a status as that of a "HUF". It appears that by his letter of June 2, 1967, he contended before the ITO that the had ceased to be a ruler and that since the rule of primogeniture was no longer applicable to his properties, his estate ceased to be impartible.He further contended that his right in lands and villages was also abolished in 1957. There was no Gaddi to which the rule of primogeniture could apply and, therefore, in the circumstances. It was not correct to assess him as an individual, according to the assessee, he had inherited the properties from his father and, therefore, the said properties were properties of a HUF, which consisted of himself, his wife and his seven sons. He, therefore, requested the ITO to consider his status as that of a HUF. The ITO was, however, of the opinion that the properties and estate in question were of absolute ownership of the assessee and, therefore, income from the said properties was his individual or separate income. He rejected the assessee's contention that the income drived from the said properties was the income of the HUF. He, therefore, assessed him as an individual, the assessee, therefore, carried the matter in appeal before the AAC. The AAC, having regard to the important fact that impartibility was a creature of customary law and since the custom of impartibility does not touch the succession as the right of survivorship was not inconsistent with the custom, the estate retained its character of joint family property. He, therefore, allowed the appeal of the assessee and granted his claim to the status of a HUF. The Revenue, therefore, took the matter in appeal before the Tribunal. The Tribunal was of the opinion that the properties involved in the appeal before it were and continued to be the absolute properties of the assessee and the question whether the estate would cease to be impartible would not assume significance till the death of its holder. In the opinion of the Tribunal, merely because the properties ceased to be impartible, they would not be impressed with the character of a joint family property so as to divest the assessee of his absolute ownership. The Tribunal, in the view of the matter it took, did not go into the question, whether the impartibility of the estate in the appeal before it ceased or not. The Tribunal held that the AAC had clearly erred in holding that the assessee's status should be taken as that of a "HUF". The Tribunal, therefore, allowed the appeal, but as the AAC had not decided all the points raised before him, the matter was sent back to him with the direction that the AAC should give his findings on other points raised before him and decide the appeal afresh in accordance with law in the light of the said order. At the instance of the assessee, therefore, the three questions set out hereinabove have been referred to us for our opinion.
3. At the time of hearing of this reference, the learned Advocate-General, appearing on behalf of the assessees, raised the following two contentions :
1. The Tribunal was clearly in error in holding that the assessee was not entitled to the status of a HUF as it has lost sight of appreciating the true effect of s. 5(2) read with ss. 4 and 6 of the Hindu Succession Act on the character of the estate involved in this reference. Precisely stated, the contention of the assessee was that the effect of the said statute was to abolish impartible estates except those which are expressly saved by s. 5(2) of the said Act.
2. The Tribunal has erred in not addressing itself to the question that by the operation of s. 5(2), the character of impartibility having gone, other rights of the members of the joint Hindu family qua the properties in question revived.
4. On behalf of the Revenue, these contentions have been repelled by Mr. Kaji, the learned advocate appearing on behalf of the Revenue. His contention was that the effect of the Hindu Succession Act on the estate in question can be relevant only when succession opens after the demise of the last holder, and cannot be relevant for purposes of this reference in the lifetime of the holder. Neither s. 4 nor s. 6. Nor other sections of the Hindu Succession Act, can have any relevance for purposes of the questions raised in this reference as it cannot be said that the impartible estate is held in coparcenary by its holder and since also because no provision is made in respect of the succession of members of a HUF except to a limited extent where a Hindu dies intestate having interest in coparcenary property and is succeeded by a female mentioned in Class I of the Schedule to the Hindu Succession Act.
5. The connotation of the term "impartible estate" is well known. If, by long established custom or under the terms of a grant by Government, a property, though partible, devolves on a single member of the family to the exclusion of others, it is known as an impartible estate and the sine qua non, therefore, of such property is its devolution on one member in preference to others. Such impartible estate may be self-acquired property or may be ancestral. It is true law to say that an impartible estate is not held in coparcenary though it may be joint family property. It is no doubt no coparcenary property in the sense that the right to partition and the right to joint enjoyment are, from the very nature of impartible estate. Incapable of existence, none the less, to the extent it devolves on the death intestate of its holder by survivorship, it retains its characteristics of coparcenary property (vide Hindu Law by Mulla, 14th Edn., p. 623, "Impartible property whether coparcenary property"). Incidents of impartible estate have been succinctly stated by the Privy Council in Shiba Prasad Singh v. Rani Prayag Kumari Devi, AIR 1932 PC 216, and on a number of occasions thereafter, by the Supreme Court. In Sri Rajah Velugoti Kumara Krishna Yachendra Varu v. Shri Rajah Velugoti Sarvagna Kumara Krishna Yachendra Varu. AIR 1970 SC 1795, the court was concerned with the effect of the Madras Estates (Abolition and Conversion into Ryotwari) Act, 1947, and the Madras Impartible Estates Act, 104, on the impartible estate. Mr. Justice Ramaswami (as he then was), negativing the contention that the effect of the Madras Estates (Abolition and Conversion into Ryotwari) Act, 1948, was to make away the character of impartibility in relation to the property in question, observed and recapitulated the Well-known incidents of impartible estates as under (p. 1805) :
"We are also unable to accept the contention of the plaintiffs that the property of the impartible estate was held in coparcenary as joint family property and became partible amongst the members once it lost its character of impartibility. In other words, the contention was that junior members had a present interest in the impartible estate and were entitled to a share in the estate once impartibility was removed. In our opinion there is no justification for this argument. The law regarding the nature and incidents of impartible estates is now well settled. Impartibility is essentially a creature of custom. The junior members of a joint family in the case of ancient impartible joint family estates take nor light in the property by birth and. Therefore, have no right of partition having regard to the very nature of the estate that it is impartible. Secondly, they have no right to interdict alienations by the head of the family either for necessity or otherwise. This, of course, is subject to section 4 of the Madras Impartible Estates Act in the case of impartible estates governed by the Act. The right of junior members of the family for maintenance is governed by custom and is not based upon any joint right or interest in the property as co-owners. This is now made clear by the Judicial Committee in CIT v. Dewan Bahadur Dewan krishna Kishore [1941] 9 ITR 695 (PC). The income of the impartible estate is the individual income of the holder of the estate and is not the income of the joint family."
6. After referring to the observations of Sir George Rankin in CIT v. Dewan Bahadur Dewan Krishna Kishore [1942] 9 ITR 695 (PC) with approval, Mr. Justice Ramaswami proceeded to observe (p. 1806) :
"To this extent the general law of Mitakshara applicable to joint family property has been modified by custom and an impartible estate, though it may be an ancestral joint family estate, is clothed with the incidents of self-acquired and separate property to that extent, the only vestige of the incidents of joint family property, which still attaches to the joint family impartible estate is the right of survivorship which, of course, is not inconsistent with the custom of impartibility. For the purpose of devolution of the property, the property is assumed to be joint family property and the only right which a member of the joint family acquires by birth is to take the property by survivorship but he does not acquire any interest in the property itself. The right to take by survivorship continues only so long as the joint family does not cease to exist and the only manner by which this right of survivorship could be put an end to is by establishing that the estate ceased to be joint family property for the purpose of succession by proving an intention, express or implied, on behalf of the junior members of the family to renounce or surrender the right to succeeded to the estate."
7. For purposes of answering this reference, two questions would incidentally arise, namely, (1) whose property is this impartible estate in question ? and (2) did it cease to be impartible at any time and what is the effect of such cessation ? It appears that the Tribunal has taken the view that the properties involved in this reference were and continued to be absolute properties of the assessee, and the question, whether they ceased to be impartible or not, was not of much significance in the opinion of the Tribunal, as it would be of importance only after the demise of its holder. The Tribunal was of the view that merely because a property may cease to be impartible, it would not automatically be impressed with the characteristics of joint family property so as to divest the assessee of his absolute ownership. The Tribunal, as stated above, did not go into the real question, whether the impartibility of the estate ceased or not and merely proceeded on the basis that the impartible estate is of the absolute ownership of its holder. The question of ownership of an ancestral impartible estate has been considered by the Supreme Court in State of U.P. v. Raj Kumar Rukmani Raman Brahma, AIR 1972 SC 1687. It has been held therein that an estate which is impartible by custom cannot be said to be the separate or exclusive property of the holder of the estate, and if the holder has got the estate as an ancestral estate and he has succeeded to it by primogeniture, it will be part of the joint estate of the undivided Hindu family. Mr. Justice Ramaswami (as he then was), speaking for the court, observed in para. 8 as under (p. 1690) :
"Since the decision of the Privy Council in Shiba Prasad Singh v. Rani Prayag Kumari Debi [1932] LR 59 IA 331; AIR 1932 PC 216, it must be taken to be well-settled that an estate which is impartible by custom cannot be said to be the separate or exclusive property of the holder of the estate. If the holder has got the estate as an ancestral estate and he has succeeded to it by primogeniture, it will be a part of the joint estate of the undivided Hindu family. In the case of an ordinary joint family property the members of the family can claim four rights (1) the right of partition; (2) the right to restrain alienations by the head of the family except for necessity; (3) the right of maintenance; and (4) the right of survivorship. It is obvious from the very nature of the property which is impartible that the first of these rights cannot exist. The second is also incompatible with the custom of impartibility as was laid down by the Privy Council in the case of Rani Sartaj Kuari v. Deoraj Kuari [1888] LR 15 IA 51 (PC) and the First Pittapur case [1899] LR 26 IA 83 (PC). The right of maintenance and the right of survivorship, however. Still remain and is by reference to these rights that the property, though impartible has, in the eye of law, to be regarded as joint family property. The right of survivorship which can be claimed by the members of the undivided family which owns the impartible estate should not be confused with a mere spes successionis. Unlike spes successionis the right of survivorship can be renounced or surrendered. It was held by the Judicial Committee in Collector of Gorakhpur v. Ram Sunder Mal [1934] LR 61 IA 286; AIR 1934 PC 157, the right of maintenance to junior members of the family. In that case, Lord Blanesburgh, after stating that the judgment of Lors Dunedin in Baijnath Prasad Singh v. Tej Bali Singh [1921] LR 48 IA 195; AIR 1921 PC 62, had definitely negatived the view that the decisions of the Board in Sartaj Kuari's case [1888] LR 15 IA 51 (PC) and the First Pittapur case [1899] LR 26 IA 83 (PC) were destructive of the doctrine that an impartible zamindari could in any sense be joint family property, went on to observe :
'One result is at length clearly shown to be that there is no reason why the earlier judgments of the Board should not be followed, such as for instance the Challapalli case (Raja Yarlagadda Mallikarjuna Prasad Naydu v. Raja Yalagadda Durga Prasad Nayudu [1900] LR 27 IA 151 (PC) which regarded their right to maintenance, however limited, out of an impartible estate as being based upon the joint ownership of the junior members of the family, with the result that these members holding zamindari lands for maintenance could still be considered as joint in estate with the zamindar in possession.'"
8. The Tribunal was, therefore, not justified in observing that the impartible estate in question, to which the assessee has succeeded on the death of his father by primogeniture, was of absolute ownership of the assessee. Mr. Kaji, the learned advocate on behalf of the Revenue. Pointed out to us that what the Tribunal meant was that the income of the properties was of the absolute ownership of the assessee. Be that as it may, however, the real question, which has been raised and to which, as rightly contended by the learned Advocate-General on behalf of the assessee, the Tribunal ought to have addressed itself is, whether the estate involved in this reference ceased to be impartible or not. The important question raised on behalf of the assessee is, a whether the Hindu Succession Act, 1956, has brought about a radical change in the rules of Hindu law relating to impartible estates. The Hindu Succession Act. no doubt, provides mainly for succession of a Hindu dying intestate, it also provides for succession of a male Hindu having interest in a coparcenary property dying leaving behind him a female of Class I of the Schedule to the said Act. Section 5 of the Hindu Succession Act mentions the properties to which the Act does not apply. Section 5(ii), which is relevant for the purposes of this reference, reads as under :
"5. This Act shall not apply to - ...........
(ii) any estate which descends to a single heir by the terms of any covenant or agreement entered into by the Ruler of any Indian State with the Government of India or by the terms of any enactment passed before the commencement of this Act;"
9. Section 4 gives an overriding effect to the Act in matters for which provision is made in the Act over any text, rule or interpretation of Hindu law or any custom or usage as part of that law in force immediately before the commencement of the said Act so far as it may be inconsistent with the provisions of the Act. Section 4(1)(a) is relevant for purposes of this reference and it provides :
"4. (1) Save as otherwise expressly provided in this Act, -
(a) any text, rule or interpretation of Hindu law or any custom or usage as part of that law in force immediately before the commencement of this Act, shall cease to have effect with respect to any matter for which provision is made in this Act."
10. The effect of s. 5(ii) is to exclude from the mischief of the Act an impartible estate which descends to a single heir as recognised by the terms of any convenant or agreement entered into by the ruler of any Indian State with Govt. of India or by the terms of any enactment passed before the commencement of the Hindu Succession Act. The object appears to be to exclude from the operation of the Act any succession to the estate which goes by the rule of primogeniture. It is only where the state descends to a single heir as recognised by the terms of any covenant or agreement enterted into by the Ruler of any Indian State with the Govt. of India or by the terms of any enactment passed before the commencement of the Hindu Succession Act. The effect of s. 4 appears to be to abrogate the rules of Hindu law in matters covered by the Act whether they were based on any text, rule or interpretation of Hindu law or any custom or usage as part of that law in force immediately before the commencement of the Succession Act. It is no doubt true that the Succession Act does not abrogate the old classical Hindu law except with respect to matters for which provision is made in the said Act, the contention of the assessee was that by the combined operation of s. 5(ii), read with ss. 4 and 6 of the Hindu Succession Act, the effect is that the character of impartibility of the estate having gone, the character of joint family property is regained and all the rights of the members in the said property qua the joint family property revived. In this connection, our attention has been drawn by the learned Advocate-General to the note proceeding the chapter relating to impartible property in Mulla's Hindu Law at p. 621. The relevant part of the note reads :
"The Hindu Succession Act, 1956, has brought about radical changes in the ruled of Hindu law relating to impartible property. The effect of that enactment is to abolish impartible estates save those which are expressly saved by s. 5(ii) of the same. Only estates which descend to a single heir by the terms of any covenant or agreement entered into by the Ruler of any Indian State with the Govt. of India or by the terms of any enactment passed before the commencement of the Act are exempted from the operation of the general law relating to succession and inheritance laid down in that Act.
Similarly in Hindu Law of Succession by S. V. Gupte, under the commentary on s. 5(ii), at p. 464, the following observation made by the learned author is to be found :
"Under the old law of succession, an estate could descend to a single heir by the rule of primogeniturs by reason of the terms of a grant or custom or usage. This was one of the features of an impartible estate. In view of the restricted exclusion under this clause the rule of primogeniture now stands abolished even where primogeniture was recognised by the terms of a grant or custom or usage. Section 5(ii) only excludes from the operation of the Act estates which descend by the rule of primogeniture in a limited class of cases."
11. In the foot-not eat (r) on p/464, the following observation is made in the same book :
"Under the original Bill, every estate which descended to a single heir by a customary rule of succession or by the terms of any grant or enactment, that is to say, all the impartible estates were sought to be excluded from the Act. Under the Act, however, only a specific class of impartible property is now excluded. All other impartible property would be governed by this Act."
12. In Anant Bhikhappa Patil v. Shankar Ramchandra Patil, AIR 1943 PC 196, the Judicial Committee clearly affirmed the principle about an impartible estate as under (p. 201) :
".... an impartible estate is not held in coparcenary, though it may be joint family property. It may devolved as joint family property or as separate property of the last male owner. In the former case, it goes by survivorship to that individual, among those male members who, in fact and in law are undivided in respect of the estate. Who is singled out by the special custom, for example, lineal male primogeniture, in the latter case, jointness and survivorship are not as such in point; the estate devolves by inheritance from the last male owner in the order prescribed by the special custom or according to the ordinary law of inheritance as modified by the custom."
13. It was, therefore, urged that as the Hindu Succession Act has made a provision for succession in the case of separate or self-acquired property as well as for a limited purpose in the case of succession to joint family property where a member, having interest in a coparcenary, dies leaving behind him a female member of Class I of the Schedule to the said Act, s. 5(ii) read with ss. 4 and 6 completely abrogate the impartible estate which after everything said and done is a creature of custom and also the rule of primogeniture which is the rule of succession in this estate.
14. The learned Advocate-General, therefore, was right and Mr. Kaji, on behalf of the Revenue, also fairly conceded that the question required to be examined, whether the impartible state in question ceased to be impartible or not. Mr. Kaji, however, reserves his right to contend that even if the estate loses its impartibility. The other rights of the members of the joint family as regards partition and the right to object to alienation would not be revived. In support of this contention, Mr. Kaji relied on the decision of this court in D. S. Meramwala Bhavawala v. Ba Shri Amarba Jethsurbhai [1966] 9 GLR 609. Two courses are, therefore, open to us, either to call for a supplementary statement of the case from the Tribunal to answer the questions which have been referred to us for our opinion or to decline to answer the questions raised by the Tribunal and to leave it to the Tribunal to take appropriate steps under the relevant sections. If we direct the Tribunal to submit a supplementary statement of case. The Tribunal will be restricted to the evidence on record and may not be entitled to have additional evidence. That would clearly result in injustice to both the parties. In the circumstances, therefore, we think it appropriate to decline to answer the questions on the ground that the Tribunal has failed to consider and decide the real question, whether the estate has lost its impartibility, and if so, from which year with reference to the provisions contained in ss. 4, 5 and 6 of the Hindu Succession Act, after ascertaining necessary relevant facts and more particularly what was precisely the custom of this impartible estate. The custom of the rule of primogeniture, what were the terms of the covenant entered into by the assessee with the Govt. of India, and what were the private properties allowed to the assessee, and whether the properties in question were part of the Gaddi, and whether the rule of descent to a single heir was recognised and maintained in terms of the covenant. It will be open to the Tribunal to dispose of the appeal in the light of the observations made hereinabove in respect of the relevant principles governing the question of the nature of impartible estates and joint family property, after determining the question which ought to have been decided as indicated above.
15. The result is that we refuse to answer the questions referred to us, and send the matter back to the Tribunal with the above directions. There will be no order as to costs in the reference.