Income Tax Appellate Tribunal - Hyderabad
Income-Tax Officer vs K. Suryanarayana on 27 June, 1986
Equivalent citations: [1986]18ITD546(HYD)
ORDER
T. Venkatappa, Judicial Member
1. Since a common issue is involved, these appeals relating to the assessment years 1978-79, 1980-81 and 1981-82 are being disposed of together. The assessee's father Dr. K. Bhimeswar Rao died on 8-7-1967 leaving behind his wife, two major sons and two married daughters. He left a will executed on 7-7-1967 bequeathing certain movable properties to his wife and two daughters and the other movable and immovable properties to his two sons, namely, Shri K. Suryanarayana and Shri K. Lakshminarayana. The respondent assessee in this case is K. Suryanarayana and we are concerned with the properties bequeathed to him. The question for consideration is whether the income from the properties bequeathed to him under the above will is individual income or a HUF income. According to the assessee under the will his father has bequeathed the properties for the enjoyment by him and his children from generation to generation and so they are HUF properties. The ITO held that the assessee's share of income from property and dividend devolved on him under the will is includible in the individual assessment. Accordingly, he completed the assessments for these three years. On appeal, the AAC held that it is not possible to infer that the property was given for the limited enjoyment of the assessee and that an affidavit has been filed by the assessee and his brother stating that they have shared the property jointly and his progeny had share in that property. In view of that the AAC held that such being the declaration of the assessee the property, that had devolved by virtue of the will should be taken as going into the joint family. Thus, he directed the ITO to delete the income from property, dividend and capital gains from the income of the assessee in all these years. Against the same the revenue has preferred these appeals.
2. The learned departmental representative strongly urged that there is nothing in the will to indicate that the property was given for enjoyment by the assessee and his sons from generation to generation. In fact it is clear from the will that the property was given to the assessee with full rights. Hence, the income is assessable in the individual assessment. The respondent assessee appeared in person. He argued that his father has given properties under the will for the enjoyment by him and his sons and, thus, the property was given to his family but not to him individually. After father's death in the normal course the sons would have got the property to be enjoyed by their families. He urged that as the property was given by his father to the joint family of himself and his children the income from the said property is not assessable in his individual hands. Thus, he supported the order of the AAC.
3. I have considered the rival submissions. I have gone through the will dated 7-7-1967 executed by the assessee's father Dr. K. Bhimeswar Rao. English translation of paragraph 6 of that will which is relevant for our purpose is as under :
Except the property mentioned in paras 1 to 5 the rest of the properties movable and immovable shall be enjoyed by my two sons Shri K. Surya-narayana and Shri K. Lakshminarayana equally with full rights after my death.
In paragraph 1 of the will he has stated that all the properties bequeathed under the will are self-acquired properties. A reading of the will clearly shows that Dr. K. Bhimeswara Rao bequeathed the properties to his two sons equally with full rights. There is nothing to indicate in the said will that he gave the properties to the families of the assessee and his brother. The intention of the executor has to be gathered only from the will. When the assessee's father has bequeathed his self-acquired properties under the will dated 7-7-1967 to the assessee and his brother to be enjoyed by them equally with full rights, the income from the properties is assessable only in their individual hands as the properties were not bequeathed to their families but to them individually with full rights and those properties are self-acquired properties in their hands with full rights to dispose of them. In C.N. Arunachala Mudaliar v. C.A. Muruganatha Mudaliar AIR 1953 SC 495 it was observed as under :
In view of the settled law that a Mitakshara father has absolute right of disposition over his self-acquired properties to which no exception can be taken by his male descendants, it is in our opinion not possible to hold that such property bequeathed or gifted to a son must necessarily and under all circumstances, rank as ancestral property in the hands of the donee in which his sons would acquire co-ordinate interest....(p.498) It was observed as under :
... We hold, therefore, that there is no warrant for saying that according to the Mitakshara, an affectionate gift by the father to the son constitutes ipso facto ancestral property in the hands of the donee.
Again it was observed as under :
As the law is accepted and well settled that a Mitakshara father has complete powers of disposition over his self-acquired property, it must follow as a necessary consequence that the father is quite competent to provide expressly, when he makes a gift, either that the donee would take it exclusively for himself or that the gift would be for the benefit of his branch of the family. If there are express provisions to that effect either in the deed of gift or a will, no difficulty is likely to arise and the interest which the son would take in such property would depend upon the terms of the grant. If, however, there are no clear words describing the kind of interest which the donee is to take, the question would be one of construction and the Court would have to collect the intention of the donor from the language of the document taken along with the surrounding circumstances in accordance with the well-known canons of construction. Stress would certainly have to be laid on the substance of the disposition and on its mere form.(p.500) On the facts of that case the Supreme Court held that on a reading of the will it becomes clear that the testator intended the legatees to take the properties in absolute right as their own self-acquisitions and he did not intend that the property should be taken by the sons as ancestral property. In M.P. Periakaruppan Chettiar v. CIT [1975] 99 ITR 1 the Supreme Court on a reading of the deeds executed held that it is clear from the deeds that the donor's desire was to surrender the property to the three sons and it was not stated that they would take the property as heads of their family units. It was further observed that the use of the words 'heirs, executors, administrators and assignees' in the context in which they appear, indicate on the contrary that the gift was to the sons absolutely, the property gifted being both heritable and alienable and there is nothing in the deeds to suggest that the interest transferred to the sons was limited in any way. In CIT v. Shambhu Ram Soni [1983] 14 Taxman 413 (Delhi) A, the father of the assessee, made a will in respect of his self-acquired properties whereby after providing certain properties to his wife, daughters and grand-daughters, he bequeathed rest of the properties to be shared equally by his two sons, the as sessee and his brother. The assessee claimed that the properties received by him by virtue of the said will were properties of the HUF consisting of himself, his wife and his sons. On those facts, the Delhi High Court held that the words that the 'rest of the property to be shared equally by two sons' clearly pointed to an intention on the part of the deceased to make it absolute and exclusive to the sons to the extent of their shares and there was no intention of the deceased that the properties shared by the two sons equally should be taken by them as ancestral property in their hands. Accordingly, the properties devolving on the assessee on the death of his father were held by him in his individual capacity. In S. Parthasarathi v. CIT AIR 1967 Mad.227 the Madras High Court held that the question whether the property in the hands of the sons is ancestral or their individual property has to be decided on the intention of the father which will have to be gathered from the terms of the language expressed in the will. In that case on the reading of the will it was held that the words of allotment to his sons clearly pointed to an intention on the part of the father to make it absolute and exclusive to each of his sons and there was no suggestion in the documents that the property should be taken by the sons as the ancestral property.
4. The ratio laid down in the above cases would squarely.apply to the instant case. The will executed by the assessee's father would clearly show that he bequeathed the properties to his two sons equally to be enjoyed by them with full rights. There is nothing to indicate in the will that the properties were given to the families of the two sons and they are to be treated as ancestral properties. In my view the properties got by the assessees under the will are not ancestral properties but self-acquired properties in their hands as the father has bequeathed them with full rights and so the income from those properties is includible in the individual assessments of the assessee. Thus, I reverse the order of the AAC and uphold the assessments made for all these years.
5. In the result, the appeals are allowed.