Income Tax Appellate Tribunal - Hyderabad
Shantilal vs Assistant Controller Of Estate Duty on 11 May, 1987
Equivalent citations: [1987]22ITD332(HYD)
ORDER
T. Venkatappa, Judicial Member
1. One appeal is by the accountable person and the other by the department. They are being disposed of together.
2. The deceased, his wife and three sons were members of the bigger HUF. The movable properties of the HUF were partitioned long back which was recognised by the department. In the partition the deceased and his three sons took 1/4th share each and the wife of the deceased was not given a share. After the said partition, the deceased with his wife constituted a smaller HUF. The deceased died on 15-5-1983. In the return filed, the accountable person claimed half share to the wife of the deceased in the smaller HUF properties. The Assistant Controller disallowed this claim and included the value of the entire property of the smaller HUF in the principal value of the estate. So far as immovable properties of the bigger HUF are concerned which were undivided, 1/5th share of the deceased was included and there is no dispute about this. On appeal, the Appellate Controller held that the wife of the deceased had a right to reopen the partition and claim her share and this right has to be considered as a liability of the estate of the deceased. He directed the Assistant Controller to work out the share which should have been allotted to the wife of the deceased, at the time of partition and out of this amount he should adopt 1/4th share of the deceased as liability which was subsisting on the date of death of the deceased and ascertain the share to which the wife of the deceased was entitled to and out of this 1/4th share should be allowed as a deduction from the principal value of the estate of the deceased. Against the said order, the accountable person as well as the revenue has preferred these appeals.
3. The learned counsel submitted that half share of the movable property has to be considered as property of the deceased and the other half share as belonging to the wife of the deceased. Reliance was placed on the decision in Bhimraj Saremal v. CED [1981] 132 ITR 35 (Guj.). He submitted that the Appellate Controller instead of deciding this main issue has only considered the alternative submission made by the assessee. This main issue should be considered and only half share is to be included. The learned departmental representative submitted that since the deceased was the sole coparcener of the smaller HUF he had absolute power of disposition of the property and so the entire value of the movable assets passed on the death of the deceased. He further submitted that the deceased's wife had no authority to reopen the partition of the movable property. Even assuming that she had a right it should be presumed that she had acquiesced the same as she never claimed share and the right of reopening of the partition has lapsed by limitation.
4. We have considered the rival submissions. There is no dispute with regard to the immovable properties. The dispute is only with regard to the movable properties. The movable property was partitioned between the deceased and his three sons each getting 1/4th share. In the said partition no share was allotted to the wife of the deceased. The wife is entitled to a share when there is partition between her husband and his sons, as per Northern School of Hindu Law. Thus her right to a share must be taken to accrue at the partition made even though she has not claimed any share at that time. In the instant case she will be entitled to 1/5th share. Though the deceased was the sole coparcener of the smaller HUF, still she had a right to a share of 1/5th in the movable property which the deceased obtained in partition. The property that passed on the death of the deceased was 4/5th in the estate on partition as 1/5th belonged to his wife. Hence 1/5th of the movable property held by the deceased has to be excluded from the principal value of the estate as it belonged to the wife of the deceased.
5. In CED v. Smt. Rani Bahu [1983] 142 ITR 843 (MP) (FB), C, the deceased, his wife and four sons had constituted a Hindu undivided faimly. In 1950 there had been a partition. In that partition the wife was not given a share. After the partition the deceased 'C' and his wife constituted as members of a smaller HUF. The deceased died in 1967. The accountable person claimed that only half share passed on the death of the deceased 'C'. This was accepted by the Tribunal and on reference, a Full Bench of the Madhya Pradesh High Court held that the property that passed on 'C's' death was only his 5/6th share which he held at the time of his death, the reason being that 1/6th of this estate was held by the deceased's wife, and estate duty could be charged only on 5/6th share. At page 848 it was held as under :
Thus, her right to share must be taken to accrue immediately a 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 the property is actually divided, but arises even at the stage when shares in the property are declared by a preliminary decree. Therefore, the moment the preliminary decree for partition was passed in the suit the right to share in the property accrued.
As already noticed, in Bhawar Singh's case AIR 1972 MP 204, the wife was not impleaded in the suit and the preliminary decree did not mention her at all. Even so, it was held that this did not make any distinction and the principle enunciated in Munnalal's case AIR 1962 SC 1493, applied. The same principle, in our opinion, must be applied when the partition effected is not through the agency of the court, but by the act of parties. The partition in the instant case was effected by a deed of surrender executed on November 11, 1950. The wife was entitled to 1/6th share in the joint family property that was divided in the said partition between the deceased and his sons and a grandson of a predeceased son. The surrender deed did not mention her at all and no share was allotted to her. This fact, however, did not deprive the wife in getting the right to her share which she could have enforced by instituting a suit for reopening the partition. The right to get 1/6th share in the joint family estate which accrued to her at this stage was property within the meaning of s. 14 of the Hindu Succession Act and vested in her absolutely from the date of commencement of the Act. This right to get 1/6th share was in the entire property which after the partition, came separately in the hands of the deceased and the three sons and a grandson.
The wife did not sue for partition. She lived as a member of the joint Hindu family with her husband, the deceased. She was not a coparcener. The deceased was the sole coparcener in this family but still in view of the change in the law, brought about by the Hindu Succession Act, she had a right to share 1/6th in the property which the deceased obtained in partition. The property that passed on the death of the deceased within the meaning of s. 5 of the E.D. Act was only his 5/6th share in the estate that he got on partition and which he held at the time of his death, the reason being that 1/6th of this estate was held by the deceased's wife, the accountable person. The estate duty could not be charged on the whole of the estate but only on 5/6ths which passed on the death of the deceased under s. 5. Even applying s. 7 and s. 39, the same result follows. The coparcenary interest held by the deceased could not include the interest which was held by wife and had there been a partition between the deceased and his wife immediately before his death, the wife would have got 1/6th share. The Tribunal was, however, wrong in holding that the interest of the wife was one half in the estate which came to the deceased on partition and that only half of the property would be deemed to have passed on the death of the deceased.
Again at page 849 it was held as under :
The learned standing counsel also referred to the circumstances that the wife did not claim any share or sue for partition during the lifetime of the deceased. This fact, in our opinion, would not make any difference. There was no case of relinquishment advanced by the Department in the courts below. Merely by standing by or by not raising any objection, a woman does not lose her right to get a share and such a conduct does not amount to acquiescence or relinquishment. It was so held by the Privy Council in Ganesh Dutt Thakoor v. Jewach Thakoorain [1904] ILR 31 Cal. 262. This case was followed by our court in Radhabai's case AIR 1941 Nag. 135. Very often in such cases no one has the knowledge that the woman has any right to a share. In the absence of such a knowledge it is difficult to make out a case of acquiescence or relinquishment. It is true that the wife did not sue for partition even though nearly 17 years had passed after the partition but from that also no inference against her can be raised. One does not know whether the deceased or the sons were denying the right of the wife. May be that they were willing, had the wife claimed her share, to part with the share to which she was rightfully entitled. We cannot give any finding on mere guesswork and if the Department wanted to rely upon acquiescence or relinquishment or cesser of right by lapse of limitation, specific pleas to that effect should have been taken during the course of assessment and findings obtained on those questions. The Department cannot be allowed before us to argue the case of acquiescence, relinquishment or cesser of right by lapse of limitation.
The above ratio would squarely apply to the instant case. In the above case it was also held that the deceased was the sole coparcener of the family but still in view of the change in the law brought about by enactment of the Hindu Succession Act she had a right to share 1/6th in the property which the deceased obtained in partition and the property that passed on the death of the doceased was only his 5/6ths share that he got on partition as 1/6th of this estate was held by the deceased's wife. Merely because the wife did not sue for partition though 17 years had passed after the partition, no inference can be drawn against her and she does not lose her right to get a share and such a conduct does not amount to acquiescence or relinquishment and the department cannot be allowed to argue a case of acquiescence or relinquishment or cesser of right by lapse of limitation as such a stand has not been taken during the course of assessment proceedings. The above observations would clearly answer the objections raised by the revenue. The above position also negatives the claim of the accountable person that the deceased had half share and his wife had half share in the movable property. The above decision was followed by the same Court in CED v. Kanhaiyalal [1983] 142 ITR 868 (MP). In that case also the deceased, his wife and his son constituted as members of the HUF. There was a partition in 1952 and in the said partition wife was not given a share. The deceased died in 1966. The accountable person claimed that on the death of the deceased only half share was held by the deceased and the other half belonged to the wife of the deceased. This contention was not accepted. The High Court held that the wife of the deceased had 1/3rd share in the entire joint family estate which she was entitled to at the time of the partition because the deceased, his son and wife constituted a joint family and, therefore, in the estate held by the deceased the wife had 1/3rd share which did not pass on the death of the deceased. What papsed on the death of the deceased is the 2/3rds share which the deceased had in the property held by him. The decision of the Gujarat High Court in Bhimraj Saremal's case (supra) is distinguishable as in that case 'S', his two sons B and J, his wife V and his minor daughter L constituted the members of the HUF and in the partition agreement B and J had separated accepting cash and shares in companies and V and S were only-owners of the balance of the property. On the facts of that case, it was held by the Gujarat High Court that para 3 of the partition deed provided for allotment of properties between each of the two sons of S on the one hand and 'S' and his wife on the other and S and his wife were the sole owners of the properties in question. Thus it was held that the deceased 'S' and his wife held the properties allotted to them as tenants in common each having half share therein and only the half share of S in the properties would pass on his death. In the instant case there is nothing to prove that at the time of partition of the movable properties that the 1/4th share allotted to the deceased was to be held by the deceased and his wife as owners whereas in the above case there was a clear provision in the partition agreement that V & S were the owners of the property allotted to them each having half share therein. Thus the above decision has no application to the facts of the instant case. Thus in our view the deceased held 4/5th share in the movable property allotted to him in partition and the 1/5th share belonged to the wife of the deceased. Hence we direct the Assistant Controller to charge estate duty only on 4/5th of the movable property held by the deceased on the date of his death as the balance 1/5th belonged to the wife of the deceased. Thus 1/5th which belonged to the deceased's wife cannot be included in the principal value of the estate.
6. In the result, E.D.A. 30 is dismissed while E.D.A. 35/Hyd/86 is partly allowed.