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One Rangi Lal and his son Chander Sen constituted a Hindu undivided family. This family had some immovable property and the business carried on in the name of Khushi Ram Rangi Lal. On October 10, 1961, there was a partial partition in the family by which the business was divided between the father and the son, and thereafter, it was carried on by a partnership consisting of the two. The firm was assessed to income-tax as a registered firm and the two partners were separately assessed in respect of their share of income. The house property of the family continued to remain joint. On July 17, 1965, Rangi Lal died leaving behind his son, Chander Sen, and his grandsons, i.e. the sons of Chander Sen. His wife and mother predeceased him and he had no other issue except Chander Sen. On his death there was a credit balance of Rs.1,85,043 in his account in the books of the firm. For the assessment year 1966-67 (valuation date October 3, 1965), Chander Sen, who constituted a joint family with his own sons, filed a return of his net wealth. The return included the property of the family which on the death of Rangi Lal passed on to Chander Sen by survivorship and also the assets of the business which devolved upon Chander Sen on the death of his father. The sum of Rs.1,85,043 standing to the credit of Rangi Lal was not included in the net wealth of the family of Chander Sen (hereinafter referred to as 'the assessee-family') on the ground that this amount devolved on Chander Sen in his individual capacity and was not the property of the assessee-family. The Wealth-tax officer did not accept this contention and held that the sum of Rs.1,85,043 also belonged to the assessee-family.

Section 8 of the said Act provides, inter alia, that the property of a male Hindu dying intestate devolved according to the provisions of that Chapter in the Act and indicates further that it will devolve first upon the heirs being the relatives specified in class I of the Schedule. Heirs in the Schedule Class I includes and provides firstly son and thereafter daughter, widow and others. It is not necessary in view of the facts of this case to deal with other clauses indicated in section 8 or other heirs mentioned in the Schedule. In this case as the High Court noted that the son, Chander Sen was the only heir and therefore the property was to pass to him only.

Now the Allahabad High Court has noted that the case of Commissioner of Income-tax, U.P. v. Ram Rakshpal, Ashok Kumar (supra) after referring to the relevant authorities and commentators had observed at page 171 of the said report that there was no scope for consideration of a wide and general nature about the objects attempted to be achieved by a piece of legislation when interpreting the clear words of the enactment. The learned judges observed referring to the observations of Mulla's Commentary on Hindu Law, and the provisions of section 6 of the Hindu Succession Act that in the case of assets of the business left by father in the hands of his son will be governed by section 8 of the Act and he would take in his individual capacity. In this connection reference was also made before us to section 4 of the Hindu Succession Act. Section 4 of the said Act provides for overriding effect of Act. Save as otherwise expressly provided in the Act, 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 the Act and any other law in force immediately before the commencement of the Act shall cease to apply to Hindus in so far it is inconsistent with any of the provisions contained in the Act. Section 6 deals with devolution of interest in coparcenary property and it makes it clear that when a male Hindu dies after the commencement of the Act having at the time of his death an interest in a Mitakshara coparcenary property, his interest in the property shall devolve by survivorship upon the surviving members of the coparcenary and not in accordance with the Act. The proviso indicates that if the deceased had left him surviving a female relative specified in class I of the Schedule or a male relative specified in that class who claims through such female relative, the interest of the deceased in Mitakshara coparcenary property shall devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivorship.

The Madhya Pradesh High Court had occasion to consider this aspect in Shrivallabhdas Modani v. Commissioner of Income-Tax, M.P.-I, 138 I.T.R. 673, and the Court held that if there was no coparcenary subsisting between a Hindu and his sons at the time of death of his father, property received by him on his father's death could not be so blended with the property which had been allotted to his sons on a partition effected prior to the death of the father. Section 4 of the Hindu Succession Act, 1956, clearly laid down that "save as expressly provided in the Act, 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 Act should cease to have effect with respect to any matter for which provision was made in the Act". Section 8 of the Hindu Succession Act, 1956 as noted before, laid down the scheme of succession to the property of a Hindu dying intestate. The schedule classified the heirs on whom such property should devolve. Those specified in class I took simultaneously to the exclusion of all other heirs. A son's son was not mentioned as an heir under class I of the schedule, and, therefore, he could not get any right in the property of his grandfather under the provision. The right of a son's son in his grandfather's property during the lifetime of his father which existed under the Hindu law as in force before the Act, was not saved expressly by the Act, and therefore, the earlier interpretation of Hindu law giving a right by birth in such property "ceased to have effect". The Court further observed that in construing a Codification Act, the law which was in a force earlier should be ignored and the construction should be confined to the language used in the new Act. The High Court felt that so construed, section 8 of the Hindu Succession Act should be taken as a self-contained provision lying down the scheme of devolution of the property of a Hindu dying intestate. Therefore, the property which devolved on a Hindu on the death of his father intestate after the coming into force of the Hindu Succession Act, 1956, did not constitute HUF property consisting of his own branch including his sons. It followed the full bench decision of the Madras High Court as well as the view of the Allahabad High Court in the two cases noted above including the judgment under appeal.