Supreme Court of India
COMMISSIONER OF WEALTH TAX, KANPUR ETC. ETC.versusCHANDER SEN ETC.
- Citation
- 1986 INSC 143
- Decided
- 16 July 1986
- Disposal
- Dismissed
- Bench
- R S PATHAK
Holding
Under Section 8 of the Hindu Succession Act, 1956, the father’s property devolves on the son in his individual capacity, not as Karta of his own HUF, so the inherited sums belong to Chander Sen individually and the interest is deductible.
Summary
Rangi Lal and his son Chander Sen formed a Hindu undivided family (HUF) that later underwent a partial partition, after which Rangi Lal died leaving a credit balance in the firm’s books. Chander Sen, who had his own HUF with his sons, claimed that the balance and its interest were his individual inheritance and excluded them from his family’s wealth tax return, while also seeking a deduction for the interest under the Income‑Tax Act. The Wealth‑Tax Officer treated the amounts as family wealth and the Income‑Tax Officer disallowed the deduction. The appellate authorities held the amounts were individually owned and allowed the deduction. The Supreme Court examined the effect of Sections 8, 4 and 19 of the Hindu Succession Act, 1956 and held that property inherited by a son from a father who died intestate devolves in the son’s individual capacity, not as Karta of his own HUF; consequently the sums belong to Chander Sen individually and the interest is an allowable deduction.
Issues considered
- Whether property inherited by a son from his father after a partition forms part of the son’s Hindu undivided family property or remains his individual property under the Hindu Succession Act, 1956.
- Whether income arising from such inherited assets is assessable in the hands of the son’s HUF or individually.
- Whether interest on the inherited capital is allowable as a deduction under the Income‑Tax Act.
Legislation cited
- Hindu Succession Act, 1956s. 19, s. 4, s. 8
- Income Tax Act, 1961
- Wealth Tax Act, 1957s. 3, s. 4
Subjects
Hindu Succession ActSection 8HUFWealth TaxIncome TaxInheritancePartitionKartaIndividual capacityDeduction
Judgment
A
COMMISSIONER OF WEALTH TAX, KANPUR ETC. ETC.
v.
CHANDER SEN ETC.
B
JULY 16, 1986
IRS. PATHAK AND SABYASACHI MUKHARJI, JJ.]
Hindu Succession Act, 1956-ss. 4, 8 and 19-Property of father
who dies intestate-Whether devolves on son, who separated by parti-
c tion from his father, in individual capacity or Kart a of his HUF.
Wealth Tax Act, 1957--ss. 3 and 4-Property inherited under s. 8 .Ji
Hindu Succession Act, 1956-Whether HUF or individual property.
D Income Tax Act, 1961/Income Tax Act, 1922-Income from as-
sets inherited by son from father-Whether assessable as individual
income.
Rangi Lal and his son Chander Sen constituted a Hindu undivided
family. They had some immovable property and the family business. By a
E partial partition the HUF business was divided between the two and
thereafter it was carried on by a partnership consisting of the two. The
house property of the family continued to remain joint. 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 mother and
wife of Rangi Lal having pre-deceased him, when he died he left behind
F him his only son Chander Sen and his grandsons. On his death there was
a credit balance of Rs.1,85,043 in his account in the books of the firm.
In the wealth tax assessment for the assessment year 1966-67,
Chander Sen, who constituted a joint family with his own sons, filed a
return of his net-wealth by including the property of the family which
G on the deathofRangi Lal passed on to him by survivorship and, also the
assets of the business which devolved upon him on the death of his
father. The sum of Rs.1,85,043 standing to the credit ofRangi Lal was, \
however; not included in the net-wealth of the assessee-family. Sim.i-
larly, in the wealth tax assessment for the assessment year 1967-68 a
sum of Rs.1,82, 742 was not included, in the net wealth of the assessee-
H family. u was contended that these amounts devolved on Chander Sen
COMMR. OF WEALTH TAX v. C. SEN 255
A
in his individual capacity and were not the property of the assessee-
family. The Wealth-tax Officer did not accept this contention and held
that these sums also belonged to the assessee-famil~.
A sum of Rs. 23,330 was also credited to the account of late Rangi
Lal on account of interest accruing on his credit balance. In the pro- B
ceedings under the Income Tax Act for the assessment year 1967-68 this
l sum was claimed as deduction on the same ground. The Income-tax
Officer disallowed the claim on the ground that it was a payment made
by Chander Sen to himself.
On appeal, the Appellate Assistant Commissioner of Income-tax c
accepted the assessee's claim in full and held that the capital in the
name of Rangi Lal devolved on Chander Sen in his individual capacity
and as such was not to be included in the wealth of the assessee family.
The sum of Rs.23,330 on account of interest was also directed to be
allowed as deduction.
D
The Income-tax ~pellate Tribunal dismissed the appeals filed by
the Revenue and its orders were affirmed by the High Court.
On the question: "Whether the income or asset which a son in-
herits from his father when separated by partition should be assessed as
income of the Hindu Undivided Family consisting of his own braqch E
including his sons or his individual income", dismissing the appeals and
Special Leave Petition of the Revenue, the Court,
HELD: 1. The sums standing to the credit of Rangi Lal belong to
Chander Sen in his individual capacity and not the Joint Hindu Family.
The interest of Rs.23,330 was an allowable deduction in respect of the F
income of the family from the business. [268C-D]
2 .1 Under s. 8 of the Hindu Succession Act, 195,, the property of
the father who dies intestate devolves on his son in bis individual capa-
city and not as Karta of his own family. Section 8 lays down the scheme
of succession to the property of a Hindu dying intestate. The Schedule G
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 g~andfather under the provision. [265F-G J
H
256 SUPREME COURT REPORTS 11986) 3 S.C.R.
A 2. 2 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". So construed, s. 8 of the Act should
B be taken as a self-contained provision laying down the scheme of de-
volution 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. i265G-il:; 266A-C I
c 2.3 The Preamble to the Act states that it was an Act to amend
and codify the law relating to intestate succession among Hindus.
Therefore, it is not possible when the Schedule indicates heirs in class I
and only includes son and does not include son's son but does include
son of a predeceased-son, to say that when son inherits the property in
I D the situation contemplated by s. 8, he takes it as Karla of his own
undivided family. l267C-D)
2.4 The Act makes it clear bys. 4 that one should look to the Act
in case of doubt and not to the pre-existing Hindu law. It would be
difficult to hold today that the property which devolved on a Hindu
E under s. 8 of the Act would be HUF in his hand vis-a-vis his own son;
that would amount fo creating two classes among the heirs mentioned in
class I, the male heirs in whose hands it will be joint Hindu family
property and vis-a-vis sons and female heirs with respect to whom no
such concept could be applied or contemplated. [267E-G I
F 2.5 Under the Hindu law, the property ofa male Hindu devolved
on his death on his sons and the grandsons as the grandsons also have an
interest in the property. However, by reason ofs. 8 of the Act, the son's
son gels excluded and the son alone inherits the property to the exclu-
sion of his son. As the effect of s. 8 was directly derogatory of the law
established according to Hindu law, the statutory provisions must pre-
G vail in view of the unequivocal intention in the statute itself, expressed
in s. 4(1) which says that to the extent to which provisions have been
made in the Act, those provisions shall override the established provi-
sions in the texts of Hindu Law. [264G-H; 265A-BJ
2.6 The intention to depart from the pre-existing Hindu law was
again made clear by s. 19 of the Hindu Succession Act which stated that
COMMR. OF WEALTH TAX v. C. SEN !MUKHARJI, J.) 257
if two or more heirs succeed together to the property of an intestate, they A
shonld take the property as tenants-in-common and not as joint tenants
and according to the Hindu law as obtained prior to Hindu Succession
Act two or more sons succeeding to their father's property took a joint
tenants and not tenants-in-common. The Act, however, has chosen to
provide expressly that they shonld take as tenants-in-common. Accord- B
ingly the property which devolved upon heirs mentioned in class I of the
l
Schedule nnder s. 8 coustitnted the absolute properties and his sous have
no right by birth in snch properties. [266F-H)
Commissioner of Income-tax, U.P. v. Ram Rakshpal, Ashok
Kumar, 67 I.T.R. 164; Additional Commissioner of Income-tax, Madras
v. P. L. Karuppan Chettiar, 114 I. T .R. 523; Shrivallabhdas Modani v. c
Commissioner of Income-Tax, M.P-1., 138 I.T.R. 673 and Commis-
sionerofWealth-Tax A.P. Ilv. Mukundgirji, 144 I.T.R.18, approved.
Commissioner of Income-tax, Gujarat-I v. Dr. Babubhai Man-
sukhbai (Deceased), 1081.T.R. 417,overruled. D
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1668-
70 of 1974 etc.
From the Judgment and Order dated 17.8.1973 of the Allahabad
High Court'in W.T. Reference No. 371of1971 and I.T. Reference No. E
452of1971.
V.S. Desai, and Miss A. Subhashini for the Appellants.
P.K. Mukharjee and A.K. Sengupta for the Respondents.
F
The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. These appeals arise by special
leave from the decision of the High Court of Allahabad dated 17th
August, 1973. Two of these appeals are in respect of assessment years
1966-67 and 1967-68 arising out of the proceedings under the Wealth G
Tax Act, 1957. The connected reference was under the Income-Tax
Act, 1961 and related to the assessment year 1968-69. A common ques-
tion of law arose in all these cases and these were disposed of by the
High Court by a common judgment.
One Rangi Lal and his son Chander Sen constituted a Hindu H
258 SUPREME COURT REPORTS 11986] 3 S.C.R.
A 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 fatherand 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
B
their share of income. The house property of the family continued to
remain joint. On July 17, 1965, Rangilal 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
c 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 <md 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
D
Chander Sen (hereinafter referred to as 'the assessee-family') on the
ground that this amount devolved on Chander Sen in his individual capa-
city 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.
E
At the close of the previous year ending on October22, 1962, relating
to the assessment year 1967-68, a sum of Rs.23,330 was credited to the
account of late Rangi Lal on account of interest accruing on his credit
balance. In the proceedings under the Income-tax Act for the assessment
year 1967-68, the sum of Rs. 23,330 was claimed as deduction. It was
alleged that interest was due to Chander Sen in his individual capacity and
F
was an allowable deduction in the computation of the business income of
the assessee-faimly. At the end of the year the credit balance in the account
of Rangi Lal stood at Rs.1,82,742 which was transferred to the account of
Chander Sen. In the wealth-tax assessment for the assessment year 1967-
68, it was claimed, as in the earlier year, that the credit balance in the
account of Rangi Lal belonged to Chander Sen in his individual capacity
G
and not to the assessee-family. The Income-tax Officer who completed the
assessment disallowed the claim relating to interest on the ground that it \
was a payment made by Chander Sen to himself. Likewise, in the wealth-
tax assessment, the sum of Rs. l,82,742 was included by the Wealth-tax
Officer in the net wealth of the assessee-family. On appeal the Appellate
H Assistant Commissioner of Income-tax accepted the assessee's claim in
COMMR. OF WEALTH TAX v. C. SEN [MUKHARJI, J.[ 259
/
,,. full. He held that the capital in the name of Rangi Lal luded in the wealth of A
the assessee-family. He also directed that in the income-tax assessment the
sum of Rs.23,330 on account of interest should be allowed as deduction.
The revenue felt aggrieved and filed three appeals before the Income-tax
Appellate Tribunal, two against the assessments under the Wealth-tax Act
for the assessment years 1966-67 and 1967-68 and one against the assess- B
ment under Income-tax Act for the assessment year 1967-68. The Tribunal
l
"
dismissed the revenue's appeals.
The following question was referred to the High Court fot its
opinion:
c
"Whether, on the facts and in the circumstances of the
case, the conclusion of the Tribunal that the sum of
Rs. l,85,043 and Rs.1,82,742 did not constitute the assets of
the assessee-Hindu undivided family is correct?"
Similarly in the reference under the Income-tax Act, the follow- D
ing question was referred:
"Whether, on the facts and in the circumstances of the
case, the interest of Rs,23,330 is allowable deduction in the
computation of the b_usiness profits of the assessee joint
family?" E
The answer to the questions would depend upon whether the
amount standing to the credit of late Rangi Lal was inherited, after his
death, by Chander Sen in his individual capacity or as a Karta of the
assessee-joint family consisting of himself and his sons.
F
The amount in question represented the capital allotted to Rangi
Lal on partial partition and accumulated profits earned by him as his
share in the firm. While Rangi Lal was alive this amount could not be
said to belong to any joint Hindu family and qua Chander Sen and his
sons, it was the separate property of Rangi Lal. On Rangi Lal's death
G
the amount passed on to his son, Chander Sen, by inheritance. The
; High Court was of the opinion that under the Hindu Law when a son
\ inherited separate and self-acquired property of his father, it assumed -
the character of joint Hindu family property in his hands qua the
members of his own family. But the High Court found that this princi-
ple has been modified by section 8 of the Hindu Succession Act, 1956. H
260 SUPREME COURT REPORTS [1986) 3 S.C.R.
A 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
B 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.
The High Court in the judgment under appeal relied on a bench
c decision of the said High Court rendered previously. Inadvertently, in
the judgment of the High Court, it had been mentioned that the judg-
ment was in Khudi Ram Laha v. Commissioner of Income-tax U.P, 67
I.T.R. 364. but that was a case which dealt with entirely different
problem. The decision which the High Court had in mind and on which
D in fact the High Court relied was a decision in the case of Commis-
sioner of Income-tax, U. P. v. Ram Rakshpa/, Ashok Kumar, 67
l.T.R. 164. In the said decision the Allahabad High Court held that in
view of the provisions of the Hindu Succession Act, 1956, the income
from assets inherited by a son from his father from whom he had
separated by partition could not be assesssed as the income of the
E Hindu undivided family of the son. The High Court relied on the
commentary in Mulla's Hindu Law, Thirteenth Edition page 248. The
High Court also referred to certain passages from Dr. Derret's
"Introduction to Modern Hindu Law" (paragraph 411, at page 252).
Reliance was also placed on certain observations of this Court and the
Privy Council as well as on Mayne's 'Hindu Law'. After discussing all
F these aspect; the Court came to the conclusion that the position of the
Hindu Law was that partition took away by way of coparcenary the
character ot .coparcener property which meant that the share of
another coparcener upon the divisions although the property obtained
by a coparcener by a partition continued to be coparcenary property
for him and his unseparated issue. In that case what had happened
G was one Ram Rakshpal and his father, Durga Prasad, constituted a
Hindu undivided family which was assessed as such. Ram Rakshpal
separated from his father by partition on October 11, 1948. The.reafter
Ram Rakshpal started business of his own, income whereof was asses-
sed in the hands of the assessee-family, Shri Durga Prasad also started
business of his own after partition in the name and style of M/s
H Murlidhar Mathura Prasad which was carried on by him till his death.
COMMR. OF WEALTH TAX v. C. SEN [MUKHARJI, J.J 261
~ Durga Prasad died on March 29, 1958 leaving behind him his widow, A
Jai Devi, his married daughter, Vidya Wati and Ram Rakshpal and
Ram Rakshpal's son, Ashok Kumar, as his survivors. The assets left
behind by Durga Prasad devolved upon three of them in equal shares
by s11ccession under the Hindu Succession Act, 1956. Vidya Wati took
away her 1/3rd share, while Jai Devi and Shri Ram Rakshpal con- B
tinued the aforesaid business inherited by them in partnership with
l
effect from April, 1, 19.58 under a partnership deed dated April 23,
1958. The said firm was granted registration for the assessment year
1958-59. The share of profit of Shri Ram Rakshpal for the assessment
., year under reference was determined at Rs.4,210. The assessee-family
contended before the Income-tax Officer that this profit was the
personal income of Ram Rakshpal and could not be taxed in the hands c
of the Hindu undivided family of Ram Rakshpal, and held that Ram
Rakshpal contributed his ancestral funds in the partnership business of
·j.. Murli Dhar Mathura Prasad and that, hence, the income therefrom
was taxable in the hands of the assessee family. The High Court finally
held on these facts in C./. T v. Ram Rakshpal (supra) that the assets D
of the business left by Durga Prasad in the hands of Ram Rakshpal
would be governed by section 8 of the Hindu Succession Act, 1956.
The High Court in the Judgment under appeal was of the opinion
.\, that the facts of this case were identical with the facts in the case of
Commissioner of Income-tax, U.P. (supra) and the principles applic- E
able would be the same. The High Court accordingly answered the
question in the affirmative and in favour of the assessee so far as
assessment of wealth-tax is concerned. The High Court also answered
necessarily the question on the income-tax Reference affirmatively and
in favour of the assessee.
F
The question here, is, whether the income or asset which a son
inherits from his father when separated by partition the same should
be assessed as income of the Hindu undivided family of son or his
individual income. There is no dispute among the commentators on
Hindu Law nor in the decisions of the Court that under the Hindu Law
as it is, the son would inherit the same as karta of his own family. But G
t '
the question, is, what is the effect of section 8 of the Hindu Succession
Act, 1956? The Hindu Succession Act, 1956 lays down the general
rules of succession in the case of males. The first rule is that the
property of a male Hindu dying intestate shall devolve according to the
provisions of Chapter II and class I of the Schedule provides that if
there is a male heir of class I then upon the heirs mentioned in class I of H
262 SUPREME COURT REPORTS [19861 3 S.C.R.
A the Schedule. Class I of the Schedule reads as follows:
"Son; daughter; widow; mother; son of a pre-deceased
son; daugther of a predeceased son; son of a pre-deceased
daughter, daughter of a pre-deceased daughter; widow of
a pre-deceased son; son of a pre-deceased son of a
B
pre-deceased son; daughter of a pre-deceased son of a pre-
deceased son; widow of a pre-deceased son of a pre-
deceased son."
The heirs mentioned in class I of the Schedule are son, daughter
etc.· including the son of a pre-deceased son but does not include
c specifically the grandson, being a son of a son living. Therefore, the
short question, is, when the son as heir of class I of the Schedule
inherits the property, does he do so in his individual capacity or does
he do so as karta of his own undivided family? -1··
D Now the Allahabad High Court has noted that the case of Com-
missioner o/ 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 attemp-
ted to be achieved by a piece of legislation when interpreting the clear
words of the enactment. The learned judges observed referring to the
E
observations of Mulla's Commentary on Hindu Law, and the provi-
sions 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 go vemed 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
F Hindu Succession Act. Section 4 of the said Act provides for overrid-
ing 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
G
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
H survivorship upon the surviving members of the coparcenary and not
) COMMR. OF WEALTH TAX v. C. SEN [MUKHARJI, J.[ 263
-r in accordance with the Act. The proviso indicates that if the deceased A
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 sue-
cession, as the case may be, under this Act and not by survivorship. B
l Section 19 of the said Act deals with the mode of succession of
two or more hei."S. If two or more heirs succeed together to the pro-
perty of an intestate, they shall take the property per capita and not per
stripes and as tenants-in-common and not as joint tenants.
Section 30 stipulates that any Hindu may dispose of by will or c
other testamentary disposition any property, which is capable of being
j.-- so disposed of by him in accordance with the provisions of the Indian
Succession Act, 1925.
It is clear that under the Hindu law, the moment a son is born, he D
gets a share in the father's property and becomes part of the comparce-
nary. His right accrues to him not on the death of the father or
inheritance from the father but with the very fact of his birth. Nor-
mally, therefore whenever the father gets a property from whatever
source from the grandfaiher or from any other source, be it separated
property or not, his son should have a share in that and it will become
E
part of the joint family of his son and grandson and other members
who form joint Hindu family with him. But the question is; is the
position affected by section 8 of the Succession Act, 1956 and if so,
how? The basic argument is that section 8 indicates the heirs in respect
of certain property and class I of the lleirs includes the son but not the
grandson. It includes, however, !he son of the predeceased son. It is F
this position which has mainly induced the Allahabad High Court in
the two judgments, we have noticed·, to take the view that the income
from the assets inherited by son from his father from whom he has
separated by partition can be assessed as income of the son individu-
ally. Under section 8 of the Hindu Succession Act, 1956 the property
of the father who dies intestate devolv~s on his son in his individual G
capacity and not as karta of his own family. On the other hand, the
I Gujarat High Court has taken the contrary view.
In Commissioner of Income-tax, Gujarat-Iv. Dr. Babubhai Man-
sukhbhai (Deceased), 108 l.T.R. 417 the Gujarat High Court held that
in the case of Hindus governed by the Mitakshara law, where a son H
264 SUPREME COURT REPORTS [1986] 3 S.C.R.
A inherited the self-acquired property of his father, the son took it as the
joint, family property of himself and his son and not as his separate
property. The correct status for the assessment to income-tax of the son
in respect of such~property was as representing his Hindu undivided
family. The Gujarat High Court could not accept the view of the
B Allahabad High Court mentioned hereinbefore. The Gujarat High Court
dealt with the relevant provisions of the Act including section 6 and
referred to Mulla's Commentary and some other decisions.
Before we consider this question further, it will be necessary to
refer to the view of the Madras High Court. Before the full bench of
Madras High Court in Additional Commissioner of Income-tax,
c Madras v. P.L. Karappan Chettiar, 114 l.T.R. 523, this question
arose. There, on a partition effected on March 22, 1954, in th•~ Hindu
undivided family consisting of P, his wife, their sons, K and their
daughter-in-law, P was allotted certain properties as and for this share
and got separated. The partition was accepted by the revenue under
D section 25A of the Indian Income-tax Act, 1922. K along with his wife
and their subsequently born children constituted a Hindu undivided
family which was being assessed in that status. P died on September 9,
1963, leaving behind his widow and divided son, K, who was the karta
of his Hindu undivided family, as his legal heirs and under section 8 of
the Hindu Seccession Act; 1956, the Madras High Court held, that
E thes,e two persons succeeded to the properties left by the deceased, P,
and divided the properties among themselves. In the assessment made
on the Hindu undivided family of which K was the karta, for the
asssessment year 1966-67 to 1970-71, the Income-tax Officer included
for assessment the income received from the properties inherited by K
from his father, P. The inclusion was confirmed by the Appellate
F Assistant Commissioner but, on further appeal, the Tribunal held that
the properties did not fonn part of the joint family properties and hence
the income therefrom could not be assessed in the hands of the family.
On a reference to the High Court at the instance of the revenue, it was
held by the Full bench that under the Hindu law, the property of a
male Hindu devolved on his death on his sons and grandsons as the
G grandsons also have an interest in the property. However, by reason of
section 8 of the Hindu Succession Act, 1956, the son's son gets ex-
cluded and the son alone inherits the property to the exclusion of his \
son. No interest would accrue to the grandson of P in the property left
by him on his death. As the effect of section 8 was directly derogatory
of the law established according to Hindu law, the statutory provision
H must prevail in view of the unequivocal intention in the statute itself,
COMMR. OF WEALTH TAX v. C. SEN [MUKHARJI, J.] 265
l
~ expressed in section 4(1) which says that to the extent to which provi- A
sions have been made in the Act, those provisions shall override the
established provisions in the texts of Hindu law. Accordingly, in that
case, K alone took the properties obtained by his father, P, in the
partition between them, and irrespective of the question as to whether
it was ancestral property in the hands of Kor not, he would exclude his B
son. Further, since the existing grandson at the time of the death of the
l
grandfather had been excluded, an after-born son of the son will also
not get any interest which the son inherited from the father. In respect
of the property obtained by K on the death of his father, it is not
possible to visualise or envisage any Hindu undivided family. The High
Court held that the Tribunal was, therefore, correct in holding that the
properties inherited by K from his divided father constituted his sepa- c
rate and individual properties and not the properties of the joint family
consisting of himself, his wife, sons and daughters and hence the in-
come therefrom was not assessable in the hands of the assessee-Hindu
undivided family. This view is in consonance with the view of the
Allahabad High Court noted above. D
The Madhya Pradesh High Court had occasion to consider this
aspect in Shrivallabhdas Modani v. Commissioner of Income-Tax,
M.P.-1, 138 l.T.R. 673, and the Court held that if there was no copar-
cenary 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
E
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
F
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
G
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 grand-
father'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 H
266 SUPREME COURT REPORTS [1986] 3 S.C.R.
A 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
B 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 consti-
tute 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.
c
The Andhra Pradesh High Court in the case of CommiSJ'ioner of
Wealth-Tax, A.P.-/1 v. Mukundgirji, 144 I.T.R. 18, had also to consider
the aspect. It held that a perusal of the Hindu Succession Act, 1956 ~-
would disclose that Parlimnent wanted to make a clean break from the
D old Hindu law in certain respects consistent with modern and egalita-
rian concepts. For the sake of removal of any doubts, therefore, sec-
tion 4(l)(a) was inserted. The High Court was of the opinion that it
would, therefore, not be consistent with the spirit and object of the
enactment to strain provisions of the Act to accord with the prior
notions and concepts of Hindu law. That such a course was not possi-
E ble was made clear by the inclusion of females in class I of the
Schedule, and according to the Andhra Pradesh High Court, to hold
that the property which devolved upon a Hindu under section 8 of the
Act would be HUF property in his hands vis-a-vis his own sons would
amount to creating two classes among the heirs mentioned in class I,
viz., the male heirs in whose hands it would be joint fmnily property
F vis-a-vis their sons; and female heirs with respect to whollJ no such
concept could be applied or contemplated. The intention to depart
from the pre-existing Hindu law was again made clear by section 19 of .>
the Hindu Succession Act which stated that two or more heirs succeed
together to the property of an intestate, they should take the property
as tenants-in-common and not as joint tenants and according to the
G Hindu ]aw as obtained prior to Hindu Succession Act two or more sons
succeeding to their father's property took a joint tenants and not
Tenants-in-common. The Act, however, has chosen to provide expres-
sly that they should take as tentants-in-common. Accordingly the
property which devolved upon heirs -mentioned in class I of the
Schedule under section 8 constituted the absolute properties and his
H sons have no right by birth in such properties. This decision, however,
COMMR. OF WEALTH TAX v. C. SEN [MUKHARJI, J.] 267
is under appeal by certificate to this Court. The aforesaid reasoning of A
the High Court appearing at pages 23 to 26 of Justice Reddy's view in
1441. T.R. appears to be convincing.
We have noted the divergent views expressed on this aspect by
the Allahabad High Court, Full Bench of the Madras High Court, B
Madhya Pradesh and Andhra Pradesh High Courts on one side and the
Gujarat High Court on the other.
It is necessary to bear in mind the Preamble to the Hindu Succes-
sion Act, 1956. The Preamble states that it was an Act to amend and
codify the law relating to intestate succession among Hindus.
c
In view of the preamble to the Act, i.e., that to modify where'
necessary and to codify the law, in our opinion it is not possible when
Schedule indicates heirs in class I and only includes son and does not
include son's son but does include son of a predeceased son, to say that
when son inherits the property in the situation contemplated by sec- D
tion 8 he takes it as karta of his own undivided family. The Gujarat
High Court's view noted above, if accepted, would mean that though
the son of a predeceased son and not the son of a son who is intended
to be excluded under section 8 to inherit, _the latter would by applying
the old Hindu law get a right by birth of the said property contrary to
the scheme outlined in section 8. Furthermore as noted by the Andhra E
Pradesh High Court that the Act makes it clear by section 4 that one
should look to the Act in case of doubt and not to the pre-existing
Hindu law. It would .be difficult to hold today the property which
devolved on a Hindu under section 8 of the Hindu Succession would be
HUF in his hand vis-a-vis his own son; that would amount to creating
two classes among the heirs mentioned in class I, the male heirs in F
whose hands it will be joint Hindu family property and vis-a-vis son
and female heirs with respect to whom no such concept could be ap-
plied or contemplated. It may be mentioned that heirs in class I of
Schedule under section 8 of the Act included widow, mother, daughter
of predeceased son etc.
G
Before we conclude we may state that we have noted the oberva-
tions of Mulla's Commentary on Hindu law 15th Edn. dealing with
j
section 6 of the Hindu Succession Act at page 924-26 as well as
' Mayne's on Hindu Law, 12th Edition pages 918-919.
The express words of section 8 of The Hindu Succession Act, H
268 SUPREME COURT REPORTS [1986] 3 S.C.R.
A
1956 cannot be ingorned and must prevail. The preamble to the Act
reiterates that the Act is, inter alia, to 'amend' the law, with that
+-
background the express language which excludes son's son but in-
cluded son of a predeceas1~d son cannot be ignored.
B In the aforesaid light the views expressed by the Allahabad High
Court, the Madras High Court, Madhya Pradesh High Court, and the
Andhra Pradesh High Court, appear to us to be correct. With respect
we are unable to agree with the views of the Gujarat High Court noted
hereinbefore.
In the premises the judgment and order of the Allahabad High
c Court under appeal is affirmed and the appeals Nos. 1668-1669 of 1974
·are dismissed with costs. Accordingly Appeal No. 1670 of 1974 in
Income-tax Reference which must follow as a consequence in view of
the findings that the sums standing to the credit of Rangi Lal belongs
to Chander Sen in his individual capacity and not the joint Hindu
D family, the interest of Rs. 23,330 was an allowable deduction in respect
of the income of the family from the business. This appeal also fails
and is dismissed with cos1s.
The Special Leave Petition No. 5327 of 1978 must also fail and is
dismissed. There will be no order as to costs of this_
E
A.P.J. Appeals and Petition dismissed.
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