Judgment:
ASHOK BHAN, J. :
The ticklish question of law reproduced below, which has been referred to us at the instance of the assessee by the Tribunal, Amritsar Bench, Amritsar under s. 64(1) of the ED Act, 1953 (hereinafter referred to as the Act), has evoked divergent and diametrically different views from different High Courts of the country :
'Whether, in view of the facts and circumstances of the case, the Tribunal was legally justified in holding that the entire value of the properties belonging to the HUF was assessable to estate duty on death of Shri Telu Ram, Karta and sole Surviving co-parcener of his HUF' ?
2. One Telu Ram, the sole surviving co-parcener, who constituted a Hindu Undivided Family (hereinafter referred to as HUF) with his wife, died on 27th January, 1977. Wife, being the accountable person, after issuance of statutory notice, filed the estate duty return contending that the properties, both movable and immovable, were ancestral and the deceased who was governed by Mitakshara school of Hindu law constituted an HUF with his wife. It was claimed that half portion of the properties belonged to her and, therefore, only half of the HUF properties should be included in the estate passing on the death of the deceased. The Asstt. CED found that the deceased was the sole surviving co-parcener at the time of his death. He was competent to dispose of whole of the properties. Wife was entitled to claim maintenance only and could not claim partition of the HUF properties. The Asstt. CED held that whole of the properties passed on the death of the deceased and, therefore, included the entire estate of the deceased for levy of the estate duty.
Accountable person carried an appeal to the CED(A) who agreed with the conclusions of the Asstt. CED. It was held that the deceased, being the sole surviving co-parcener, had the right to dispose of the properties within the meaning of s. 6 of the Act. Wife could not claim partition and the provisions of the Hindu Succession Act, 1956 (hereinafter referred to as the Act of 1956) could not be helpful in determining the question of power of disposal of the properties by the sole surviving co-parcener. Appeal was dismissed.
In further appeal before the Tribunal, it was held that ss. 7 and 39 of the Act had no application and whole of the properties passed on the death of the deceased under the provisions of s. 6 of the Act. It was also held by the Tribunal that the provisions of the Act of 1956 had no relevance for deciding the issue under consideration. Plea raised and the appeal filed by the accountable person were rejected.
3. Mr. A. K. Mittal, learned counsel appearing for the accountable person, relying upon the decisions of the Bombay and Orissa High Courts in CED vs . P. G. Chaware : [1993]204ITR513(Bom) and Dulari Devi & Ors. vs . CED : [1995]211ITR524(Orissa) , respectively, vehemently contended that there can be a Hindu joint family consisting of the sole co-parcener with his wife. In the event of the death of either one of them, for computing the interest of the deceased in the HUF properties, s. 39 of the Act would apply and only that portion of the properties which would fall to the share of the deceased on a notional partition under s. 6 of the Act of 1956 immediately before the death of the deceased, would be the interest which would pass on the death of the deceased. Under s. 39(1) of the Act, there has to be a deemed partition for determining the share of the deceased in the HUF property.
As against this Mr. B. S. Gupta, senior advocate, appearing for the Department, with equal emphasis, relying upon the text of Hindu law and the judgments in CED vs . Smt. P. Leelavathamma : [1978]112ITR739(AP) ; CED vs . Smt. Ginni Devi Jain : [1993]204ITR110(Patna) ; CED vs. Smt. S. Harish Chandra (1980) 167 ITR 230; CED vs . Smt. Kalawati Devi : [1980]125ITR762(All) ; Ramratan vs . CED : [1983]142ITR863(MP) and P. Amirthavalli vs . CED : [1987]164ITR63(Mad) , contended that a wife, though can constitute a HUF which is a taxable unit under the IT Act, 1961 without there being two male members in the family, nonetheless, cannot claim partition of the HUF. Only a co-parcener could claim partition of the ancestral property. Wife has a right of maintenance only from the husband. The sole surviving coparcener has the absolute right over the property which he can dispose of as his self-acquired property. On his death, the whole of the property possessed by the HUF passes for the purposes of estate duty. It was argued that the Tribunal has taken the correct view and the question be answered in the affirmative, i.e. in favour of the Revenue. It was also argued by him that the Bombay and Orissa High Courts in P. G. Chawares case (supra) and Dulari Devis case (supra), respectively, have not taken the correct view and commended to us the contrary view taken by the other High Courts in Smt. P. Leelavathammas case (supra), Smt. Ginni Devi Jains case (supra), Smt. S. Harish Chandras case (supra), Smt. Kalawati Devis case (supra), Ramratans case (supra) and P. Amirthavallis case (supra).
4. Secs. 6, 7 and 39 of the ED Act, 1953, which would be relevant to the discussion, are reproduced below :
'Sec. 6. Property within disposing capacity. - Property which the deceased was at the time of his death competent to dispose of shall be deemed to pass on his death'.
Sec. 7. Interest ceasing on death. - (1) Subject to the provisions of this section, property in which the deceased or any other person had an interest ceasing on the death of the deceased shall be deemed to pass on the deceaseds death to the extent to which a benefit accrues or arises by the cesser of such interest, including, in particular, a coparcenary interest in the joint family property of a Hindu family governed by the mitakshara, marumakkattayam or aliyasantana law.
(2) If a member of a Hindu coparcenary governed by the mitakshara school of law dies, then the provisions of sub-s. (1) shall apply with respect to the interest of the deceased in the coparcenary property only :
(a) if the deceased had completed his eighteenth year at the time of his death, or
(b) where he had not completed his eighteenth year at the time of his death, if his father or other male ascendant in the male line was not a coparcener of the same family at the time of his death.
Explanation. - Where the deceased was also a member of a sub-coparcenary (within the coparcenary) possessing separate property of its own, the provisions of this sub-section shall have effect separately in respect of the coparcenary and the sub-coparcenary.
(3) If a member of any tarwad or tavazhi governed by the marumakkattayam rule of inheritance of a member of a kutumba or kavaru governed by the aliyasantana rule of inheritance dies, then the provisions of sub-s. (1) shall not apply with respect to the interest of the deceased in the property of the tarwad, tavazhi, kutumba or kavaru, as the case may be, unless the deceased had completed his eighteenth year.
(4) The provisions of sub-s. (1) shall not apply to the property in which the deceased or any other person had an interest only as holder of an office or recipient of the benefits of a charity or as a corporation sole.
Explanation. - For the removal of doubts, it is hereby declared that the holder of a sthanam is neither the holder of an office nor a corporation sole within the meaning of this sub-section'.
'Sec. 39. Valuation of interest in coparcenary property ceasing on death. (1) The value of the benefit accruing or arising from the cesser of a coparcenary interest in any joint family property governed by the mitakshara school of Hindu law which ceases on the death of a member thereof shall be the principal value of the share in the joint family property which would have been allotted to the deceased had there been a partition immediately before his death.
(2) The value of the benefit accruing or arising from the cesser of an interest in the property of a tarwad or tavazhi governed by the murumakkattayam rule of inheritance or of kutumba or kavaru governed by the aliyasanatana rule of inheritance which ceases on the death of a member thereof shall be the principal value of the share in a property of the tarwad or tavazhi or, as the case may be, the kutumba or kavaru which would have been allotted to the deceased had a partition taken place immediately before his death.
(3) For the purpose of estimating the principal value of the joint family property of a Hindu family governed by the mitakshara, marumakkattayam or aliyasanatana law in order to arrive at the share which would have been allotted to the deceased had a partition taken place immediately before his death, the provisions of this Act, so far as may be, shall apply as they would have applied if the whole of the joint family property had belonged to the deceased'.
Sec. 6 of the Hindu Succession Act, 1956, is also reproduced below, as reference would be made to it in the later discussion :
'Sec. 6. Devolution of interest in coparcenary property. -When a male Hindu dies after the commencement of this 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 this Act :
Provided 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 the mitakshara coparcenary property shall devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivorship.
Explanation 1. - For the purposes of this section, the interest of a Hindu mitakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death, irrespective of whether he was entitled to claim partition or not.
Explanation 2. - Nothing contained in the proviso to this section shall be construed as enabling a person who has separated himself from the coparcenary before the death of the deceased or any of his heirs to claim or intestacy a share in the interest referred to therein'.
5. In P. G. Chawares case (supra), the Bombay High Court in the case of an HUF consisting of the sole surviving coparcener and his wife, on consideration of s. 39 of the Act, held :
'In the instant case, factually, there is no dispute that there was a joint Hindu family consisting of the deceased and his wife. The deceased was the sole coparcener and his wife a member of the said HUF. Each one of them had an equal interest in the properties of the said joint family. In the event of partition, the deceased would have been entitled only to one-half of the property as his share. If that be so, s. 39(1) would be clearly attracted and, on the death of the deceased, only a half share of the family property would be deemed to pass. The Asstt. CED does not appear to be correct in taking the view that though there might be a HUF consisting of the deceased and his wife, on the death of the deceased, the whole property will pass. He also does not appear to be right in holding that there cannot be a valid partition between a single male coparcener and his wife. There is no dispute in regard to the legal proposition that, in a joint Hindu family, the wife who is a member is entitled to get a share as and when a partition is effected. The only restriction is that she herself is not entitled to claim a partition. But, in the event of a partition taking place, she cannot be denied her share. If that be so, it is not understandable how s. 39(1) will not be attracted. Sec. 39(1) visualises a deemed partition immediately before the death of the deceased and determination of the share of the deceased consequent to such partition. It is the share of the deceased determined in such manner which will be taken as his interest in the joint family property that ceased on his death. The Appellate CED, therefore, seems to be correct in holding that only a half share of the joint family property could be included in the estate of the deceased. The Tribunal was justified in upholding this view.'
6. Relying upon N. V. Narendranath vs. CWT : [1969]74ITR190(SC) and C. Krishna Prasad vs. CIT : [1974]97ITR493(SC) , it was held that a single coparcener could form a HUF with female member of the family. Further relying upon Gurupad Khandappa Magdum vs. Hirabai Khandappa Magdum & Ors. : [1981]129ITR440(SC) and Alladi Kuppuswamys case : [1977]108ITR439(SC) , two judgments of the Supreme Court, it was concluded :
'On a careful consideration of the various decisions of the Supreme Court and the High Court referred to above, we are of the clear opinion that there can be a Hindu joint family consisting of a sole coparcener and his wife. That being so, in the event of the death of any one of them, for computing the interest of the deceased in the family property, s. 39 of the ED Act would apply and only the portion of the property which would have fallen to the share of the deceased in the event of partition of the family taking place immediately before the death would be deemed to be the interest of the deceased in the joint family property. That being so, in the instant case, the Tribunal was right in holding that only a half share in the property of the deceased passed on his death'.
It specifically dissented from the view taken by the Madhya Pradesh High Court in CED vs. Smt. Rani Bahu : [1983]142ITR843(MP) and Ramratans case (supra) and the Allahabad High Court in Smt. Kalawati Devis case (supra).
7. Orissa High Court in Dulari Devis case (supra) took the same view as the Bombay High Court in P. G. Chawares case (supra). Judgment in P. G. Chawares case (supra) was noted but the judgments of the other High Courts taking the contrary view were not considered.
8. The Madhya Pradesh High Court in Ramratans case (supra), in somewhat similar facts, took the following view :
'The ownership in the property obtained by the deceased on partition was not shared by his wife although the deceased and his wife constituted an HUF. The deceased had no son. There was thus no coparcener in his family excepting himself. The deceased was the sole coparcener in his family. Speaking generally, female members in an HUF have no ownership in the property belonging to the family. The ownership of such a property is held by a smaller body which is called the coparcenary and in case there is only one coparcener, it is he alone who owns the entire property. It is true that for purposes of assessment of income-tax, the status of the deceased was that of an HUF as he and his wife constituted a family but different considerations prevail for finding out as to whether the entire property of the family or a share in it passed on the death of the deceased. As the entire ownership in the property vested in the deceased and as no part of it was shared by the wife who was the only other member in the family, the entire property passed on the death of the deceased with the meaning of s. 5 of the Act. The deceased being the sole coparcener had a disposing power under the Hindu law in respect of the entire property and even under s. 6 of the Act the entire property would be deemed to have passed on his death for purposes of estate duty. Sec. 7 which applies when a coparcenary interest in a joint family property ceases on death and s. 39(1) which lays down the mode of valuation of such interest, can apply only when the joint family property is vested in more than one person. It is only then that an interest in the joint family property ceases on the death of a coparcener and the valuation of such an interest has to be ascertained on the basis of the principal value of the share which would have been allotted to the share which would have been allotted to the deceased had there been a partition immediately before his death. When the entire property vested in the deceased because the deceased was the sole coparcener, there is no question of any other person getting any interest or share on a notional division immediately before his death and ss. 7 and 39 have no application to such a case. As earlier stated, the whole of the property in such cases passes under s. 5 r/w s. 6. The view that we have taken is fully supported by the decision of the Allahabad High Court in CED vs. Kalawati Devi : [1980]125ITR762(All) , with which we entirely agree.'
9. The Allahabad High Court has consistently taken the same view in Smt. Kalawati Devis case (supra), Smt. S. Harish Chandras case (supra) and Smt. Rajni Bhargava vs. CED : [1991]190ITR521(All) . It has been held in these judgments that a single male member in the family could constitute a HUF with the female members and it is not necessary that there should be two male members to constitute a joint family. The last male holder would have absolute power to dispose of the property and on his death the entire estate would pass to the accountable person. In Smt. S. Harish Chandras case (supra), it was also held that as there was no coparcenary in existence at the time of the death of the last male holder, a notional partition under s. 6 of the Act 1956 could not, therefore, be assumed and the whole of his share of the original HUF passed on his death to the accountable person.
10. Similarly, Patna High Court in Smt. Ginni Devi Jains case (supra), on same facts, has taken the following view :
'It is also well established that, in respect of ancestral properties, there can be a partition only between two surviving coparceners subject to the provisions contained in the Hindu Succession Act, 1956, conferring special rights which are not relevant for the present purpose. Therefore, even immediately before the death of the deceased, no partition was permissible between the deceased and his wife, Ginni Devi. It is well settled that, in a case like the present one, neither the wife can have any share nor could she sue for any share and, therefore, on the death of the sole surviving coparcener of an HUF, the entire interest in the HUF property passes to his heir. [See Smt. Rajni Bhargava vs. CED ( : [1991]190ITR521(All) and CED vs. Smt. Kalawati Devi : [1980]125ITR762(All) .']
11. The Madras High Court in P. Amirthavallias case (supra), held :
'that when the partition took place between the deceased and his son, the deceaseds wife had no right to be allotted any share in the joint family property. Thereafter, in the said joint family, the only members were the deceased, his wife and one unmarried daughter and during the lifetime of the deceased, neither his wife nor the unmarried daughter had any right to demand any partition and it would be only on the death of the deceased that the entire estate would devolve on his heirs including the widow. Further, there being only a sole coparcener in the coparcenary, no partition was ever possible during the lifetime of the deceased and, therefore, the entire interest of the deceased passed on his death. The Tribunal was, therefore, right in its view that the cesser of interest under s. 7(1) was to the extent of the whole of the property received by the deceased in the partition between him and his son.'
Andhra Pradesh High Court in Smt. P. Leelavathammas case (supra) has also taken the same view.
12. On consideration of the matter, we with respect differ with the view expressed by the Bombay and Orissa High Courts in P. G. Chawares case (supra) and Dulari Devis case (supra), respectively, and respectfully follow the view taken by the Madhya Pradesh, Allahabad, Madras, Patna and Andhra Pradesh High Courts, in Smt. Rani Bahus case (supra), Ramratans case (supra), Smt. Kalawati Devis case (supra), Smt. Rajni Bhargavas case (supra), Smt. S. Harish Chandras case (supra), P. Amirthavallis case (supra), Smt. Ginni Devi Jains case (supra) and P. Leelavathammas case (supra).
13. Hindu law is applied to Hindus, subject to any legislative enactment for the time being in force. A joint Hindu family consists of all persons lineally descended from a common ancestor. It is much larger than a coparcenary and includes the females i.e. the wife and unmarried daughters. A daughter ceases to be a member of her fathers family on marriage and becomes a member of her husbands family. The existence of joint estate is not essential requisite to constitute joint family and the family which does not own any property may nevertheless be a joint family. A Hindu coparcenary is a much narrower body than a joint family. It consists of male members of a joint and undivided family who are related to the head of the family for the time being within four degrees. These are sons, grand sons and great grand sons i.e. three generations next to the holder of the joint property in an unbroken male descent. Coparcenary excludes female members of the joint family. A coparcener acquires by birth an interest in the ancestral property. Property inherited from father, grandfather and great grandfather is ancestral property whereas any other property inherited from other relations is the separate property of the inheritor. A coparcener, subject to local customary laws, can claim partition of his ancestral property from his father. A Hindu male has absolute right over his self-acquired property and can dispose it of at his will. The last male holder/sole surviving co-parcener enjoys the same powers of disposition of the inherited property as self-acquired property.
14. Coparcenary, being a narrower body, may cease to exist even before the joint family, such as the one under consideration. In the absence of any other coparcener, Telu Ram, deceased, became the sole surviving coparcener/last male holder. As the deceased did not have son, sons son or sons sons son, he was the absolute owner of the property as if it was his separate and self-acquired property and could deal with it as he liked. Another established principle of Hindu Law is that the female member of an HUF cannot claim partition. In CED vs. Alladi Kuppuswamy (supra) their Lordships of the apex Court observed that prior to the passing of Hindu Womens Rights to Property Act, 1937, 'a Hindu woman had no right or interest at all in a Hindu coparcenary. She was neither a coparcener nor a member of the coparcenary nor did she have any interest in it, except the right to get maintenance. She also had no right to demand partition of the coparcenary property after the death of her husband.'
In Sat Pal Bansal vs. CIT (1986) 162 ITR 582 (P&H;) (FB), a Full Bench of this Court, while summarising the law on partition where the HUF consisted of only one male member, held :
'According to Hindu law, female members of an HUF have no share in the joint family property and their interest is confined to maintenance only. A wife cannot herself demand a partition of the HUF, but if a partition takes place between her husband and his sons, she is entitled to receive a share equal to that of a son and to hold and enjoy that share separately even from her husband. The share which is allotted to the wife or the mother is in lieu of her right of maintenance and the allotment of such a share does not show that she has any right or interest in the HUF property. Before a partition can be visualised or thought of, the property has to be owned by more than one person. The sole owner cannot divide the property. The grant of any share in the property by the sole surviving male member of the HUF to the wife or to the mother would be only in the nature of settlement of the property upon them in lieu of their right of maintenance and cannot by any stretch of reasoning be said to be partition of the property amongst them. Therefore, no partition, partial or otherwise, would be possible in the case of HUF consisting only of one male member or the sole coparcener. Therefore, a Karta who is the sole surviving coparcener of an HUF cannot effect partition of the family property between himself and his wife'.
15. As has been observed by us earlier, the sole surviving coparcener can constitute a HUF with a female member of the family which is a taxable unit under the IT Act. The female can be a member of the HUF but not of a coparcenary. She does not have interest in the HUF property by birth and has no right to claim partition. She has only a right of maintenance. HUF property continues to be joint as a taxable unit in the IT Act but the last male holder enjoys the same power on the property as if the same was his personal/self-acquired property. As he was possessed with right of disposal of the property; under s. 6 of the Act, the whole of his interest would be deemed to have passed on his death to the accountable person. Sec. 7 of the Act applies when coparcenary interest in a joint family property ceases on death and s. 39(1) lays down the mode for valuation of that interest. Secs. 7 and 39 would apply only if there are more than one coparceners in the joint Hindu family. In the case of a single coparcener, the whole estate vests in him, being the last male holder, and the question of ascertaining his right for valuation under s. 39(1) would not arise. Question of partition immediately before his death would also not arise as partition could only be amongst the coparceners.
16. Sec. 39 falls in Part V of the Act, which deals with value chargeable of the property for the purposes of estate duty. Sec. 36 provides the mode of estimating the principal value of the property. Sec. 37 deals with valuation of shares in a private company where alienation is restricted. Sec. 38 deals with valuation of interests in expectancy. Sec. 39 deals with valuation of interest in coparcenary property ceasing on death. It has nothing to do with the mode of partition. Thus, ss. 37 and 39 of the Act would not apply.
17. With respect, we say that the Bombay High Court in P. G. Chawares case (supra) proceeded on a wrong premises. It was wrong in observing that the coparcener and the wife, with whom he constituted the HUF, had equal interest in the property and in the event of partition, the deceased would have been entitled to half share only. Wife could not claim partition. Question of deemed partition under s. 39 of the Act would not arise as there was only one surviving coparcener and there was no heritable coparcenary interest. Reliance upon Gurupad Khandappa Magdums case (supra) is also misplaced. Judgment in Gurupad Khandappa Magdums case (supra) is only for the proposition that a female member of HUF inherits an interest in the HUF property by virtue of s. 6(1) of the Hindu Succession Act and on a notional partition under that section, she is not only entitled to inherit the interest as a heir to the deceased but also the share she would have been notionally allotted as per Expln. (1) to s. 6 of the Hindu Succession Act. Similarly, reliance placed upon Alladi Kuppuswamys case (supra) to hold that a wife could claim partition/had a coparcenary interest, is also wrong. In Alladi Kuppuswamys case (supra), their lordships were dealing with a special provision contained in the Hindu Womens Rights to Property Act, 1937. Sec. 3(2) and (3) of this Act, by fiction, created a coparcenary interest and right to claim partition in a female. Otherwise, it has been held that but for the Act of 1937, a Hindu woman had no right or interest in a Hindu coparcenary. She was neither a coparcener nor a member of the coparcenary and had no interest in it, except the right to get maintenance; that she could not, as of right, demand partition of the coparcenary property.
Present case is not being considered under the Act of 1937. Their lordships of the Bombay High Court in P. G. Chawares case (supra) were also not considering a case under the Act of 1937 and, therefore, Alladi Kuppuswamys case (supra) has no applicability.
18. For the reasons stated above, we answer the question referred to us in the affirmative i.e. against the assessee and in favour of the Revenue.