1998 (11) TMI 112 - HC - Wealth-tax

Court rules deceased's estate not excluded from HUF; Hindu Succession Act principles apply

The court ruled against the assessee, finding that the death of Shri Chandrasinhrao did not lead to a complete partition of the Hindu undivided family ... HUF, Partition Issues Involved:1. Whether the death of Shri Chandrasinhrao resulted in a complete partition of the Hindu undivided family (HUF) of Dadasaheb Ukajirao.2. Whether the estate of the deceased Chandrasinhrao in the HUF properties should be excluded from the properties of the HUF of Dadasaheb Ukajirao.Issue-wise Detailed Analysis:Issue 1: Complete Partition of HUF on Death of Shri ChandrasinhraoThe first issue examines whether the death of Shri Chandrasinhrao on March 27, 1965, resulted in a complete partition of the HUF of Dadasaheb Ukajirao, of which Chandrasinhrao was the karta. The Tribunal's conclusion that a complete partition occurred was based on the Hindu Succession Act's provisions. The court clarified that the Hindu Succession Act, particularly section 6, does not ordain that a coparcenary ends on the death of a male member. Instead, it deals with the devolution of the undivided interest of the deceased coparcener in the coparcenary property. The court emphasized that section 6 provides that the interest of a deceased male Hindu in a coparcenary property devolves by survivorship unless there is a surviving female relative specified in class I of the Schedule or a male relative claiming through such a female. In such cases, the interest devolves by testamentary or intestate succession under the Act, not by survivorship. The court concluded that the Hindu Succession Act does not envisage actual partition or disruption of the family upon the death of a coparcener. Therefore, the Tribunal was wrong in concluding that the death of Chandrasinhrao resulted in a complete partition of the HUF.Issue 2: Exclusion of Deceased's Estate from HUF PropertiesThe second issue concerns whether the estate of the deceased Chandrasinhrao should be excluded from the HUF properties. The court noted that section 20 of the Wealth-tax Act deals with the partition of an HUF and its continued assessment. For wealth-tax purposes, the Assessing Officer must be satisfied that the joint family property has been partitioned among the members in definite portions. Mere satisfaction or a claim to severance in status without partitioning the property in definite portions does not bring an end to the HUF's status for assessment purposes. The court reiterated that section 6 of the Hindu Succession Act does not deem a partition but only hypothesizes the share of the deceased if a partition had taken place immediately before his death. The court emphasized that the heirs of the deceased become tenants-in-common with the coparcenary, and their shares are definite and determinate from the date of death. The court referred to previous decisions, including Goswami Brijratanlalji Maharaj v. CWT and M. K. Balakrishnan Menon v. Asst. CED-cum-ITO, to support its conclusion that the notional partition assumed for determining the deceased's interest does not result in the disruption of the coparcenary's status. The court concluded that the Tribunal was not justified in allowing the exclusion of the deceased's interest from the HUF properties without finding the necessary facts for the operation of section 6.Conclusion:The court answered both questions in the negative, in favor of the Revenue and against the assessee. The Tribunal was not right in concluding that the death of Shri Chandrasinhrao resulted in a complete partition of the HUF. Additionally, the Tribunal did not consider the necessary facts for excluding the deceased's estate from the HUF properties. The court emphasized that the continued existence of the HUF does not imply continued ownership of the same assets if the ownership changes by operation of law or by acts of the parties. The court also noted that the assessee did not appear despite notice, and there was no order as to costs.