1993 (11) TMI 12 - HC - Income Tax

Inheritance under Hindu Succession Act: Property classification, devolution, and income determination

Commissioner Of Income-Tax Versus HH. Rajendrasinghji, Maharaja Of Rajpipla (By Legal Representative HH. Raghubirsinghji, Maharaja Of Rajpipla)

The court determined that the property inherited by Maharaja Rajendrasinghji before the Hindu Succession Act, 1956, should be considered Hindu Undivided ... Assessment Year, Hindu Succession Act, Income From Property, Income Of Individual Issues Involved:1. Nature of the property (Rajpipla Palace) in the hands of Maharaja Vijaysinghji and Maharaja Rajendrasinghji.2. Determination of the property as Hindu Undivided Family (HUF) property or individual property.3. Applicability of the rule of primogeniture.4. Devolution of property under the Hindu Succession Act, 1956.5. Tax treatment of income from Rajpipla Palace for different assessment years.Issue-wise Detailed Analysis:1. Nature of the Property in the Hands of Maharaja Vijaysinghji and Maharaja Rajendrasinghji:The court examined the nature of the Rajpipla Palace property in the hands of Maharaja Vijaysinghji and subsequently in the hands of Maharaja Rajendrasinghji. The property was part of the estate left by Maharaja Vijaysinghji, who had executed multiple wills, including an English will and an Indian will. Upon his death, a legal dispute arose among his heirs, leading to a settlement under the consent decree dated January 28, 1957. Consequently, Rajpipla Palace came into the hands of Maharaja Rajendrasinghji as an heir of his father.2. Determination of the Property as Hindu Undivided Family (HUF) Property or Individual Property:The court had to decide whether the property was HUF property or individual property. The accountable person claimed that the properties received by Maharaja Rajendrasinghji were HUF properties, a contention upheld by the Income-tax Appellate Tribunal. The court concluded that since Maharaja Rajendrasinghji inherited the property before the Hindu Succession Act, 1956, it should be considered HUF property during his lifetime.3. Applicability of the Rule of Primogeniture:The Department contended that Rajpipla Palace was an impartible estate governed by the rule of primogeniture. However, the court found no evidence to support this claim. The Tribunal had already determined that there was no factual basis for the rule of primogeniture applying to Rajpipla Palace. The court noted that Vijaysinghji treated all his properties, including Rajpipla Palace, as private property, and there was no custom or usage establishing succession by primogeniture.4. Devolution of Property under the Hindu Succession Act, 1956:Upon the death of Maharaja Rajendrasinghji in 1963, the devolution of Rajpipla Palace was governed by section 6 of the Hindu Succession Act, 1956. Since he left behind female relatives (his widow and daughters), his interest in the property devolved by intestate succession under the Act, rather than by survivorship. The court referenced Supreme Court decisions (CWT v. Chander Sen and CIT v. P.L. Karuppan Chettiar) to support the view that property inherited under section 8 of the Hindu Succession Act would be the absolute property of the heir and not HUF property.5. Tax Treatment of Income from Rajpipla Palace for Different Assessment Years:The court addressed the tax treatment of income from Rajpipla Palace for various assessment years. For the assessment year 1963-64, the income was considered the income of the HUF of which Maharaja Rajendrasinghji was the karta. For subsequent years, the income was partly HUF income (due to Raghubirsinghji's coparcenary interest) and partly individual income (due to inheritance under the Hindu Succession Act). The Tribunal was instructed to work out the proportionate division of income accordingly.Conclusion:1. Income-tax Reference No. 152 of 1978 and Income-tax Reference No. 57 of 1983:- The income from Rajpipla Palace for the assessment year 1963-64 was the income of the HUF of which Maharaja Rajendrasinghji was the karta.- For subsequent assessment years, the income was partly HUF income and partly individual income based on Raghubirsinghji's interests.2. Estate Duty Reference:- The properties in question, which came to the deceased from his father by virtue of the consent decree dated January 28, 1957, were joint Hindu family properties and not the personal properties of the deceased.In the circumstances of the case, there was no order as to costs.