1989 (7) TMI 77 - HC - Income Tax

Court remands case, directs Tribunal to reconsider appeal in line with Hindu law principles pre-Zamindari Act.

The court remanded the case back to the Tribunal, highlighting errors in applying Hindu law principles without determining the holding's character ... Agricultural Holding, Estate Duty, HUF Issues Involved1. Severance of status of the ancestral Hindu undivided family property.2. Correct share of the deceased in the ancestral property.3. Applicability of the Zamindari Abolition and Land Reforms Act.4. Treatment of the family settlement application dated March 14, 1973.5. Consideration of deemed gifts under section 9 of the Estate Duty Act.Detailed Analysis1. Severance of Status of the Ancestral Hindu Undivided Family PropertyThe Tribunal held that severance in the status of the joint family occurred on March 14, 1973, when a coparcener of the family instituted the suit for partition of his share, expressing his intention to become separate unequivocally and unambiguously. This view was supported by the Supreme Court decision in Kakumanu Pedasubhayya v. Kakumanu Akkamma, which states that a coparcener has the right to become divided at his own will and option, and severance in family status takes place with the institution of a suit for partition.2. Correct Share of the Deceased in the Ancestral PropertyThe Tribunal upheld that the deceased had only a one-third share in the agricultural holdings, based on the institution of proceedings for partition by the son of the deceased on March 14, 1973. This resulted in a decree where the deceased's share was divided equally between the accountable person (son) and the widow of the deceased.3. Applicability of the Zamindari Abolition and Land Reforms ActThe Revenue contended that the notions of Hindu law or personal law could not be imported into the rights created by the Zamindari Abolition and Land Reforms Act. They argued that after the abolition of Zamindari, new rights, including Bhumidhari rights, were conferred, and joint family could not hold any agricultural land to which the provisions of the said Act apply. The Tribunal's decision was challenged on the grounds that it did not first determine the character of the holding before the enforcement of the Zamindari Abolition Act.4. Treatment of the Family Settlement Application Dated March 14, 1973The Assistant Controller of Estate Duty initially rejected the accountable person's claim, stating that the transfer or settlement made by the application dated March 14, 1973, was within two years of the deceased's death and thus liable to be treated as deemed gifts under section 9 of the Estate Duty Act. However, the Tribunal found that the application was not a family settlement but a plaint in a suit for partition of agricultural land. The Tribunal was required to submit a supplementary statement enclosing a copy of the family settlement/application dated March 14, 1973, which revealed that it was indeed a plaint and not a family settlement.5. Consideration of Deemed Gifts Under Section 9 of the Estate Duty ActThe Tribunal rejected the alternative case of the Revenue based on section 9 of the Estate Duty Act, holding that there was no gift in favor of the widow within the meaning of section 9, as she got a share in the assets as of right due to the partition in the joint family property.ConclusionThe court concluded that the Tribunal erred in applying the principles of Hindu law without first determining the character of the holding before the enforcement of the Zamindari Abolition Act. The matter was remanded back to the Tribunal to dispose of the appeal after considering and examining the case in light of the observations made and in accordance with the law. The reference was returned unanswered, and no order as to costs was made.