Hindu Undivided Family property retained its character despite former impartibility, limiting estate duty to the deceased's share

Property that was originally impartible by custom but ancestral in character did not lose its character as Hindu Undivided Family property after the merger of the Indian States, even though succession had been governed by primogeniture. The existence of the HUF at the relevant time supported the conclusion that the property remained family property. As a result, the deceased was treated as having only a share in the property, and only that share was liable to pass on death under the Estate Duty Act. The broader contention that he could dispose of the entire property was not separately decided.

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Issues: (i) Whether the property of the former ruler ceased to be an impartible estate after the merger of the Indian States and retained the character of Hindu Undivided Family property; (ii) whether, on the death of the deceased, only his share in the property passed under the Estate Duty Act and the deceased was not competent to dispose of the entire property.

Issue (i): Whether the property of the former ruler ceased to be an impartible estate after the merger of the Indian States and retained the character of Hindu Undivided Family property.

Analysis: The property was originally impartible by custom, but it was ancestral in character. The rule of primogeniture governing succession did not destroy its character as family property. On the merger of the Indian States, the property continued to be impressed with the character of Hindu Undivided Family property, and the existence of the Hindu Undivided Family at the relevant time supported that conclusion.

Conclusion: The property did not lose its character as Hindu Undivided Family property and the finding was in favour of the assessee.

Issue (ii): Whether, on the death of the deceased, only his share in the property passed under the Estate Duty Act and the deceased was not competent to dispose of the entire property.

Analysis: Since the property was held to belong to the Hindu Undivided Family, the deceased had only a share in it. Accordingly, only that share could be treated as passing on his death. In view of this conclusion, the further question regarding competency to dispose of the property did not require separate adjudication.

Conclusion: Only the deceased's share in the property passed on his death, and the broader contention of the Revenue was rejected.

Final Conclusion: The reference was answered by upholding the Tribunal's view that the property retained the character of Hindu Undivided Family property and only the deceased's share was exigible to estate duty, with no separate decision required on the competency question.

Ratio Decidendi: Property that remains ancestral and is held in a Hindu Undivided Family does not lose that character merely because it was formerly impartible or governed by primogeniture; on the owner's death, only his share, and not the whole property, is liable to pass under estate duty.

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