Hindu succession overrides impartibility customs, leaving estate assessable as HUF and not individual property

Section 4(1) of the Hindu Succession Act, 1956 overrides customary incidents of impartibility and lineal primogeniture where the Act makes provision, so an estate governed by those customs could not continue to be treated as impartible after the Act came into force. On that basis, the assessee was to be treated as a member of a Hindu undivided family rather than as an individual for the relevant assessment years. Section 27(ii) of the Income-tax Act, 1961 applies only where an impartible estate in law still subsists, so it could not deem the house property comprised in the estate to be the assessee's individual property.

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Issues: (i) Whether, after the commencement of section 4(1) of the Hindu Succession Act, 1956, an impartible estate held by custom and governed by lineal primogeniture ceased to retain those incidents and the assessee became assessable as a Hindu undivided family; (ii) Whether section 27(ii) of the Income-tax Act, 1961 required the house property comprised in such estate to be treated as the individual property of the assessee.

Issue (i): Whether, after the commencement of section 4(1) of the Hindu Succession Act, 1956, an impartible estate held by custom and governed by lineal primogeniture ceased to retain those incidents and the assessee became assessable as a Hindu undivided family.

Analysis: Section 4(1) of the Hindu Succession Act gives overriding effect to the Act and displaces any pre-existing text, rule, custom or usage of Hindu law to the extent that the Act makes provision for the matter. The customary incidents of impartibility and lineal primogeniture, being based on custom and inconsistent with the statutory scheme, could not survive after the Act came into force. The property remained impressed with the character of joint family property, and the assessee's earlier individual status could not continue merely because succession had not yet opened on his death.

Conclusion: The assessee had to be treated as a member of a Hindu undivided family after September 1956, and the Tribunal was correct on this issue in favour of the assessee.

Issue (ii): Whether section 27(ii) of the Income-tax Act, 1961 required the house property comprised in such estate to be treated as the individual property of the assessee.

Analysis: Section 27(ii) operates only where the assessee is in fact the holder of an impartible estate. Once the custom of impartibility disappeared under section 4(1) of the Hindu Succession Act, the estate could no longer be treated as an impartible estate for the relevant assessment years. The provision was therefore inapplicable to fasten individual ownership on the assessee in respect of the house property.

Conclusion: The house property could not be deemed the individual property of the assessee under section 27(ii), and this contention failed against the assessee.

Final Conclusion: The reference was answered in favour of the assessee and against the Revenue, holding that the assessee was assessable as a Hindu undivided family and not as an individual on the basis urged by the Revenue.

Ratio Decidendi: Section 4(1) of the Hindu Succession Act, 1956 overrides and nullifies customary incidents of impartibility and lineal primogeniture where the Act makes provision, and section 27(ii) of the Income-tax Act applies only so long as an impartible estate in law subsists.

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