1991 (1) TMI 207 - AT - Wealth-tax

HUF Ownership: Pre-Partition Property Rights Dispute

The Tribunal held that the smaller Hindu Undivided Family (HUF) could not be deemed the owner of any part of the larger HUF's property pre-partition in ... House Property Issues Involved:1. Justification of assessments made by the assessing officer and confirmed by the DCWT(A).2. Claim for freezing the value of the property under section 7(4) of the Wealth-tax Act.3. Ownership and valuation date of the property for wealth-tax purposes.4. Applicability of analogies from the Estate Duty Act and other laws.Detailed Analysis:1. Justification of Assessments:The assessee contended that the assessments made by the assessing officer and confirmed by the DCWT(A) were unjustified, both legally and factually. The authorities should have accepted the assessee's claim to freeze the value of the property at Shillong under section 7(4) of the Wealth-tax Act.2. Claim for Freezing the Value under Section 7(4):The assessee argued that the value of the property should be frozen based on the value determined as of 31-3-1971. The assessee had not accepted the valuation determined by the department. The assessing officer, however, did not agree, noting that the assessee became the owner of the property only from 1-1-1982, and therefore, the value as on 31-3-1971 could not be accepted under section 7(4). Consequently, the value was determined at Rs. 5,45,409 for the assessment year 1983-84.3. Ownership and Valuation Date:The assessee claimed that the property, used as a residence, was received from a larger HUF on partition effected on 11-12-1980. The DCWT(A) found that the building previously belonged to the larger HUF, and the assessee became the owner only from 11-12-1980. Hence, the benefit stipulated by section 7(4) was not available, as the property was acquired after 1-4-1971 and 1-4-1976. The appeals for both years were dismissed.4. Applicability of Analogies from Other Laws:The assessee's counsel drew analogies from section 39(1) of the Estate Duty Act, arguing that the interest of a member in HUF properties (Mitakshara) passes on death and is includible in the estate, thus entitling relief under section 33(1)(n) of the Estate Duty Act. However, the revenue contended that the provisions of the Estate Duty Act and Wealth-tax Act are different, and no analogy could be drawn.Additional Judicial References:- CIT v. Bagyalakshmi & Co. [1965] 55 ITR 660 (SC) and CED v. Jyotirmoy Raha [1978] 112 ITR 969 (Cal.): The revenue emphasized that the property did not belong to the present assessee prior to the partition, and thus, the assessee could not dispose of or alienate it.- Ranganayaki Ammal v. CED [1973] 88 ITR 96 (Mad.): The Hon'ble Madras High Court noted that partition is not a transfer in the normal sense but a renunciation of mutual rights.- Gowli Buddanna v. CIT [1966] 60 ITR 293 (SC): The Supreme Court held that the property of the joint family did not cease to belong to the family merely because it was represented by a single coparcener.- CED v. Kancharla Kesava Rao [1973] 89 ITR 261 (SC): The Supreme Court observed that partition in the HUF did not amount to a 'disposition' within the meaning of section 24 of the Estate Duty Act.- R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 (SC): The owner must be the person who can exercise the rights of the owner in his own right.- CGT v. N.S. Getti Chettiar [1971] 82 ITR 599 (SC): A member of a Hindu undivided family has no definite share in the family property before division.- Attorney-General of Ceylon v. AR. Arunachalam Chettiar [1958] 34 ITR (ED) 20: The Privy Council held that a coparcener cannot be said to have a definite share in the family property.- CWT v. Arvind Narottam [1988] 173 ITR 479 (SC): The Supreme Court dealt with the concept of 'property' and 'interest in property,' noting that there must be a right, present or contingent, before it can be said that the assessee has an 'interest' in the property.Conclusion:The Tribunal concluded that the smaller HUF (the present assessee) could not be considered the owner of any portion of the property of the larger HUF prior to the partition on 11-12-1980. Therefore, freezing the value as on the basis of the assessment year 1971-72 could not arise. The claim of the assessee was correctly rejected by the authorities below, and the appeals for both years were dismissed.Result: The appeals by the assessee are dismissed.