Impartible estate lost its character after abolition, and post-abolition family settlements were not taxable transfers.

Estate abolition legislation was treated as extinguishing the old impartible estate regime entirely in relation to the properties under consideration, so the erstwhile estate did not retain impartibility after vesting in the Government. The ryotwari patta regrants did not automatically revive any impartible character; instead, the 1965 and 1972 partition and settlement deeds expressly declared the properties to be Hindu joint family properties available for partition, which was sufficient to impress them with that character. On that footing, the settlements in favour of the wife and children were family arrangements linked to family rights and maintenance, and they did not amount to taxable transfers under the deeming provisions of the Income-tax Act and Wealth-tax Act.

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Issues: (i) Whether the Madras Impartible Estates Act stood totally repealed by the Andhra Pradesh and Orissa estates abolition laws and whether the erstwhile impartible estate continued to retain its impartible character after abolition; (ii) Whether the properties regranted on ryotwari patta after abolition retained the character of impartibility or became joint family properties; (iii) Whether the partitions and settlements executed in 1965 and 1972 amounted to transfers attracting section 64 of the Income-tax Act, 1961 and section 4 of the Wealth-tax Act, 1957.

Issue (i): Whether the Madras Impartible Estates Act stood totally repealed by the Andhra Pradesh and Orissa estates abolition laws and whether the erstwhile impartible estate continued to retain its impartible character after abolition?

Analysis: The abolition provisions transferred the entire estate to the Government and extinguished the landholder's pre-existing rights, subject only to compensation and ryotwari patta where admissible. On the record, there was no reliable material showing that any identifiable items of property had acquired impartibility by custom and survived outside the abolition scheme. The earlier view of a limited repeal was not accepted, and the statutory effect was treated as a complete repeal of the impartible estates regime in relation to the estates under consideration.

Conclusion: The repeal was total, and the erstwhile impartible estate did not continue as such after abolition.

Issue (ii): Whether the properties regranted on ryotwari patta after abolition retained the character of impartibility or became joint family properties?

Analysis: The estate having vested in the Government and been resumed, the regranted lands and buildings could not automatically carry forward the old impartible character. The partition and settlement deeds of 10-6-1965 and 22-9-1972 expressly described the parties as members of a Hindu joint family and declared the properties as joint family properties or properties available for partition. That unequivocal declaration was sufficient to impress the properties with the character of joint family property, irrespective of any earlier individual character.

Conclusion: The regranted properties became joint family properties and did not retain impartibility.

Issue (iii): Whether the partitions and settlements executed in 1965 and 1972 amounted to transfers attracting section 64 of the Income-tax Act, 1961 and section 4 of the Wealth-tax Act, 1957?

Analysis: Once the properties were treated as joint family properties, the settlements in favour of the wife and children were referable to family rights and maintenance, and the partitions were valid family arrangements. The deeming provisions for post-1969 blending or transfer did not apply on the facts. The fiction applicable to impartible estates under the income-tax and wealth-tax enactments also ceased to operate once the estate had lost its impartible character.

Conclusion: The partitions and settlements did not constitute taxable transfers under the cited deeming provisions.

Final Conclusion: The assessee succeeded on the substantive issues, the revisionary order could not stand, and the departmental challenges in the connected income-tax and wealth-tax matters failed.

Ratio Decidendi: Where an impartible estate is extinguished by estate abolition legislation and the holder later makes an unequivocal post-abolition declaration treating the regranted properties as joint family property, the properties are to be treated according to that family character and not under the old deeming fictions attached to impartible estates.

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