TaxTMI 
TaxTMI 
2015 (1) TMI 916
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....clare that during my life time I will enjoy the property and after my death my husband shall enjoy the property as an exclusive owner and it is only on the death of myself and my husband my two daughters shall be entitled to half equal share in the said property and they shall hold and enjoy their respective shares as an exclusive owner and to use the same in any manner they like." Smt.Sadath Khatoon expired on 24-03-2002, survived by husband, Sri Karam Ali Khan, and two daughters, Smt. Ishrath Khatoon, W/o. Sri. Sardar Omer Khan and Smt.Aliya Khatoon w/o. Sri Basheer Ahmed Khan. As per the will of the lady, husband succeeded to the ownership of the property. It was submitted that there were unpleasantness among the daughters in respect of succession to the property. Therefore, the assessee tried to resolve the issue by entering into a Memorandum of Understanding (MOU) with the daughters and the property was distributed as under: 1. Sri. Karam Ali Khan (Husband) 20% Share 2. Smt. Ishrat Khatoon (daughter) 20% Share 3. Smt. Aliya Khatoon (daughter) 20% Share 4. Sri. Mohd. Sajjad Ali Khan 20% Share (S/o.Smt. Ishrat Khatoon) 5. Sri. Irshad Hussain Khan 20% Share (S/o.Sm....
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....tered into a MOU with his daughters as per which Sri Karm Ali Khan and his two daughters Smt. Ishrath Khatoon and Smt. Aliya Khatoon and the two children of Ishrath Khatoon were allotted 20% of the share to each of them in the subject property. Unfortunately this MOU entered on 01- 04-2004 was also not according to the principles of Mahommedan Law. The difference and the disputes further crept into the family and relations were further strained on account of allotting to children at 20% share for each of the child of one of the daughter. Meanwhile the assessee tried to seek the correct legal position in respect of the sharing of the property left by his wife. On enquiries made with legal experts on Mahommedan Law, it was found the assessee is only eligible for 25% of the share in the property of his wife and both of daughters are eligible for equal share in the remaining 75% of the property. Therefore, orally it is agreed between the father and the two daughters that they will share the property according to the Mohemmedan Law to resolve all the disputes crept into the family on account of not distributing the property in accordance with law. Therefore, according to the above legal....
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....n of the plain and unambiguous meaning of the statute, the principles and provisions of personal law are not required to be considered. Copy of the remand report was also given to the assessee who has submitted its reply stated above. From the perusal of the remand report and submissions of the appellant, it is noticed that the wife of the appellant was the owner of the property which is an undisputed issue. Secondly, the wife of the assessee has made a declaration that after her death her husband will the owner of the property and after the death of her husband the share the property will be distributed between her two daughters and their children This declaration clarifies that so long the husband i.e. the assessee is alive he is owner of the property and he is only eligible to collect the rent of the property amounting to Rs. 4,20,000/-. Only after death, the property will be shared between two daughters and their children. As per this declaration, the appellant has filed return for A.Y. 2004-05 and earlier years and declared the rental income and paid taxes accordingly. But in the year under consideration, the assessee has shown only 1/5th of the rent i.e. Rs. 84,000/- by....
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....of Sec. 60. The A.O. has also held that the decision relied on by the assessee in the case of SAIL DSP VR Employees Association 1998 Vs. Union of India 262 ITR 638 (Cal) are not identical/to the facts of the present case, therefore, not helpful to the assessee. In view of these facts & circumstances and the decision of Hon'ble Gujarat and Calcutta High Court that the provisions of the Income Tax Act are very clear that the principles and provisions of personal law are not required to be considered in the income tax proceedings, therefore, the rental income assessed in the hands of the assessee of Rs. 4,20,000/- is upheld and ground of appeal is dismissed". 5. It was the submission of the ld.Counsel that assessee and his family members are Sunni Muslims. The law relating to personal matters such as succession etc., are governed by Muslim Personal Law and in the Muslim Personal Law assessee follows Hanafi School of law wherein an hanafi muslim cannot defeat the claim of all his remaining heirs under the law of Inheritance by bequeathing entire property in favour of a choosen heir exclusively ; in such a case the Will will be regarded as invalid. Therefore, the Assessing Office....
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....before us that this MOU entered between the assessee and the other persons is not in accordance with the Muslim Law. It was contended that Sri Karam Ali Khan will have 25% share and two daughters Smt. Ishrat Khatoon and Smt. Aliya Khatoon will have 50% share of the balance 75%, ie, 37.50% each. Assessee filed copies of returns filed by the three inheritors in the same ratio so as to justify the claims under the Muslim Law. 9. Ld. Counsel during the course of arguments placed the extracts from various commentaries of the Muslim Law as under: All schools of Islamic law restrict the testamentary freedom of muslims as follows: (i) Up to one third of his 'net estate' every muslim is free to make a will (subject of course, to the legal rules as to who can be his legatees): where he makes within this limit, the attitude of his would be heirs to the will is legally irrelevant; they cannot veto it either when the will is made (i.e. in his lifetime) or when it becomes operative (i.e. after the legators's death); (ii) over and above one third of his 'net estate' the will of a muslim is not void. It is ordinarily, invalid but his would-be heirs can validate it by t....
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.... the death of the ancestor, and he is not entitled until then to any interest in the property to which he would succeed as an heir if he survived the ancestor. (S189 Syn No.1 Pg 489) The second restriction with respect to person is limited to heirs. The policy of Mohammedan Law is to prevent a testator from interfering by will with the course of devolution of property among his heirs according to law although he may give a specified portion, as much as a third, to a stranger. It safeguards against a breach of the ties of the kindred. It is intended to prevent the showing of favoritism to any heir to the prejudice of the others, and thus defeating the policy of the Quranic injunctions as to the division of heritage according to fixed principles. Bequest in favour of heirs: While Mohammedan Law permits the making of a will to a limited extent in favour of stranger Sec.190), it does not allow any undue preference being given to some particular heirs and a bequest to some of the heirs without the consent of the other heirs will be altogether invalid. The consent is necessary even when inheritance is governed by any custom. The consenting heirs must be major and sane otherwise the....
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....elevant; they cannot veto it either when the will is made (i.e. in his lifetime) or when it becomes operative (i.e. after the legators's death); over and above one third of 'net estate' the will of a muslim is not void. It is ordinarily, invalid but his would-be heirs can validate it by their consent, express or implied, which they can give, under Ithna Ashari and Ismaili laws, either during the lifetime of the legator or after his death. Under the Hanafi law the consent of the heirs has to be obtained after the legators death. Therefore the will or declaration given by Smt. Sadath khatoon cannot be considered invalid to the extent of bequetable third. With reference to the 2/3rd of the property, the legal heirs has a right to property. As stated before us, admittedly the husband and two daughters has a share. Husband get 1/4th share and two daughters get 1/2 of the balance share. Accordingly, out of the total property, the said Smt.Sadath Khatoon willed 1/3rd of the property for the benefit of husband for which consent of the other legal heirs is not required. Admittedly, no other debts or bequeath expenses are claimed against this property. Therefore the property in i....
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....ues in the name of the first part and., WHEREAS the parties of the second part are not having any OBJECTION for getting the rent in the name of first party and., (emphasis supplied) This shows that assessee is not interested in giving share in the property, but only share in the income. Therefore, provisions of section 60 of the Act will come into play. 12. The provisions of section 60 are as under: "60. All income arising to any person by virtue of a transfer whether revocable or not and whether effected before or after the commencement of this Act shall, where there is no transfer of the assets from which the income arises, be chargeable to income-tax as the income of the transferor and shall be included in his total income." Therefore, we are not convinced with the claim of the assessee that the incomes are to be divided according to the Muslim Law. Had assessee taken recourse to legal proceedings and got the property divided between the legal heirs through a court of law, may be the contentions can be accepted. However, assessee chose to enter into MOU so as to divide only the incomes. Therefore, we are not convinced with the assessee's argument. 13. Th....