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2018 (10) TMI 507
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..... APPL.5758/2013, WTR 28-32/1995 & C.M. APPL.5768/2013, WTR 4/1997 & C.M. APPL.5771/2013, C.M. APPL.5769/2013 IN ITR 297/1981, C.M. APPL.5760/2013 IN ITR 46/1982, ITR 95/1983, ITR 170/1985, ITR 283/1985, ITR 185-88/1989, C.M. APPL.5774/2013 IN WTR 40/1987 Through : Sh. Ajay Vohra, Sr. Advocate with Sh. D.D. Singh, Ms.Seerat Deep Singh, Ms. Kavita Jha and Sh. Aditya Vohra, Advocates, for Maharaja Prithvi Raj and Maharaja Jai Singh, in ITA 152/2001. Sh. Deepak Anand and Sh. Puneet Rai, Advocates, for appellant, in ITA 152/2001, ITA 218/2002, ITA 679/2004, ITA 163/2005, ITA 750/2007, ITA 751/2007, ITA 752/2007, ITA 763/2007, ITR 78/1981, ITR 297-98/1981, ITR 9/1982, ITR 46-47/1982, ITR 9598/1983, ITR 137-39/1983, ITR 271/1983, ITR 221/1984, ITR 397/1983, ITR 438/1983, ITR 170-71/1985, ITR 221-24/1985 & ITR 18/2000. Sh. Prateesh Kumar and Ms. Meera Mathur, Advocates, for assessee, in ITA 152/2001, ITA 218/2002, ITA 679/2004, ITA 163/2005, ITA 750/2007, ITA 751/2007, ITA 752/2007, ITA763/2007, ITR 78/1981, ITR 297-98/1981, ITR 9/1982, ITR 4647/1982, ITR 95-98/1983, ITR 137-39/1983, ITR 271/1983, ITR 221/1984, ITR 397/1983, ITR 438/1983, ITR 170-71/1985, ITR 221-24/1985 & ITR....
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....Singh, a former ruler of Jaipur, was adopted on 24-031921; he ascended the throne ("Gaddi") of the erstwhile princely state of Jaipur on 7-09-1922. He ruled the Jaipur State as the Maharaja of Jaipur till 1947. With India's independence, British Paramountcy lapsed. The State of Jaipur acceded to India by instrument of accession; the erstwhile state thereafter merged in the United State of Rajasthan on 30-3-1949. The covenant, dated 6-12-1949 with the Government of India recognised the terms of accession under the terms of accession/covenants. The properties of Jaipur State, of which Sawai Man Singh was an absolute owner up to the merger, were divided into two categories: State properties and private properties. Till assessment year (A.Y.) 1969-70, the late Sawai Man Singh filed his returns of income in the status of an individual. For the A.Y. 197071, a return of income was filed on 30-4-1970 in the status of an individual. Sawai Man Singh died on 24-6-1970. 4. The return filed by late Sawai Man Singh before his death was not available. A duplicate of that return was filed on 26-03-1970 declaring the status of an individual. A return dated 12-02-1971 was later filed (received in....
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....he overlord. That is why an impartible estate has been treated as Zamindari to which all the laws of the Government are applicable. The most famous Zamindari/impartible estate is that of Maharaja Adhiraj of Dharbhanga to which all the Indian laws were applicable even before the abolition of Zamindari. Bettiah Raj was another Zamindari in Bihar and an impartible estate but it was not immune from Indian laws as would be apparent from the innumerable litigations even on tax matters by both Zamindars and they being reported cases need not be referred to support the proposition that the Zamindari/impartible estate were amenable to the Indian laws. That being so, the question which arises for determination is whether the Maharaja of Jaipur was a holder of the impartible estate. The history of Jaipur lies deep in the hearty past which may be called medieval and it cannot be said that it was an impartible estate as understood in law. The rulers of Jaipur were absolute rulers, monarchs and, if we may call them, kings who made all laws, who were the fountains of all laws and administered them in the manner they wanted. Up to 1947, when India attained independence, no Indian law was applicabl....
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....individual and was assessed so. But the question is whether his declaring a status of an individual up to the assessment year 1969-70 could jeopardise claiming of the correct status as assignable under the law. It is also true that the conduct of the assessee is relevant for the purpose of determining the issue of the status but that is not the sole determining factor. An assessee may not be aware of his correct status in law but as and when he knows his correct status, he has the right to claim the correct status. There can be no dispute about the legal proposition. In respect of the fact that the assessee continued to dispose of properties by way of transfer, gifts, etc., even after the merger, that may be a conduct which may appear to go against the assessee to some extent but on a deeper thought it is not so. It is well settled that the karta of a HUF has a limited right of disposition of HUF property. If we were to look into the claim in terms of money in respect of the immovable properties disposed of by the ruler, the figure appear to be substantial. That may be so if the properties of an ordinary HUF are taken as the touch stone. But if the huge dimension of the properties ....
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....he estates of the erstwhile Maharaja of Jaipur, he continued to treat the assets as his sole assets. Consequently, the attributes of primogeniture applied and the property had to be assessed as individual properties, in keeping with the status claimed by the deceased assessee in his returns till the date of his death. 10. It was asserted that the properties of the ruler were impartible given the inviolate rule of primogeniture that applied to the erstwhile state of Rajasthan. Learned counsel submitted that this was in no manner altered or changed, and was in fact preserved, by virtue of Section 5 (ii) of the Hindu Succession Act, 1956 which otherwise governed the law of succession among Hindus after its enactment. Counsel stated that the preamble to the Hindu Succession Act, 1956, showed that Parliamentary intention was that the Act was only to govern succession. It had prospective effect, its object was not to affect existing rights of holders of property living on the date of which the Act came into force, namely, 16-6-1956. No interpretation of the Act should be given having the effect of affecting existing rights since such an interpretation would result in the provisions of....
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....bility is dependent upon custom. Counsel highlighted that right from the beginning, the wellrecognized principle that governed succession amongst rulers in India was that they belonged to families that were joint or undivided; however, succession to the gaddi was by succession. Furthermore, if succession to the personal estate of the rulers too was governed by a custom that decreed primogeniture, then alone would that principle overbear the rights otherwise available to members of a Hindu undivided family. Counsel relied on Anant Bhikappa Patil v Shankar Ramachandra Patil 70 M.I.A. 232 and argued that it is custom that defines whether particular properties or communities are governed by primogeniture. In Anant Bhikappa Patil, the Privy Council held that: "14. Now an impartible estate is not held in coparcenary, (Rani Sartaj Kuari v. Rani Deoraj Kuari (1888) L.R. 15 I.A. 51), though it may be joint family property. It may devolve as joint family property or as separate property of the last male owner. In the former case it goes by survivorship to that individual, among those' male members who in fact and in law are undivided in respect of the estate, who is singled out by the....
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....rved as follows: "In our opinion, there is a fallacy lurking in this argument. It is true that for the purposes of income-tax the Hindu undivided family is assessed as a distinct entity or unit of assessment under the provisions of the Income-tax Act, 1922; in respect of the joint estate of the members the Hindu undivided family in taxed, though in respect of their separate income the members are separately taxed. But the question as to whether the present Raja of Bhor and his two brothers have proprietary right in the Government securities must be answered not with reference to the context and background of Hindu law. Merely because for the purpose of income-tax the Hindu undivided family is treated as a separate unit of assessment, it does not follow that in the eye of Hindu law the property of the Hindu undivided family belongs to its as a corporate unit with a separate legal personality as distinct from the individual family members composing it. In the present case, the Raja of Bhor and his two brothers constituted a Mitakshara coparcenary and it is well-established that the essence of a coparcenary under the Mitakshara law is unity of ownership. The ownership of the coparc....
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.... dispute; Sawai Man Singh (born Mor Mukut) was, on 24-3-1921 adopted by the then ruler, Sawai Madho Singh II to be his son and heir. He was named "Man Singh" upon his adoption. Madho Singh II died on 7-9-1922 and was succeeded by Man Singh as Maharaja of Jaipur and head of the Kachwaha clan of Rajputs. The new Maharaja was ten years old. At the time of India's Independence in 1947, the maharaja acceded Jaipur to the Dominion of India and on 30-3-1949, he merged the princely state with the new state of Rajasthan. Sawai Man Singh passed away on 24-6-1970. There is no dispute that till the time of his passing away, the income tax returns he filed under the Act and the old Indian Income Tax Act, 1922, were shown to be in his individual capacity. The returns for the accounting year in which his death occurred, however, showed that he was karta of the HUF. 19. The revenue seems to assert that since Sawai Man Singh was a ruler and succession to the gaddi was by application of the rule of primogeniture and given that during his life time, the late ruler had consistently filed his income and wealth tax returns claiming individual rather than joint family status, the estate was impart....
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....ntitled to the estate, he is also entitled to the improvements on the estate, being the immovable properties specified in items 9 of Schedule Kha. These improvements, in fact, form part of the impartible estate." Dewan Bahadur Dewan Krishna Kishore's case (supra) held as follows: "Since the decision of the Board in Baijnath Prasad Singh v Tej Bali Singh, it has been settled law that property though impartible may be the ancestral property of a joint family and that in such cases the successor falls to be designated according to the ordinary rule of the Mitakshara. The concluding words of the judgment delivered on behalf of the Board by Lord Dunedin in Baijnath Prasad Singh v Tej Bali Singh are to that effect and in that case as well as in Shiba Prasad Singh v Rani Prayag Kumari Debi at page 345, which followed it, the keynote of the position is - not that property which is not joint property devolves by virtue of custom as though it had been joint - but that the general law regulates all beyond the custom, that the custom of impartibility does not touch the succession since the right of survivorship is not inconsistent with the custom; hence the estate retains its charact....
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....o Desai and Ors. vs. Khando Tirmal Desai and Ors (1982) 2 SCC 79, the Supreme Court held as follows: "Since the decision of the Privy Council in Shiba Prasad Singh's case (supra), it is well-settled that an estate is impartible does not make it the separate and exclusive property of the holder : where the property is ancestral and the holder has succeeded to it, it will be part of the joint estate of the undivided family. 20. The incidents of impartible estate laid down by the Privy Council in Shiba Prasad Singh's case, supra, and the law as there stated, have been reaffirmed in the subsequent decisions of the Privy Council and of this Court : Collector of Gorakhpur v. Ram Sundar Mai and Ors. I.L.R. (1934) 61 I. A. 286. Commissioner of Income Tax, Punjab, v. Krishna Kishore L.R. (1941) 68 I.A 155 Anant Bhikappa Patil v. Shankar Ramchandra Patil L.R. 1942 70 I.A 232 Chinnathavi Alias Veeralakshmi v. Kutasekara Pandiya Naicker and Anr. [1952] 1 SCR2 41. Mirza Raja Shri Pushavathi Viziaram Gajapathi Raj Manne Sultan Bahadur and Ors. v. Shri Pushavathi Viseswar Gajapathi Raj and Ors. [1964] 2 SCR 403 Rajah Velugoti Kumara Krishna Yachendra Varu and Ors. v. Rajah Velugoti ....
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....mpartible estate to which the holder has succeeded by the custom of primogeniture is part of the joint estate of the undivided Hindu family. Though the other rights enjoyed by the members of a joint Hindu family are inconsistent in the case of an impartible estate, the right survivorship still remains. In Rajah Velugoti Kumara Krishna's case, supra, it was observed that the only vestige of the incidents of joint family property, which still attaches to the joint family property is the right of survivorship which, of course, is not inconsistent with the custom of impartibility. In Bhaiya Ramanuj Pratap Deo's case, supra, the principles laid down by the Privy Council in Shiba Prasad Singh's case were reiterated. 23. In the course of argument, great reliance was placed on the two decisions of this Court in Mirza Raja Ganapath Vs case, supra and Raja Velugoti Kumara Krishna's case, supra, for the proposition that the junior members of a joint family in the case of an ancient impartible joint family estate take no right in the property by birth and therefore have no right, of partition having regard to the very character of the estate that it is impartible. To our min....
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....ere part of the impartible estate. 25. In Raja Velugoti Kutnara Krishna's case, supra, it was a suit for partition by the junior members of Vankatgiri Estate, an ancient impartible estate governed by the Madras Impartible Estates Act, 1904. The suit was principally confined to the claim for a share to the Schedule B properties. The contention was that the impartibility was continued under that Act but ceased when the estate vested in the State Government under Section 3 of the Madras Estates (Abolition and Conversion into Ryotwari) Act, 1948 and this had the effect of changing character of the properties in the B Schedule and making them partible. It was said that the junior members had a present right in the impartible estate and were entitled to share in the properties once it lost its character of impartibility. The Court had to consider the effect of the Abolition Apt on the rights and obligations of the members of the family and held that the Abolition Act has no application to properties which are outside the territorial limit of the Venkatgiri Estate. The claim that failed was in relation to properties which did not form part of a 'zamindari estate' within the....
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.... 41. In this connection it has to be kept in mind that the mode of succession of a sovereign ruler and the powers of such a ruler are two different concepts. Mode of succession regulates the process whereby one sovereign ruler is succeeded by the other. It may inter alia be governed by the rule of general primog(sic)iture or lineal primogeniture or any other established rule governing succession. This process ends with one sovereign succeeding another. Thereafter what powers, privileges and prerogatives are to be exercised by the sovereign is a question which is not relatable to the process of succession but relates to the legal incidents of sovereignty. 42. If some-one asserts that to a particular property held by a sovereign the legal incidents of sovereignty do not apply, it will have to be pleaded and established by him that the said property was held by the sovereign not as a sovereign but in some other capacity. In the instant case apart from asserting that the properties in suit belonged to a joint family and Respondent No. 1 even though a sovereign ruler, held them as the head of the family to which the property belonged, the appellant has neither specifically pleaded no....
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....hat: "ARTICLE XII (1) The Ruler of each Covenanting State shall be entitled to the full ownership, use and enjoyment of all private properties (as distinct from State properties) belonging to him on the date of his making over the administration of that State to the Rajpramukh of the former Rajasthan State or as the case may be to the Raj Pramukh of the United State under this Covenant. (2) .... ARTICLE XIV (1) The succession according to the law and custom, to the gaddi, of each Covenanting state and to the personal rights, privileges, dignities, and titles of the Ruler thereof, is hereby guaranteed. (2) Every question of the disputed accession in regard to a Covenanting State shall be decided by a Council of Rulers after referring it to the High Court of the United State and in accordance with the opinion given by the High Court." 27. From the materials on record, in these appeals, there is nothing to suggest that the succession to the estate of the ruler- or his family (other than succession to the gaddi) was governed by the principle of primogeniture. In these circumstances, the law on the subject is clear: sans evidence of a preexistent custom with respect....