TaxTMI 
TaxTMI 
1981 (1) TMI 14
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....tate of Patdi in Saurashtra. He died in the year 1941, and Pratapsinhji ascended to the gaddi and became the ruler or darbar of the said State of Patdi. He inherited certain immovable properties on the demise of his father, Narendrasinhji, which are involved in both these references and situate in the City of Ahmedabad as well as in the town of Viramgam and in different villages of Viramgam Taluka including Patdi, as also movable properties comprising jewellery, etc. Pratapsinhji was making a return of his income in the status of an individual right from the assessment year 1949-50 to the assessment year 1964-65, and he was assessed accordingly. For the assessment year 1965-66, he also filed his return as an individual. However, in the course of the assessment proceedings, the assessee claimed the status of a HUF (hereinafter called as " the HUF ") since by his letter of June 2, 1967, he had contended before the ITO that he ceased to be a ruler and that the rule of primogeniture was no longer applicable to his properties, and his estate ceased to be impartible. He also contended in the said letter that there was no gaddi to which the rule of primogeniture could apply and, theref....
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.... be impartible at any time, and, if so, what is the effect of such cessation ? The Division Bench considered various authoritative pronouncements of the Supreme Court and the Privy Council in connection with the characteristics of an impartible estate and also to the relevant sections of the Hindu Succession Act, namely, ss. 4, 5, and other relevant provisions connected therewith. The Division Bench emphasised and noted certain observations made in Mulla's Hindu Law by Desai and also Hindu Law of Succession by S. V. Gupte, where it was observed that the Hindu Succession Act, 1956, had brought about a radical change in the rules of Hindu law relating to impartible estates and its effect as to the abolition of impartible estates save those which were expressly saved and excluded by s. 5(ii) of the Hindu Succession Act. Since it was common ground between the parties that the Tribunal has not gone into the question, whether the impartible estate in question ceased to be impartible or not, the Division Bench found itself unable to answer the question and, therefore, declined to answer the questions referred to it for its opinion. This court, therefore, left the matter to the Tribunal to....
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.... accepted the claim of the assessee to be assessed in the status of a HUF. The department, therefore, carried the matter in appeal before the Appellate Tribunal from the said order of the AAC and in the course of the hearing of the appeal it was contended on behalf of the department that the Tribunal had reversed a similar order of the AAC made for the assessment year 1965-66 and negatived the claim of the assesse to the status of a HUF. On behalf of the assessee, it was urged that there were additional circumstances to support his claim which have ensued subsequent to the said order of the Tribunal. He, inter alia, relied on the facts of the above-mentioned letter of June 2, 1967, to the ITO and the Hindu Succession Act, having been placed on the statute book in 1956, with the result that the estate ceased to be impartible and all the attributes of joint family property revived in all their vigour, and, in any view of the matter, the statement in the letter of June 2, 1967, in effect and substance, impressed the estate, assuming it to be the absolute and individual property of the assessee, with all the characteristics of joint family property. The Tribunal rejected both these con....
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.... would be profitable to shortly refer to what the Tribunal has found as a matter of fact in this reference. The Tribunal has found that there was no dispute with regard to the fact that the properties, the income of which has been assessed in the hands of the assessee, are part of the impartible estate which the assessee inherited under the rule of primogeniture on the death of his father in 1941. The Tribunal further found that the question as to whether the properties ceased to be impartible on the merger of Kathiawar State in 1948 and the abolition of the assessee's right over land in 1957 in the absence of any express provisions specifically abolishing impartible estates would be a matter of construction as to the effect of the merger and abolition of the assessee's right over the land by the relevant legislation or an interpretation thereof and cannot be said to fall within the realm of a finding of fact. The Tribunal also found, on a consideration of the relevant terms of the covenant entered into by the erstwhile rulers of Kathiawar State that the said covenant, far from abolishing the custom of impartibility or rule of primogeniture, seeks to ensure and guarantee the same, ....
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.... Brahma, AIR 1971 SC 1687, a question arose whether a gujaranama executed by malgujar, who was the proprietor of an impartible estate which he inherited, being the eldest son of the Raja, was hit by s. 23(1)(a) of the U. P. Zamindari Abolition and Land Reforms Act, 1950, since it granted a right to maintenance to the younger sons who were given a reasonable share of the estate in lieu thereof. In that context, Ramaswami J., speaking for the court, stated the exact nature of impartible estates under the Hindu law. He held as under (p. 1690): " 8. Since the decision of the Privy Council in Shiba Prasad Singh v. Rani Prayag Kumari Debi [1932] LR 59 IA 331 ; AIR 1932 PC 216, it must be taken to be well settled that an estate which is impartible by custom cannot be said to be the separate or the exclusive property of the holder of the estate. If the holder has got the estate as an ancestral estate and he has succeeded to it by primogeniture, it will be a part of the joint estate of the undivided Hindu family. In the case of an ordinary joint family property the members of the family can claim four rights: (1) the right of partition; (2) the right to restrain alienations by the head o....
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....further landmark in the judicial exposition of the question at issue here. While the power of the holder of an impartible raj to dispose of the same by deed (Sartaj Kuari's case [1888] LR 15 IA 51 (PC)) or by will (the First Pittapur's case [1899] LR 26 IA 83 (PC) and Pratap Chandra Deo v. Jagadish Chandra Deo [1927] LR 54 IA 289; AIR 1927 PC 159), remain definitely established, the right of the junior branch to succeed by survivorship to the raj on the extinction of the senior branch has also been definitely and emphatically re-affirmed. Nor must this right be whittled away. It cannot be regarded as merely visionary. As pointed out in Baijnath Prasad Singh's case [1921] LR 48 IA 195 ; AIR 1921 PC 62, when before the Allahabad High Court, the junior members of a great zamindari enjoy a high degree of consideration, being known as babus, the different branches holding babuana grants out of the zamindari. Their enjoyment of these grants is attributable to their membership of the joint family, and until the decisions above referred to beginning in 1888 supervened they had no reason to believe that their rights of succession were being imperilled by their estrangement from the zamindar....
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....e of U.P. v. Rukmini Raman, AIR 1971 SC 1687)." It is clear from the settled legal position stated above that the property, though partible by nature, may, by custom or terms of a Government grant, be treated as impartible in the sense that it always devolves on a single member of the family to the exclusion of others. If the custom or the grant, as the case may be, is not clear as to on which single heir of the last holder the property should devolve, the property will go by the rule of primogeniture. The real question to which we directed, in our earlier decision, the Tribunal to address to and answer it was, whether the estate in question was excluded by the operation of s. 5 of the Hindu Succession Act and, therefore, not abolished. As a matter of fact we had set out two passages in our earlier decision to indicate that the impartible estate, except those recognised by s. 5(ii) of the Hindu Succession Act, ceased to be impartible. Before referring to those paragraphs we will read the relevant sections of the Hindu Succession Act so as to decide whether the observations which we have digested in our earlier decision from the book of Mulla's Hindu Law by S. T. Desai and the Hi....
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....nto by the ruler of an Indian State with the Govt. of India, or by the terms of any enactment passed before the commencement of the Hindu Succession Act. In other words, the conjoint reading of ss. 4 and 5 drives us to the conclusion that any custom or usage, which enjoins the devolution of an estate on a single heir is no more effective, except in those cases where in respect of an estate such a descent is to a single heir by the terms of any covenant or agreement entered into by the ruler of any Indian State with the Govt. of India or by any terms of an enactment passed before the commencement of the Hindu Succession Act. What are the principles governing succession to an impartible estate has been considered by the Supreme Court in Dayaram v. Dawalatshah, AIR 1971 SC 681. The contest in the said matter was between the descendants of the two branches of the original holder of the impartible estate. In that context, Shah C.J., speaking for the court, held as under in para. 15 at p. 686 : " 15. On the death of Amarshah, there were two male relatives: they were Pratapshah, father of the plaintiffs, and the 1st defendent, Dayaram. The contest between them had to be adjudged in ....
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....India or by the terms of any enactment passed before the commencement of this Act. The object is to exclude from the operation of the Act succession to the estate which goes by the rule of primogeniture but not in all cases; it is only where the estate descends to a single heir by reason only of the terms of the covenant or agreement entered into by the Ruler of any Indian State with the Government of India or by the terms of any enactment passed before the commencement of this Act. Under the old law of succession, an estate could descend to a single heir by the rule of primogeniture by reason of the terms of a grant or custom or usage. This was one of the features of impartible estates. In view of the restricted exclusion under this clause the rule of primogeniture now, stands abolished even where primogeniture was recognised by the terms of a grant or custom or usage. Section 5(ii) only excludes from the operation of the Act estates which descend by the rule of primogeniture in a limited class of cases." (Emphasis supplied) In para. 81 of the same book at p. 466, the learned author has observed as under: " 81. Impartible estates abolished.Thus barring the impartible and oth....
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.... later than April 15, 1948, make over the administration of his State to the Raj Pramukh, with the result that all rights, authority and jurisdiction belonging to the ruler which appertained, or were incidental, to the Government of the covenanting State would vest in the United States of Kathiawar, as it was formerly called, and also all the assets and liabilities of the covenanting State would be the assets and liabilities of the United State of Kathiawar of the said new State. Article X entitled the ruler of each covenanting State to receive annually from the revenue of the United State a certain sum by way of his privy parse. Article XI entitled the ruler of each covenanting State to the fall ownership, use and enjoyment of his private properties as distinct from State properties. Articles XII and XIII are relevant for purposes of this reference and, therefore, they are reproduced in extenso: " Article XII.-The ruler of each covenanting State, as also the members of his family shall be entitled to all the personal privileges, dignities and titles enjoyed by them, whether within or outside the territories of the State, immediately before the 15th day of August, 1947. Artic....
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....the estate which descended to a single heir by the terms of the said covenant or agreement. It should be noted at this stage that the Constitution (26th Amend. Act), 1971, by its s. 3 introduced art. 366 by which the recognition granted to the rulers of Indian States ceased and the privy purses were abolished. This 26th Amendment was an event of historical importance and it is really surprising how the Tribunal overlooked such a significant event in the history of this country and reached the conclusion that since art. XIII guaranteed the law and custom of succession to the Gaddi, all estates, whatever they may be, were impartible estates, the succession to which was governed by the rule of primogeniture. In our opinion, the Tribunal clearly erred in construing this article and reaching the conclusion as it did in clear disregard of the apparent provisions contained in ss. 4 and 5 of the Hindu Succession Act, and the effect thereof. It was contended on behalf of the Revenue before us that assuming that the conjoint effect of ss. 4 and 5 of the Hindu Succession Act is to abolish all impartible estates, save and except those which are within the terms of s. 5(ii) of the Hindu Succ....
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.... as under at p. 1500: " Manifestly the Legislature intended to supersede the rules of Hindu law on all matters in respect of which there was an express provision made in the Act." The second decision which has taken a still clearer view on this aspect of the question is in Punithavalli Ammal v. Minor Ramalingam, AIR 1970 SC 1730. The Supreme Court in that case was concerned with the doctrine of relation back as to whether an adopted son acquired all the rights of an aurasa son and whether those rights related back to the date of the death of the adoptive father so as to circumscribe the rights of a Hindu widow which she acquired under s. 14 of the Hindu Succession Act. Hegde J., speaking for the court, ruled as under: (p. 1731) " 4. It is undisputed that the fiction of relation back in the case of adoption under Hindu law is based on Hindu law texts or rule or at any rate it is based on interpretation of Hindu law. Therefore, that rule ceased to have effect from the date the Act came into force with respect to any matter for which provision is made under the Act." In Sundari v. Laxmi, AIR 1980 SC 198, the Supreme Court was concerned with the effect of the Expln. to s. 7....
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....partible estate, having regard to the custom as to its descent and devolution on a single heir. In our opinion, the second contention, though urged by the learned Advocate-General as an alternative contention, merely states the same position of law which, even according to the Revenue, would arise on the interpretation which has appealed to us at the time of opening of succession on the demise of Pratapsinhji. Now, if having regard to that position the holder of the impartible estate prays to the ITO to treat the properties as the properties of the undivided Hindu family and subject to tax the income therefrom as that of a HUF, we do not think that the ITO would be justified in refusing that prayer. The Tribunal has rejected this contention on the ground that no one can impress or attribute that character to any property or thing which it already possessed. In our opinion, it is not question of merely attributing or impressing the character which the property had already possessed; it was as a matter of fact a contention which was urged in the alternative before the Tribunal that even if the property is considered to be separate or individual property, by the letter of June 2, 1967....