TaxTMI 
TaxTMI 
1977 (5) TMI 16
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....d certain properties absolutely on his wife, Smt. Alladi Venkalakshmamma (to be referred in short as " Smt. Alladi ") and he had also declared certain other properties to form part of the joint family properties. Sri Alladi Krishnaswami Iyer (hereafter to be referred to as " Sri Alladi ") was a member of the Hindu coparcenary consisting of himself, his wife and three sons. In the instant case we are only concerned with the joint family properties left by Sri Alladi. Smt. Alladi died on January 5, 1956, a few months before the passing of the Hindu Succession Act, 1956, and the Assistant Controller of Estate Duty valued her estate at a total amount of Rs. 7,25,527 including a sum of Rs. 2,02,271 being the value of her 1/4th share in the joint family properties. The dispute in the present case centres round the inclusion of the aforesaid sum of Rs. 2,02,271. The revenue assessed the estate duty on the footing that, as Smt. Alladi was a member of the Hindu coparcenary, her interest in the joint family properties passed on her death to the other three sons and the value of this interest being 1/4th the heirs would be liable to pay estate duty on the value of the 1/4th share assessed at ....
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....ners [1968] AC 553 ; [1968] 70 ITR 663 (HL), came to the conclusion that the interest of Smt. Alladi was not a coparcenary interest which could have passed under section 7(1) of the Act and as the said interest was incapable of valuation it was not exigible to estate duty. Thereafter, the appellant applied to the High Court for granting a certificate of fitness for leave to appeal to this court and the same having been granted the appeal has now been placed before us for hearing. The respondent reiterated his contentions before us and submitted that section 7(1) of the Act had no application to the facts of the present case, and, therefore, the share of Smt. Alladi was not exigible to estate duty. The appellant, however, submitted that a Hindu widow had a coparcenary interest in the joint family properties which could be valued on the basis of the factors enumerated in section 39 of the Act, the High Court was in error in holding that the interest of Smt. Alladi was not capable of any valuation. The appellant, therefore, submitted that the High Court had not correctly appreciated the legal nature and character of the interest of the Hindu widow conferred on her by virtue of the ....
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.... Hindu family governed by the Mitakshara, Marumakkattayam or Aliyasantana law. In the instant case, we are mainly concerned with the Mitakshara law. We might dispose of a short argument advanced by Mr. S. T. Desai in support of the appeal on this question. It was submitted that the words " governed by the Mitakshara, Marumakkattayam or Aliyasantana law " clearly show that the coparcenary interest has been used in a wide sense and cannot be restricted to the strict coparcenary interest known to the Mitakshara law alone. In the view which we take in this case, however, it is not at all necessary to go into this point. The main question for determination is as to whether the interest acquired by a Hindu widow under the Act of 1937 can be said to be a coparcenary interest in the legal sense of the term. Once a Hindu widow is held to have a coparcenary interest, then there would be no difficulty in treating her as a member of the Hindu coparcenary, in which case her interest could be easily valued according to the relevant provisions of section 39 of the Act which runs thus: " 39. (1) The value of the benefit accruing or arising from the cesser of a coparcenary interest in any joint ....
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....spelt out by sub-section (3) itself, namely, that while the Hindu widow would have the same right and interest as her husband, her interest would only be the limited interest known as a Hindu woman's estate. Sub-section (2) of section 3 of the Act of 1937 further conferred on the widow the right to demand partition and on partition she was entitled to get the same share as her husband. Thus, the position appears to be that a Hindu widow was introduced for the first time into the Hindu coparcenary having the same rights as her husband and became as it were a member of the Hindu coparcenary with two qualifications, viz., (1) that she had only a limited interest; and (2) that she could not be a coparcener because having regard to the nature of her entry into the family after marriage with her husband there was no question of her getting interest in the Hindu coparcenary by birth which is one of the most important incidents of a Hindu coparcenary. All the other rights of a coparcener were duly conferred on her by the Act of 1937. Dwelling on the content and import of the nature of the interest of a Hindu widow, this court pointed out in Jaisri Sahu v. Rajdewan Dubey [1962] 2 SCR 558....
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....troduced changes which were alien to the structure of a Hindu coparcenary. In this connection the court observed as follows : " The Act in investing the widow of a member of a coparcenary with the interest which the member had at the time of his death has introduced changes which are alien to the structure of a coparcenary. The interest of the widow arises not by inheritance, nor by survivorship, but by statutory substitution :...... A Hindu coparcenary under the Mitakshara school consists of males alone: it includes only those members who acquire by birth or adoption interest in the coparcenary property. The essence of coparcenary property is unity of ownership which is vested in the whole body of coparceners. While it remains joint, no individual member can predicate of the undivided property that he has a definite share therein. The interest of each coparcener is fluctuating, capable of being enlarged by deaths, and liable to be diminished by the birth of sons to coparceners : it is only on partition that the coparcener can claim that he has become entitled to a definite share. The two principal incidents of coparcenary property are : that the interest of coparceners devol....
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.... property which may on demand for partition become separated from the coparcenary property, it is still liable to revert to the coparcenary on the determination of the widow's estate, does not give full effect to the statutory conferment upon the widow of ' the same right of claiming partition as a male owner '." Finally, this court approved of certain observations made by the Madras High Court in Hanumanthappa v. Nagamma ILR [1954] Mad 183; AIR 1954 Mad 576, 579, where Subba Rao J., as he then was, made the following observations : " She could ask for partition and separate possession of her husband's share. In case she asked for partition, her husband's interest should be worked out having regard to the circumstances obtaining in the family on the date of partition. If she divided herself from the other members of the family during her lifetime, on her demise the succession would be traced to her husband on the basis that the property was his separate property. If there was no severance, it would devolve by survivorship to other members of the joint Hindu family," It is, therefore, manifest from the aforesaid decision that if the widow had not chosen to exercise her righ....
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....thly, that as a result of such co-ownership the possession and enjoyment of the properties is common; fifthly, that no alienation of the property is possible unless it be for necessity, without the concurrence of the coparceners, and, sixthly, that the interest of a deceased member lapses on his death to the survivors. A coparcenary under the Mitakshara school is a creature of law and cannot arise by act of parties except in so far that on adoption the adopted son becomes a coparcener with his adoptive father as regards the ancestral properties of the latter." Thus, analysing the ratio of the aforesaid case regarding the incidents of a Hindu coparcenary it would appear that a Hindu coparcenary has six essential characteristics, namely: (1) that the lineal male descendants up to the third generation acquire an independent right of ownership by birth and not as representing their ancestors ; (2) that the members of the coparcenary have the right to work out their rights by demanding partition; (3) that until partition, each member has got ownership extending over the entire property conjointly with the rest and so long as no partition takes place, it is difficult for any ....
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....ndu widow has got the same interest as her husband in the Hindu coparcenary and has also the right to demand partition and her interest which is a fluctuating one would lapse to the other coparceners in case of her death without seeking partition in the same manner as that of other coparceners, yet it should be exempt from estate duty. The sheet-anchor of the argument of the respondent was the Privy Council decision in Arunachalam Chettiar's case [1958] 34 ITR (ED) 20 (PC). In the first place, the facts of that case are clearly distinguishable from the facts of the present case. In that case, the Hindu undivided family consisted of father, son and some female members. According to the Privy Council, the females were merely entitled to maintenance. The females there could not have any interest in the coparcenary nor could any such argument be advanced because there was no statute similar to the Act of 1937. Moreover, in the Estate Duty Ordinance which was being construed by the Privy Council there was neither any provision like the inclusive part of sub-section (1) and sub-section (2) of section 7 nor any provision similar to section 39 of the Act. In these circumstances, we do n....
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....ry or as having been conferred coparcenary interest in the property. Even though the widow is not a coparcener in the strictly legal sense of the term, the interest which she has is the same interest as her husband had and that is the coparcenary interest with the only limitation placed on her by section 3(3) of the Act of 1937, namely, that her interest would be the limited interest of a Hindu widow. The conclusion is, therefore, inescapable that Smt. Alladi did possess a coparcenary interest which lapsed on her death and merged into the coparcenary and the case was clearly covered by the inclusive part of sub-section (1) of section 7 and under section 39 the value of the benefit accruing or arising from the cesser of her coparcenary interest was to be determined by taking the principal value of the share in the joint family property which would have been allotted to her, had there been a partition immediately before her death. The last plank of the argument of the respondent was that the Estate Duty Act being a fiscal statute should be construed strictly so as to give every benefit of doubt to the subject. There can be no quarrel with this proposition but when the phraseology ....