Commissioner of Income Tax vs N.D. Mehta

R.B. Abichandani, J.—The assessee filed a return if income on June 30, 1969, showing a total income of Rs. 8,294 and thereafter a revised return on December 3, 1969, showing total income of Rs. 4,356. The assessee contended that she had no interest in the property left by her husband who died intestate on August 9, 1955, leaving self-acquired property. The deceased had left behind him, his son and his widow who is the present assessee. The Income Tax Officer held that half of the share of the self-acquired property of the deceased was assessable in the hands of the assessee as her absolute property and assessed her income accordingly by adding half-share in the properties self-acquired and left by her deceased husband.

The Appellate Assistant Commissioner upheld the decision of the Income Tax Officer holding that the Income Tax Officer had rightly assessed the one-half share of the income from the said property in the hands of the assessee. On further appeal, the Tribunal held that the lower authorities were not right in holding that the income from the property inherited by the assessee should be assessed as individual income and not as Hindu undivided family income. The Tribunal held that, in view of the decision of this court in Commissioner of Wealth Tax, Gujarat I Vs. Harshadlal Manilal, , the authorities below were wrong in holding that the assessee had held one-half share in the income from the self-acquired property of her deceased husband and that the said share belonged to her as her absolute property.

Pursuant to the directions of this court, the Tribunal has referred for the opinion of the High Court, the following two questions u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the said Act") :

"1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in finding that the lower authorities were wrong in holding that the assessee was having half-share in the income of the self-acquired property left by her husband and that the same belonged to the assessee as the absolute property ?

Whether half-share in income from self-acquired property left by the husband of the deceased is assessable in the hands of the assessee ?"

Admittedly, Shri Deviprasad M. Mehta, husband of the assessee, died on August 9, 1955, i.e., prior to the coming into force of the Hindu Succession Act, 1956, leaving behind him, his son and his widow, the assessee, who succeeded to his self-acquired property. Since Deviprasad M. Mehta died before the coming into force of the Hindu Succession Act, 1956, the rights of his widow in respect of his self-acquired property were governed by the provisions of the Hindu Women''s Rights to Property Act, 1937 (hereinafter referred to as "the Act of 1937"). As indicated in the preamble, the Act of 1937 was intended to give better rights to women in respect of property. The provisions of section 3, dealing with devolution of property where a Hindu dies intestate, which are material for the purpose of this matter, are as follows :

"3. (1) When a Hindu governed by the Dayabhaga school of Hindu law dies intestate leaving any property, and when a Hindu governed by any other school of Hindu law or by customary law dies intestate leaving separate property, his widow, or if there is more than one widow, all his widows together, shall, subject to the provisions of sub-section (3), be entitled in respect of property in respect of which he dies intestate to the same share as a son :

Provided that the widow of a predeceased son shall inherit in like manner as a son if there is no son surviving of such predeceased son, and shall inherit in like manner as a son''s son if there is surviving a son or son''s son of such predeceased son :

Provided further that the same provisions shall apply mutatis mutandis to the widow of a predeceased son of a predeceased son.

(2) When a Hindu governed by any school of Hindu law other than the Dayabhaga School or by customary law dies having at the time of his death an interest in a Hindu joint family property, his widow shall, subject to the provisions of sub-section (3), have in the property the same interest as he himself had.

(3) Any interest devolving on a Hindu widow under the provisions of this section shall be the limited interest known as a Hindu Woman''s estate, provided however that she shall have the same right of claiming partition as a male owner."

It was contended by learned counsel, Mr. Divetia, appearing for the assessee, that the separate property inherited by the widow under sub-section (1) of section 3 of the Act of 1937, will be part of the Hindu undivided family property since sub-section (3) of section 3 provides that interest devolving on a Hindu widow under the provisions of section 3 shall be the limited interest known as "Hindu Woman''s estate" and that she has a right of claiming partition. He submitted that just as the interest in a Hindu joint family property devolving on a widow is the same interest as that of her husband who died intestate and, therefore, she has no defined share in respect of such interest, even when the separate property devolves on her, she would not have any defined interest in respect of such property which should be treated as a part of the Hindu undivided family property.

On a plain reading of the provisions of sub-section (1) of section 3, it is clear that, in the direction of giving better rights to women in respect of property of a Hindu dying intestate, his widow is given same share as a son in respect of the separate property of her husband. The words "the same share as a son" can only mean that she will inherit "in like manner as a son". The separate property of the father on his death would become ancestral property in the hands of the son but the share which is granted to his widow by virtue of the provisions of sub-section (1) of section 3 in such separate property cannot be treated as an ancestral property in her hands despite the fact that the interest devolving on her is a limited interest known as "Hindu Woman''s estate". On a Hindu dying intestate, sub-section (1) of section 3 clearly carves out the interest of his widow by prescribing the share to which she becomes entitled in respect of the separate property of her husband. From the fact that the provisions of sub-section (3) which describes the limited nature of interest which devolves on a Hindu widow and enables her to claim partition, it cannot be inferred that the share devolving on a Hindu widow in respect of the separate property of her husband is an undefined share, as sought to be suggested by learned counsel appearing for the assessee. Sub-section (2) of section 3 is enacted to deal with the interest of a Hindu dying intestate in a Hindu joint family property and provides that his widow shall, subject to the provisions of sub-section (3), have the same interest as he himself had in the joint family property. Therefore, when the interest of a Hindu in a joint family property was in the nature of an undefined share which fluctuated with the membership of the coparcenary and was governed by the incident of survivorship, the law took care to see that, when such interest devolves on the widow, its nature remains the same. This is why the interest in a joint family property of the husband which devolves on his widow would continue to have the same incidents of a joint family property and the widow does not acquire any separate or defined share in such property. In respect of interest in the joint family property which devolves under sub-section (2), since the husband could not have claimed any defined share until partition was claimed, the share of his widow would become defined only if and when she claims partition because the same interest as her husband had in the joint family property devolved on her. Even this interest which devolves on her and which retains the same character as it had before the death of her husband is again a limited interest known as "Hindu Woman''s estate" though she has been given a right to claim partition even in respect of such interest in the joint family property. It is, thus, clear that the area of operation of sub-section (2) of section 3 is different from sub-section (1) which deals with the separate property of the deceased Hindu dying intestate. Merely because sub-section (3) provides that the interest which devolves under sub-section (1) and sub-section (2) shall be a limited interest known as "a Hindu Woman''s estate", it cannot be inferred that the incidents of the devolution of interest of her deceased husband in the joint family property on her attach also to her share in the self-acquired property of her husband. Since the property, at the time when it devolved on the widow, was self-acquired property in the present case, the incidents of coparcenary property cannot be attached to it in respect of the share which devolved on the widow and it is clear that she took a defined share equal to that of the son in the self-acquired property of her husband at the time of his death.

Admittedly, the self-acquired property of her husband had devolved on the assessee u/s 3(1) of the Act of 1937. On the day when the provisions of the Hindu Succession Act came into operation, she became a full owner of the share which had devolved on her by virtue of section 14 of that Act. We, therefore, are of the view that the one-half share in the separate property of Deviprasad M. Mehta, which devolved on his widow, namely, the assessee, became her absolute property and was, therefore, assessable in her hands and not in the hands of the Hindu undivided family as held by the Tribunal.

The Tribunal had placed reliance on the decision of this court in Commissioner of Wealth Tax, Gujarat I Vs. Harshadlal Manilal, for holding that the property which devolved on the assessee became the property of the joint Hindu family. In out view, the decision of this court in Commissioner of Wealth Tax, Gujarat I Vs. Harshadlal Manilal, does not warrant such an inference in respect of the separate property of a Hindu dying intestate devolving on his widow u/s 3(1) of the Act of 1937. In Commissioner of Wealth Tax, Gujarat I Vs. Harshadlal Manilal, , the assessee''s father had died in 1927 leaving his widow, his only son, the assessee, and a daughter and, on the relevant valuation date, the family consisted of the assessee, his wife, his daughter and his mother. The assessee had received on the death of his father self-acquired properties of his father. The self-acquired properties had passed into the hands of the assessee and became ancestral property in the hands of the assessee. It was found that since the mode of transmission of the property stamped it with the character of joint family property, the property received by the assessee on the death of his father became the property of the joint Hindu family. In the instant case, we are not concerned with the separate property devolving on the son which would become ancestral property in his hands where the mode of transmission is by succession. We are, in the instant case, concerned with the share equal to that of a son devolving on the widow, which, though limited in nature by virtue of sub-section (3), cannot be treated as ancestral property in the hands the widow. Therefore, the decision in Commissioner of Wealth Tax, Gujarat I Vs. Harshadlal Manilal, can have no application to the facts of the present case and the Tribunal has erred in placing reliance on it for holding that the share in property which devolved on the widow under sub-section (1) of section 3 of the Act of 1937, should be treated as a part of the joint family property. In this view of the matter, the decision of the Rajasthan High Court in Smt. Vidyawati Devi Rathi Vs. Commissioner of Gift-tax, , on which reliance was placed on behalf of the assessee, cannot help the assessee since that decision turned upon the provisions of section 3(2) of the Act of 1937, and, therefore, it was held that the exact share in the joint family property of the widow cannot be predicated until partition is made and till then she has a fluctuating interest in the property. In our opinion this incident of joint family property cannot attach the share of the widow in the separate property of her husband which devolved on her by virtue of sub-section (1) of section 3 of the Act of 1937. Even in Commissioner of Wealth Tax, Kanpur and Others Vs. Chander Sen and Others, , on which reliance was placed on behalf of the assessee, no question of the share of a widow in separate property of her husband dying intestate was involved since in that case, the father had died leaving behind his sons and his grandson, his mother and wife having predeceased him. The decision of the Supreme Court in State of Maharashtra Vs. Narayan Rao Sham Rao Deshmukh and Others, , on which reliance was sought to be placed on behalf of the assessee can have no application to the facts of the present case since the question involved therein was in respect of the unit of ceiling area which the family was entitled to retain under the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961. Under that Act, a "person" included a "family" for purposes of the Ceiling Act and the members of the family could not hold more than one unit of the ceiling area. Therefore, even if the female acquired an interest by inheritance in the property, since she continued to be a member of the family, the unit of ceiling area was to be computed as per the provisions of the Ceiling Act.

We, therefore, hold that the Tribunal committed an error in coming to the conclusion that the self-acquired property of her deceased husband, which had devolved on the assessee, became the property of the joint Hindu family. We hold that the one-half share in the separate property of Deviprasad M. Mehta which devolved on his widow, i.e., the assessee, by virtue of sub-section (1) of section 3 of the Act of 1937, became her absolute property on the coming into force of section 14 of the Hindu Succession Act, 1956, and, therefore, the income from such property was assessable in the hands of the assessee. We, therefore, answer question No. 1 in the negative and in favour of the Revenue.

The reference stands disposed of, accordingly, with no order as to costs.