N A MAYANNA Vs. THIRD WEALTH TAX OFFICER
LAWS(IT)-1982-11-7
INCOME TAX APPELLATE TRIBUNAL
Decided on November 11,1982

Appellant
VERSUS
Respondents

JUDGEMENT

T. Venkatappa, Judicial Member - (1.) THIS is an appeal against the order of the Commissioner, Karnataka-I dated 17-3-1981 passed under Section 25(2) of the Wealth-tax Act, 1957 ('the Act'), setting aside the assessment order for the assessment year 1975-76 to be redone bringing into tax the entire wealth of the family.
(2.) The facts are : The HUF consisted of Shri Appayyanna, his wife Smt. Eeramma and his son- Mayanna. On 11-4-1974, Shri Appayyanna died. His share of the property devolved on his widow Eeramma and his son Mayanna. Mayanna filed return of wealth declaring half of the wealth as belonging to the family in the status of a HUF and the other half as belonging to the individual. The WTO accepted the returns and assessed only half wealth in the case of the HUF. The Commissioner was of the view that the order of the WTO was erroneous and prejudicial to the interest of revenue. He invoked the provisions of Section 25(2). The assessee objected for invoking the provisions of Section 25(2). The Commissioner did not accept the objections of the assessee. He held that the properties of a HUF will remain with the family till a partition is effected. Since no partition is effected, all the properties of the family are assessable to wealth-tax as belonging to the family. Accordingly, he set aside the assessment and directed the WTO to re-do the same bringing into tax the entire wealth of the family. Against the same, the present appeal is filed. It will be necessary to refer to the provisions of the Hindu Succession Act, 1956. Section 6 of the said Act deals with devolution of interest in coparcenary property. It reads as under : When a male Hindu dies after the commencement of this Act, having at the time of his death an interest in a Mitakshara coparcenary property, his interest in the property shall devolve by survivorship upon the surviving members of the coparcenary and not in accordance with this Act : Provided that, if the deceased had left him surviving a female relative specified in clause I of the Schedule or a male relative, specified in that clause who claims, through such female relative, the interest of the deceased in the Mitakshara coparcenary property shall devolve by testamentary or intestate succession, as the case may be, Under this Act and not by survivorship. Explanation 1: For the purposes of this section the interest of a Hindu Mitakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death, irrespective of whether he was entitled to claim partition or not. Explanation 2 : Nothing contained in the proviso to this section shall be construed as enabling a person who has separated himself from the coparcenary before the death of the deceased or any of his heirs to claim on intestacy a share in the interest referred to therein. The main part of Section 6 provides that when a male Hindu dies after the commencement of the Act, having at the time of his death an interest in a Mitakshara coparcenary property, his interest in the property shall devolve by survivorship upon the surviving members of the coparcenary and not in accordance with this Act. But under the proviso to it, if the deceased had left behind him surviving a female relative specified in clause I of the Schedule or a male relative specified in that clause who claims, through such female relative, the interest of the deceased in the Mitakshara coparcenary property shall devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivorship. Under Explanation 1, the interest of a Hindu Mitakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death irrespective of whether he was entitled to claim partition or not.
(3.) IN the instant case, the deceased has left surviving a female relative specified in clause I of the Schedule, i.e., the widow of the deceased. Hence, the proviso to Section 6 would apply. Hence, the property was not devolved by survivorship but only by intestate succession as the deceased has not left any intestate. Under the Explanation, a notional partition shall be deemed before the death of the deceased. The share in the coparcenary property which would have been allotted to the deceased on partition if the partition had taken place immediately before his death shall devolve on his heirs. This does not affect the continuance of the HUF. Where provison to Section 6 of the Hindu Succession Act applies, there will be no dissolution of joint family status. The coparcenary will continue till a partition is effected but the coparcenary property will not include the interest of the deceased coparcener which has devolved on his heirs by inherited succession. That share of the deceased which has devolved on the heirs by intestate succession goes out of the HUF and the HUF continues to be the owner of the remaining share. The share of the deceased which has devolved on his heirs will be held by them as tenants-in common. Under Section 19 of the Hindu Succession Act, the heirs shall take the property as tenants-in-common and not as joint tenants. Thus, the share of the deceased in the coparcenary property which has devolved on his heirs by intestate succession having gone out of family to the heirs who held them as tenants-in-common cannot be included in the net wealth of the HUF. IN view of Explanation 1, a notional partition shall be deemed to arrive at the share of the deceased, There need not be actual partition, The Commissioner was wrong in thinking that the properties of the HUF will remain in the family till a partition is effected.;


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