Decided on January 02,1984



LODHA, J. - (1.)THIS reference has been made by the Tribunal, Jaipur Bench, and is a joint reference in the matter of wealth-tax as well as income-tax assessments of the assessee, Maharajadhiraj Himmat Singhji. The relevant year for the wealth-tax is 1957-58, and for the income-tax matters, 1961-62 to 1965-1966 The facts giving rise to this reference briefly stated are that the assessee, Maharajadhiraj Himmat Singhji is the second son of late Maharaja Shri Ummed Singh, the then Ruler of the erstwhile Jodhpur State. On the death of Maharaja Shri Ummed Singh, his eldest son, the late Maharaja Shri Hanuwant Singh succeeded to the Jodhpur State. Maharaja Hanuwant Singh had four brothers including the present assessee. He gave jagirs and residential accommodations to his four brothers as their " chhut bhai bunt" and the assessee received 17 villages and a residential house in Jodhpur. The assessee is governed by the Hindu Mitakshara law and by custom as well as the Marwar Land Revenue Act, the rule of primogeniture is applicable to him. The jagir and the residential house received by the assessee is on that account impartible. The assessee held the jagir land and the residential house till 30th June, 1954, whereafter the jagir was resumed by the Government of Rajasthan, which had succeeded to the State of jodhpur and some interim compensation was paid to the assessee. Up to 5th Sept., 1956, he had received Rs. 1,25,520 as interim compensation. The compensation was finally determined on 21st Aug., 1959, at a figure of Rs. 7,02,659 and on the above basis, the balance of compensation which was due to him on the valuation date was Rs. 5,77,139 though the jagir bonds in respect of the compensation were issued only after 21st Aug., 1959. Out, of the jagir bonds, the assessee had on the request of his wife got the bonds issued separately in his name and in the names of his wife and two minor sons. The market value of the above bonds amounting to Rs. 5,77,139 was determined by the WTO at Rs. 4,10,169 and included in the total wealth of the assessee. The residential house was sold by the assessee to the Government of Rajasthan on 1st March, 1958, for Rs. 3,00,000. Out of the sale proceeds, the assessee deposited different amounts in fixed deposits in the names of his wife and his two minor sons. The WTO took the value on the date of the valuation at the same figure. These assets were treated by the WTO as the individual assets of the assessee and the valuation thereof was included in his total wealth. In the income-tax assessments, the income arising to the assessee from the investments in the names of his minor sons of a part of the realisations from the sale of the property was also treated as the individual income of the assessee. The assessee filed appeals against these assessments as he claimed that these assessments and the income from the investments out of the sale proceeds were the assets and income of the joint Hindu family of which the assessee was the "Karta" and the appeals were accepted by the learned AAC. He found that the compensation received on the resumption of the jagir as also the residential house could not be treated as the individual assets of the assessee and that they were the assets of the joint Hindu family headed by the assessee. The WTO filed an appeal against the order of the learned AAC, which was accepted by the Tribunal and the Tribunal held that these assets constituted the individual property of the assessee. Similarly in the appeals against assessments of income-tax, the AAC held the incomes to be of the joint family and not to be the individual income of the assessee but on appeal by the ITO, the Tribunal reversed the order and held that such income was rightly included in the total income of the assessee under s. 64(iv) of the IT, Act. Thereupon, the Tribunal was requested to make a reference to this Court and the learned Tribunal referred the following questions to this Court :
"1. Whether, on the facts and in the circumstances of the case, the jagir lands and residential property received by the assessee from his brother, the late Maharaja Hanuwant Singh, constituted individual property in his hands for the purposes of the WT Act ?

(2.)WHETHER, on the facts and in the circumstances of the case, the Tribunal are justified in holding that the market value of the compensation receivable by the assessee in respect of the jagir lands resumed by the Government of Rajasthan was includible in his total wealth for the asst. yr. 1957- 58, though the exact amount of compensation payable to him was finally determined only in August, 1959 ?
Whether, on the facts and in the circumstances of the case, the income derived by the assessee from investments in fixed deposits and house property in the names of his minor sons was includible in his total income under s. 64(iv) of the IT Act ?" We have heard Shri Meratwal on behalf of the assessee and Shri J. P. Joshi on behalf of the CWT and Income-tax. Having heard the learned counsel for the parties, we are clearly of the opinion that the questions referred to us in this reference already stand answered by various decisions of this Court and, therefore, a detailed discussion of the matter is not called for. Suffice it to say that on the basis of a number of decisions of the Privy Council and the Supreme Court, this Court in the decisions to which we shall presently refer, has found that where in impartible estate is governed by the Hindu Mitakshara law as also the rule of primogeniture, the holder of such an estate cannot be deemed to be the sole owner of the same and it must be deemed to be joint Hindu family property in his hands as a "Karta". The first case to which reference may be made is a decision of a Division Bench of this Court in Thakur Gopal Singh vs. CWT (1975) 99 ITR 354. In that case, this Court after taking into consideration the authorities reported in Baijnath Prasad vs. Tej Bali Singh, AIR 1921 PC 62, Komammal vs. Annadana Jadaya Gounder, AIR 1928 PC 68, Shiba Prasad Singh vs. Rani Prayag Kumari Debi, AIR 1932 PC 216, Pushpavathi Vijayaram vs. P. Visweswar, AIR 1964 SC 118 and State of U. P. vs. Raj Kumar Rukmini Raman Brahma, AIR 1971 SC 1687 etc., held (p. 365):

"There is no manner of doubt left in our mind that the jagir of Badnore was not the absolute property of the jagirdar and it belonged to the HUF."
The question of compensation received by the assessee on the resumption of the jagir was also considered in that case and it was held (p. 367):
"We have already held above that the jagir which the assessee held belonged to the joint Hindu family and it was not his self- acquired or his separate property. The compensation awarded to him or the market price of the compensation on the date of valuation could be assessed for wealth-tax purposes only as that of an HUF. The character of compensation cannot be different from what it was of the jagir."
It may be mentioned here that this case arose from that part of Rajasthan, which was formerly a part of the former Mewar State and was governed by the Qanoon Mal Mewar and it was not in dispute that the jagir of Badnore was ancestral and impartible and was governed by the rule of primogeniture. Later, this decision was followed by another Division Bench of this Court in CWT vs. Thakur Bhairon Singh (1984) 147 ITR 32. This case related to the jagir of Barkana, which was formerly the scheduled jagir in the then State of jodhpur, Marwar. In this case, the provisions of the Mewar Land Revenue Act and the Qanoon Mal Mewar were held to be analogous and the view taken in Thakur Gopal Singh's case (supra) was adopted. It was further observed as under (p. 38) :
"The assessee has merely said that this amount is the joint Hindu family property of himself and his sons and from this declaration it is easy to infer the intention of the assessee that he has impressed the compensation and other assets included in the returns with the character of undivided joint Hindu family property."
So also is the case with the present assessee inasmuch as he has also declared these properties to be of the joint Hindu family and has thus impressed them with that character. Then yet in another case of this Court reported in CWT vs. Thakur Laxman Singh (See infra Appendix at p. 421), the earlier two authorities were followed and it was observed as under :
"We have gone through these cases and find that Thakur Bhairon Singh's case (supra) is on all fours with the present case and squarely covers the points arising in the case on hand. Learned counsel for the Department could not point out any distinguishing features in the present case which may take it out of the principle laid down in the two decisions of this Court referred to above. We, therefore, do not consider it necessary to repeat all the reasons which have been set out in the aforesaid two decisions in support of the view that the wealth in question must be taken to be the wealth of the HUF and the assessee should be assessed with respect to it in his status as Karta of the HUF. We may also mention that Bhairon Singh's case was sought to be taken to the Supreme Court by an application for grant of leave which was refused. The decision by this Court in Bhairon Singh's case is reported to have become final."
It may be mentioned that the question in Bhairon Singh's case (supra), as well as in Thakur Laxman Singh's case (See p. 421 infra (Appx.)), related to the compensation received by an ex jagirdar in lieu of the resumption of the jagir. These authorities were again followed by another Division Bench of this Court of which one of us was a member in Thakur Bhawani Singh vs. CED (IT Ref. No. 8 of 1971, decided on 13th July, 1983--(1984) 147 ITR 29). Yet in another case reported in Gopal Singh vs. State of Rajasthan (1983) WLN 375, a learned Single judge (who is a party to the present order also) had, relying on Thakur Gopal Singh's case (supra), held that if the impartible character of the property was lost on account of the resumption of the jagir, then the property would still bear the character of a joint family property. It will not be out of place to mention that the learned counsel for the Department has not challenged the view taken by these authorities and has not pointed out any distinguishing features in the present case. In these circumstances, we are clearly of the opinion that questions Nos. 1 to 3 should be answered in the negative. It may be added that when the assets themselves were of the joint Hindu family and not of the assessee in his individual capacity, the income derived from the investmen ts made in the names of the minor sons of the assessee could also not be covered under s. 64(iv) of the IT Act.

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