COMMISSIONER OF WEALTH TAX Vs. N A MAYANNA

JUDGEMENT

(1.) THE following question of law is referred for our consideration under the provisions of the WT Act, 1957 :

(2.) THE relevant facts are : THE HUF consisted of Shri Appayyanna, his wife, Smt. Eeramma, and his son, Mayanna. On 11th April, 1974, Shri Appayyanna died. His share of the property devolved on his widow, Eeramma, and his son, Mayanna. Mayanna filed a return of wealth declaring half of the wealth as belonging to the family in the status of an HUF and the other half as belonging to the individual. THE WTO accepted the returns and assessed only half of the wealth as that of the HUF. THE CWT was of the view that the order of the WTO was erroneous and prejudicial to the interests of the Revenue. He invoked the provisions of s. 25(2) of the WT Act to which the assessee objected. THE Commissioner did not accept the objections of the assessee. He held that the properties of the 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 redo the same bringing to tax the entire wealth of the family. In the appeal filed by the assessee, the Tribunal found that the deceased had left surviving a female relative specified in class I of the Schedule to the Hindu Succession Act (for short "the Act"), that is the widow of the deceased and hence the proviso to s. 6 would apply ; thus the property shall not devolve by survivorship but only by intestate succession ; as the deceased has not left any will, under Explanation 1 to s. 6, a notional partition shall be deemed just 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 would devolve on his heirs ; this does not affect the continuance of the HUF ; where the proviso to s. 6 applies, no disruption of joint family status takes place. THE coparcenary will continue till a partition is effected but the coparcenary property will not include the interest of the deceased coparcener which devolves on his heirs. That share of the deceased which devolved on the heirs by intestate succession goes out of the HUF and the HUF continues to be the owner of the remaining share only. THE share of the deceased in the coparcenary property which has devolved on his heirs by intestate succession having gone out of the family to the heirs who held them as tenants-in- common cannot be included in the net wealth of the HUF. Thus, the property of the HUF stood diminished to the extent of the share of the deceased. Consequently, this reference was invited by the Revenue and has come up before us.

(3.) IN the concluding paragraph, the Bench again stated that (at p. 354): "The joint family, notwithstanding the death of one of its male members, continues for the purpose of income-tax but the share of that joint family is diminished as in the case of alienation of any of the joint family properties."