S PARTHASARATHY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question under reference pertains to the character of the rental income received by each of the assessees for the assessment year 1960-61. THEre is no dispute as to the quantum of the rental income. THE assessees were each allotted a house by their father by a deed dated July 12, 1959. THE revenue has throughout taken the view that the rental income from these houses constituted the individual income of each of the assessees and could not by any means be regarded as income of each of the assessees in the status of a Hindu undivided family. With this view of the terms of the said document, the Tribunal agreed. It however felt that a question of law did arise and, at the instance of the assessees, it made a consolidated reference to us of the following question "Whether the property obtained and held by the sons by the deed of July 12, 1959, was individually and exclusively for themselves or as kartas of their Hindu undivided families ?" *Though the question has been framed in that form, we have indicated the real point for decision, namely, as to whether the income of each of the assessees in question pertains to the income of the Hindu undivided family of each of themTHE answer to the question turns entirely upon our construction of the terms of the deed. It is manifest from it that the two houses were the self-acquisitions of the father of the assessees. It appears that out of his own funds he purchased a plot of land in Cathedral Road, Madras, on November 7, 1913, and in the first instance, built 8 houses on a part of the site. He allotted two houses to each of his four daughters in 1944 under a settlement deed. On the remaining extent he built three houses bearing Doors Nos. 9, 10 and 11, of which under the deed of 1959 he reserved one house exclusively for himself and allotted one house to each of his sons. He provided in the deed that from the date of the document each son must take the house, receive the income therefrom, pay the tax and thus enjoy the property. He further provided that in case any of his sons desired to alienate his house, he should in the first instance offer to sell it to the other brother and only when the option is not exercised by the other brother, should he be in a position to alienate his house to a strangerIt is contended for the assessees that the terms of the deed show that the intention of the father was to give a house to each of his sons representing his branch and as an ancestral property in his hands, and not as a gift to each of them exclusively with absolute rights. In support of this contention reliance is placed upon the description of the deed as pakapattiram (partition deed) and the fact that each of the two sons has been allotted a house of equal value and the father himself reserved to himself a house of similar value. It is also pointed out for the assessees that it was in the contemplation of the father that each son should get a house and enjoy the same separately, that is to say, on behalf of himself and his family. THE effect of these features, so it is argued, disclosed a scheme of partition and the allotment of a house to each of the sons was a part of such scheme. We are not persuaded to accept this view of the document.

(2.) THE effect of a disposition under a document has to be ascertained primarily from the intention evinced by the language employed in the particular deed under construction. THEre is no presumption that when a father allots his self-acquired properties among his sons, the sons take their bounties or shares as ancestral property. In Arunachala Mudaliar v. Muruganatha Mudaliar the Supreme Court held that there was no warrant for saying that, according to the Mitakshara, an affectionate gift by the father of his self-acquired property to his son constituted ipso facto ancestral property in the hands of the donee. THE court observedBut when the father obtains the grandfather's property by way of gift, he receives it not because he is a son or has any legal right to such property but because his father chose to bestow a favour on him which he could have bestowed on any other person as well. THE interest which he takes in such property must depend upon the will of the grantor. A good deal of confusion, we think, has arisen by not keeping this distinction in mind. To find out whether a property is or is not ancestral in the hands of a particular person, not merely the relationship between the original and the present holder but the mode of transmission also must be looked into and the property can ordinarily be reckoned as ancestral only if the present holder has got it by virtue of his being a son or descendant of the original owner. THE Mitakshara, we think, is fairly clear on this point. "It is clear from the decision of the Supreme Court that it is well accepted law that a Mitakshara father has complete powers of disposition over his self-acquired property and that being the case, such a father is quite competent to provide expressly when he makes a gift either that the donee would take it exclusively for himself or that the gift would be for the benefit of his branch of the family. As further observed by the Supreme Court" *THE material question which the court would have to decide in such cases is, whether taking the document and all the relevant facts into consideration, it could be said that the donor intended to confer a bounty upon his son exclusively for his benefit and capable of being dealt with by him at his pleasure or that the apparent gift was an integral part of a scheme for partition and what was given to the son was really the share of the property which would normally be allotted to him and in his branch of the family on partition ? In other words, the question would be whether the grantor really wanted to make a gift of his properties or to partition the same? As it is open to the father to make a gift or partition of his properties as he himself chooses, there is, strictly speaking, no presumption that he intended either the one or the other. "It is open to a Mitakshara father, therefore, to treat his self-acquired property as ancestral property and then proceed to allot the same to his sons as in a partition. Equally he can, treating his property as self-acquired and in the exercise of his power of disposition over it, make a gift of this or that property of his own to each of some of his sons at his discretion and pleasure.