COMMISSIONER OF INCOME TAX Vs. ANIL J CHINAI

JUDGEMENT

(1.) THIS is an application by way of a petition under S. 256(2) of the IT Act, 1961, for directing the Tribunal to refer certain questions of law to this Court for its opinion and to draw up a statement of case for that purpose. The questions which are sought to be referred are as follows :

(2.) CERTAIN uncontroverted facts emerge from the order of the Tribunal rejecting the application made by the petitioner here for making a reference to this Court. Anil Chinai was the Karta of an HUF (referred to hereinafter as "the HUF") consisting of himself, his wife, Jayantika, and their two minor daughters, Arti and Anjana. The respondent before us is the said HUF during the year under assessment, namely, asst. year 1973 74 and as the Karta of the assessee HUF made gifts of certain shares of its undivided share in certain immovable properties to Smt. Jayantika A. Chinai, the wife of Anil Chinai and to two trusts in favour of their minor daughters, Arti and Anjana, respectively. These gifts were made by Anil Chinai in his capacity as the Karta and sole surviving member of the said HUF as aforesaid. It appears that the said donees sold the gifts received by them and made capital gains. The ITO took the view that the aforesaid three gifts were not valid and the assessee HUF continued to be the owner of the gifted properties and hence he taxed the aforesaid capital gains in the hands of the assessee.

(3.) IN this case, the law appears to be fairly clear. In Art. 257 of Mulla's Commentary on Principles of Hindu law (15th Edn. at p. 345), it has been clearly observed that a person who for the time being is the sole surviving coparcener is entitled to dispose of the coparcenary property as if it were his separate property. He may sell or mortgage the property without legal necessity or he may make a gift of it. If a son is subsequently born to him or adopted by him, the alienation, whether it is by way of sale, mortgage or gift, will nevertheless stand, for a son cannot object to alienations made by his father before he was born or begotten. The same position emerges from the decision of a Division Bench of the Gujarat High Court in Anilkumar B. Laskari vs. CIT (1983) 37 CTR (Guj) 266 : (1983) 142 ITR 831 (Guj). It has been held there that under the Hindu law, it is the settled legal position that the existence of a female member does not in any way curtail or restrict the right of the sole surviving coparcener to alienate the coparcenary property as if it were his separate property. We are in respectful agreement with this conclusion. Reference may now be made to the decision of the Supreme Court in Surjit Lal Chhabda vs. CIT 1976 CTR (SC) 140 : (1975) 101 ITR 776 (SC). In that case, the HUF consisted of a sole member who was the appellant before the Supreme Court, his wife and his married daughter. The Supreme Court held, as far as the wife and minor daughter were concerned, they not being coparceners of the appellant, had neither a right by birth in the property nor the right to demand its partition nor indeed the right to restrain the appellant from alienating the property for any purpose whatsoever. It is true that, in that case, it so happened that the property in question had been thrown by the sole surviving coparcener into the family hotchpot which had no other property, but the principle laid down which we have pointed out above, was not limited to those facts but was of general application.