DWARAKA PRASAD Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) THE only question that has been referred to us by the CBDT under S. 64 of the ED Act is :

(2.) THE deceased was the sole surviving coparcener of an HUF, and on 25th March, 1954, i.e., about a month before his death, he adopted a son, who is now the person accountable. A claim was made by the accountable person that after his adoption he became a member of the joint family and on the death of his adoptive father he was liable to the estate duty only in respect of the other half share. The Asstt. CED, Hyderabad, who was the assessing authority in this case, held that, as a result of the adoption made by him, the deceased had surrendered in favour of the adopted son, within two years before death, his right in a half share of the property of which he was till then the absolute owner and that liability to estate duty was attracted on the death in respect of the interest thus surrendered. The Asstt. CED accordingly determined the principal value of the estate of the deceased at Rs. 1,16,069 (including therein the interest acquired by the applicant on adoption in the half share of the property valued at Rs. 58,535) and the duty payable thereon at Rs. 2,444.40 nP.

(3.) THE order of the Asstt. CED as well as that of the Board run counter to the fundamental and well accepted notions of Hindu law. It is rather surprising that, while accepting the principle that on the adoption on 25th March, 1954, the adopted son acquired the rights of a natural son and became a member of the HUF, the estate duty authorities treated the adoption as a voluntary act of transfer of property and as amounting to a gift under S. 9 of the Act. We are at a loss to understand as to how a distinction can be drawn between the restriction of the rights in property of a sole surviving coparcener by the birth of a son on the one hand and by adoption on the other. In both these cases, a coparcener is introduced which halves the interest of the sole surviving coparcener and the joint family in turn is expanded. Their Lordships of the Privy Council in Anant Bhikkappa Patil vs. Shankar Ramachandra Patil AIR 1943 PC 196 have expounded this principle of Hindu law by holding that the power of a Hindu widow to adopt does not come to an end on the death of the sole surviving coparcener. Neither does it depend upon the vesting or divesting of the estate nor can the right to adopt be defeated by partition between the coparceners on the death of a sole surviving coparcener and a Hindu joint family cannot be finally brought to an end while it is possible in nature or law to add a male member to it. It is further held that the family cannot be at an end while there is still a potential mother if that mother in the way of nature or in the way of law brings in a new male member.