PARSHOTAM DASS Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) ONE Kanhaya Lal along with his three sons originally constituted a Hindu undivided family. Till the assessment year 1945-46, this family was being assessed to income-tax as such and was carrying on the money-lending and cloth business in the name of Kahan Chand Kanhaya Lal and Kanhaya Lal Mehra. They possessed properties both movable and immovable. On 7th August, 1944, Kanhaya Lal (the karta of this family), of which is only ascertained after the sale takes place. For purposes of computation, the two parts of the business may with the consent of his sons and wife, Smt. Kushal Devi, executed a farkhati nama (release deed) under which the three sons, after getting Rs. 10,000 each, gave up their entire rights in the said joint family property and separated from the family. After that Kanhaya Lal continued carrying on the money-lending as well as the cloth business, while the sons started their separate businesses. On the basis of the release deed, it was claimed before the income-tax authorities under section 25A of the Income-tax Act, 1922, that a partition had than place amongst the members of the family and on 19th December, 1945, the Income-tax Officer passed an order under this section to that effect. Thereafter, Kanhaya Lal was assessed to income-tax in the status of an individual till his death which occurred on 10th April, 1956. On his death, proceedings with regard to the imposition and recovery of the estate duty under the Estate Duty Act, 1953 (hereinafter referred to as the Act), started and his sons and the widow, who were the accountable persons, contended before the Assistant Controller of Estate Duty, Amritsar, that the capital in the business of the deceased did not belong solely to him but represented the joint property of the deceased and his wife, Smt. Kushal Devi. Their case was that at the time of the execution of the release deed, which resulted in the disruption of the family, the sons had received their shares in the joint family property, but the remaining property was jointly owned by the deceased and his wife. This state of affairs continued till Kanhaya Lal died. At the time of the partition, Smt. Kushal Devi had rights in the joint family property equal to that of a son. She did not get her share separated, but preferred to remain joint with her husband. It was, consequently, urged that only one-half share in the capital could be termed as constituting the estate of the deceased. They also stated that when the release deed was executed, only the movable belonging to the joint family were divided, while immovable property was kept joint. As a result, Kanhaya Lal had only one-fifth share in the house property, which belonged to the Hindu undivided family consisting of the deceased, his wife and the three sons. By his order dated 5th March, 1959, the Assistant Controller held that the release deed effected a complete partition of the joint Hindu family; that this partition was admitted to be so by the deceased and his sons, with the result that an order under section 25A of the Income-tax Act, 1922, had been passed, that the three sons went out of the family after taking Rs. 10,000 each and, thereafter, they had no connection with the family or its property, that the immovable property fell to the share of the deceased along with his wife, that after the partition Kanhaya Lal was being assessed to income-tax as an "individual" and he took care to see that he was assessed in that status, that at the time of the execution of the release deed, Smt. Kushal Devi had a right to receive a sum of Rs. 10,000 if she had decided to separate but she had surrendered her share voluntarily and remained joint with her husband; and that after 7th August, 1944, there was no joint Hindu family as such because there was no other person who could claim partition and the deceased was the sole coparcener of the erstwhile Hindu family with the result that the entire estate belonged to him. On these findings the Assistant Controller completed the estate duty assessment taking the status of the deceased as an "individual". The value of his estate was fixed at Rs. 3,17,146 net and the estate duty payable thereon was assessed at Rs. 23,821.90 nP.

(2.) AGGRIEVED by this decision, the sons and the widow of the deceased filed an appeal before the Central Board of Revenue (hereinafter referred to as the Board) under section 63 of the Act. Their principal objection was against the determination of the status of the deceased as an "individual". It was claimed that he had only a half share in the property left by him and it was only this half which was liable to the payment of the estate duty. According to them even after the execution of the release deed, the deceased and his wife continued to constitute a joint family, the wife having a half share in its assets. The Board, vide their order dated 28th August, 1960, dismissed the appeal and confirmed all the findings of the Assistant Controller. They held that since the deceased had no other male issue till the time of his death, he had full power of disposal over hid property, even if it was joint family property. According to the Board, on the death of a sole coparcener, like the deceased, the entire property passed as property in the disposing power of the deceased and section 7 of the Act did not come into the picture at all.

(3.) THIS proposition of law dies not advance the case of the petitioner in any way, inasmuch as Smt. Kushal Devi did not take her share in the joint family property at the time when the release deed was executed.