B.P. Saraf, J.@mdashBy this reference u/s 256(1) of the Income Tax Act, 1961, the Income Tax Appellate Tribunal has referred the following question of law to this court for opinion at the instance of the Revenue :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that income derived from intestate self-acquired property received from the assessee''s father was taxable in the status of the Hindu undivided family ?"
2. The material facts giving rise to this reference are as follows :
During the assessment year 1978-79, the assessee derived income from house property and business. The assessee claimed that the above income should be assessed in the hands of the assessee''s Hindu undivided family as the above properties had been received by him from his father who died intestate. The Income Tax Officer rejected the assessee''s claim for being assessed as a Hindu undivided family in respect of the above income on the ground that the properties were the self-acquired properties of his father and the assessee received them on the death of his father intestate. He, therefore, assessed the income in the hands of the assessee in his individual status. The assessee appealed to the Commissioner of Income Tax (Appeals). The case of the assessee before the Commissioner of Income Tax (Appeals) was that, income received by the assessee from the self-acquired properties of his deceased father must be assessed in the hands of his Hindu undivided family and not in his hands as an individual. The Commissioner of Income Tax (Appeals) accepted the above contention of the assessee and allowed the appeal. Against the above order, the Revenue appealed to the Income Tax Appellate Tribunal ("the Tribunal"). The Tribunal followed its own Special Bench decision in the case of the assessee himself wherein it had been held that income received by the assessee from the self-acquired property of the father inherited by the assessee on his death u/s 8 of the Hindu Succession Act should be assessed in his hands in the capacity of a karta of his Hindu undivided family and not in his individual capacity. Hence, this reference at the instance of the Revenue.
We have heard Mr. P. S. Jetly, learned counsel for the Revenue. The uncontroverted factual position in this case is that the property in question was the self-acquired property of the assessee''s father. The assessee received the same on the death of his father intestate. The property was not coparcenary property or Hindu undivided family property in the hands of the deceased father of the assessee. Admittedly, it was his self-acquired property. The assessee got the property as his share u/s 8 of the Hindu Succession Act.
3. The question that arises for consideration is whether the property inherited by the assessee as share of the self-acquired property of his father on his death intestate u/s 8 of the Hindu Succession Act, 1956, belongs to the assessee in his individual capacity or it constitutes an asset of the Hindu undivided family of the assessee and his sons. There was a divergence of opinion between different High Courts at the time when the issue was decided by the Special Bench of the Tribunal on February 8, 1988, which decision has been followed by the Tribunal in the present case. The Allahabad High Court in
4. This controversy, however, now stands concluded by the decision of the Supreme Court in
"There is no dispute among the commentators on Hindu law nor in the decisions of the courts that, under the Hindu law, as it is, the son would inherit the same as karta of his own family. But the question is, what is the effect of Section 8 of the Hindu Succession Act, 1956 ?"
5. The Supreme Court noted the divergent views expressed in this aspect by the Allahabad High Court, Madhya Pradesh High Court and the Andhra Pradesh High Court on the one side and the Gujarat High Court on the other side. The Supreme Court on consideration of the effect of Section 8 of the Hindu Succession Act, 1956, on the position that prevailed under the Hindu law prior to the enactment of the said Act, observed (page 381):
"It is necessary to bear in mind the preamble to the Hindu Succession Act, 1956. The preamble states that it was an Act to amend and codify the law relating to intestate succession among Hindus.
In view of the preamble to the Act, i.e., to modify where necessary and to codify the law, in our opinion it is not possible when the Schedule indicates heirs in Class I and only includes son and does not include son''s son but does include son of a predeceased son, to say that when a son inherits the property in the situation contemplated by Section 8, he takes it as karta of his own undivided family. The Gujarat High Court''s view noted above, if accepted, would mean that though the son of a predeceased son and not the son of a son is intended to be included u/s 8 to inherit, the latter would, by applying the old Hindu law, get a right by birth to the said property contrary to the scheme outlined in Section 8. Furthermore, as noted by the Andhra Pradesh High Court, the Act makes it clear by Section 4 that one should look to the Act in case of doubt and not to the pre-existing Hindu law. It would be difficult to hold today that property which devolved on a Hindu u/s 8 of the Hindu Succession Act would be Hindu undivided family property in his hands vis-a-vis his own son ; that would amount to creating two classes among the heirs mentioned in Class I, the male heirs in whose hands it will be joint Hindu family property vis-a-vis their sons and female heirs with respect to whom no such concept could be applied or contemplated. It may be mentioned that heirs, in Class I of the Schedule u/s 8 of the Act included widow, mother, daughter of a predeceased son, etc. . . .
The express words of Section 8 of the Hindu Succession Act, 1956, cannot be ignored and must prevail. The preamble to the Act reiterates that the Act is, inter alia, to ''amend'' the law. With that background, the express language which excludes son''s son but includes son of a predeceased son cannot be ignored."
The Supreme Court approved the decisions of the Allahabad High Court, Madras High Court, High Court of Madhya Pradesh and the Andhra Pradesh High Court and overruled the decision of the Gujarat High Court which has been relied upon by the Tribunal in the instant case. In view of the above, the Supreme Court held that the sums inherited by Chander Sen in that case belonged to him in his individual capacity and not as the joint Hindu family.
6. The law is thus clear that after the coming into force of the Hindu Succession Act, 1956, when a son inherits the property of his father in the situation contemplated by Section 8 of that Act, he takes it in his individual capacity and not as karta of his own Hindu undivided family. In other words, the property devolves on him in his individual capacity. In view of the above, in our opinion, the Tribunal was not right in holding that the income derived by the assessee from the self-acquired property of his father who died intestate was taxable in the status of the Hindu undivided family. The question referred to us is, therefore, answered in the negative, i.e., in favour of the Revenue and against the assessee.
7. The reference stands disposed of accordingly with no order as to costs.
