JUDGMENT
Uday Sinha, J.
1. This is a reference under Section 256(1) of the Income-tax Act at the instance of the Revenue. The question referred for the opinion of this court is as quoted below :
“Whether, on the facts and in the circumstances of this case, the Tribunal was correct in law in determining the status of the assessee as Hindu undivided family ?”
2. In this reference, we are concerned with the assessment years 1967-68 to 1969-70. The assesses succeeded to the Gaddi of late Maharaja Pratap Udai Nath Sahdeo of Ratu Raj on March 7, 1950, on the latter’s death. The late Maharaja being holder of an impartible estate and governed by the law of lineal primogeniture was assessed as an individual. The assessee having succeeded to the Gaddi with all the incidents thereto, like his predecessor, was also assessed as an individual. In the assessment years 1965-66 and 1966-67, the assessee claimed the status as that of a Hindu undivided family. The Income-tax Officer rejected his claim. In the years under reference (1967-68 to 1969-70) also, the assessee claimed the same status. The contention of the assessee was that on coming into force of the Hindu Succession Act in September, 1956, the impartible estate governed by the lineal primogeniture disappeared. Thus, all the incidents of a joint Hindu family became operative. The income of the estate became the income of the Hindu undivided family consisting of the assessee, his wife, daughters, widowed mother and widowed grandmother.
3. The Income-tax Officer rejected the claim of the assessee. His view was that the assessee had succeeded to the estate in the year 1950 as an individual and, therefore, he would be treated as such till succession opened after his death.
4. The Appellate Assistant Commissioner on appeal held that with the passing of the Hindu Succession Act, the customary right of impartibility and lineal primogeniture in the matter of succession disappeared–excepting such estates as were saved by Section 5 of the said Act. Other members of the joint family also got a right in the property and its income. He, therefore, held that the property and income of the Hindu undivided family of the assessee did not belong to him in his individual capacity after the passing of the Hindu Succession Act. The Appellate Assistant Commissioner also referred to the fact that in earlier years also, the status of the assessee had been held to be that of a Hindu undivided family.
5. The Income-tax Appellate Tribunal, on appeal by the Department, in agreement with the Appellate Assistant Commissioner held that the status of the assessee was to be taken as that of a Hindu undivided family. The Revenue thereafter moved the Tribunal for making a reference to this court. Thus arises the reference falling for consideration before us. The question referred to us for our opinion has been quoted earlier.
6. It is not in controversy that the assessee succeeded to an impartible estate–impartible by custom–governed by the law of lineal primogeniture. The property was ancestral and there had been no partition. The matter in controversy has to be decided on the basis of the scope and effect of Section 4(1) of the Hindu Succession Act, 1956, which reads as follows :
" 4(1). Save as otherwise expressly provided in this Act,-- (a) any text, rule or interpretation of Hindu law or any custom or usage as part of that law in force immediately before the commencement of this Act shall cease to have effect with respect to any matter for which provision is made in this Act; (b) any other law in force immediately before the commencement of this Act shall cease to apply to Hindus in so far as it is inconsistent with any of the provisions contained in this Act." 7. By the force of the above provision, the custom of impartibility and lineal primogeniture ceased to have effect. The shakles on the joint family thus fell apart. 8. In Shiba Prasad Singh v. Rani Prayag Kumari Debi, AIR 1932 PC 216, it has been laid down as follows (p. 222): " Impartibility is essentially a creature of custom. In the case of ordinary joint family property, the members of the family have (1) the right of partition ; (2) the right to restrain alienations by the head of the family except for necessity ; (3) the right of maintenance, and (4) the right of survivorship. The first of these rights cannot exist in the case of an impartible estate, though ancestral, from the very nature of the estate. The second is incompatible with the custom of impartibility..... To this extent, the general law of the Mitakshara has been superseded by custom and the impartible estate, though ancestral, clothed with the incidents of self-acquired and separate property. But the right of survivorship is not inconsistent with the custom of impartibility. This right therefore still remains..... and to this extent the estate still retains its character of joint family property, and its devolution is governed by the general Mitakshara law applicable to such property. Though the other rights which a coparcener acquires by birth in joint family property no longer exist, the birth right of the senior member to take by survivorship still remains. Nor is this right a mere spes successions similar to that of a reversioner succeeding on the death of a Hindu widow to her husband's estate. It is a right which is capable of being renounced and surrendered."
9. It is plain from the law laid down by the Privy Council that the joint family of a Mitakshara Hindu family persisted all along and the estate retained its character of joint family property. Of course, the general law of the Mitakashara in regard to joint family property was superseded by the custom of impartibility and lineal primogeniture. The incident of right of survivorship was, however, never superseded. The eclipse of the rights of the members of a joint family in regard to (1) right of partition, (2) right to restrain alienations by the head of the family except for necessity, and (3) right of maintenance, fell apart consequent upon the enactment of Section 4(1) of the Hindu Succession Act. The rights of the members of the joint family shined forth in full lustre. Thus, although the status of the assessee was that of an ” Individual ” from 1950 till September, 1956, after that period he was entitled to the status of member of a Hindu undivided family. He is, therefore, entitled to be treated and assessed as such.
10. Learned counsel for the Revenue submitted that in the situation like the present one, the Hindu Succession Act did not come into play. According to him, the question of effect of Section 4 of the said Act would arise when succession would open consequent upon the death of the asses-see who had inherited an impartible estate. Reliance was placed for this proposition in CIT v. U.C. Mahatab, Maharaja of Burdwan, [1981] 130 ITR 223 (Cal), where Sabyasachi Mukharji J. observed as follows (p. 230) :
” It is clear, in our opinion, this Hindu Succession Act only dealt with the position at the time of succession after the coming into operation of the Hindu Succession Act, 1956. It did not affect the position and character of the HUF or of the ingredients of the impartible estate as such, of an impartible estate which is in existence even from before the coming into operation of the Hindu Succession Act, 1956…. As we have mentioned before, the Hindu Succession Act, 1956, only regulated and abrogated those portions of the Hindu law which related to succession after the coming into operation of the Hindu Succession Act and did not modify or amend the existence of joint or composite ownership of properties under the Hindu joint family law.”
11. Reliance was placed by the Revenue also upon the observations of N.P. Singh J. in CIT v. Maharaja Chintamani Saran Nath Sahdeo, [1982] 133 ITR 658 (Pat), where it was observed (p. 663);
“May be that, notwithstanding the enforcement of the said Act (Hindu Succession Act), the assessee having been vested with the property of an impartible estate, he could not be divested of it by the passing of the said Act, the incidents attaching to an impartible estate would continue to be enjoyed by him.”
12. On the basis of the above two cases, learned standing counsel submitted that the holder of an impartible estate cannot be divested of the estate of which he was possessed. According to him, Section 4 of the Hindu Succession Act would remain inoperative and in abeyance till the death of the holder of the impartible estate, i.e., the assessee.
13. I regret, I have considerable difficulty in accepting the submission urged on behalf of the Revenue. In Sundari v. Laxmi, AIR 1980 SC 198, the Supreme Court had the occasion to consider whether the provisions of Section 4(1) read with Section 7(2) of the Hindu Succession Act would remain
in abeyance or not. Kailasam J., speaking for the court, after setting out the salient features of Aliyasanthana Kavaru, observed in paragraph 9, at page 201, as follows :
” Section 4 of the Act gives overriding application to the provisions of the Act and lays down that in respect of any of the matters dealt with in the Act all existing laws whether in the shape of enactment or otherwise which are inconsistent with the Act are repealed. Any other law in force immediately before the commencement of this Act ceases to apply to Hindus in so far as it is inconsistent with any of the provisions contained in the Act. It is, therefore, clear that the provisions of Aliyasanthana law whether customary or statutory will cease to apply, in so far as they are inconsistent with the provisions of the Hindu Succession Act.”
14. The above must be held to be the law of the land. The decision of the Supreme Court was given on August 28, 1979. On the other hand, the decision of the Calcutta High Court in CIT v. U.C. Mahatab, Maharaja of Burdwan, [1981] 130 ITR 223 was given on September 29, 1980. The Calcutta High Court decision, therefore, must be held to be against the law laid down by the Supreme Court in the case of Sundari, AIR 1980 SC 198. The view of the Calcutta High Court that Section 4 of the Hindu Succession Act did not affect the position and character of an impartible estate which had come into existence before the coming into operation of the Hindu Succession Act, is rather untenable. The effectiveness of the Hindu Succession Act cannot be postponed till the opening of succession on the death of the holder of the impartible estate. The same must be held to be true in regard to the Patna decision as well. In the face of the Supreme Court decision, I am unable to subscribe to the view of N.P. Singh J., that the assessee having been vested with the property of an impartible estate, he could not be divested of it by enactment of Section 4 of the Hindu Succession Act. The question is not one of divesting of the estate of the holder of the impartible estate, ‘but the question is of the effect of Section 4 of the Hindu Succession Act. It is true that the Hindu Succession Act deals with succession, but it is not only that, it lays down what the law is and what are the rights of a Hindu in regard to the property of specified character. Their Lordships’ attention was not drawn to the case of the Supreme Court in Sundari v. Laxmi, AIR 1980 SC 198. Their Lordships’ observation in that regard may not have been so, if the Privy Council case of Shiba Prasad Singh, AIR 1932 PC 216, and the Supreme Court case had been brought to their notice. Even before the Calcutta High Court, the Supreme Court case had not been brought to their Lordships’ notice, I am unable to hold that the Calcutta and Patna High Courts’ decisions have laid down the correct law in this regard.
15. The position thus is that the assessee was holding an impartible estate with the incident of lineal primogeniture till September, 1956, by custom–not by grant. On the enactment of the Hindu Succession Act in September, 1956, the restraint on the members of the joint family disappeared. In terms of the law laid down by the Privy Council in Shiba Prasad Singh’s case, AIR 1932 PC 216, there were four incidents of joint family property. Three of them had become eclipsed or were dormant by custom. They fell apart on the enactment of Section 4 of the Hindu Succession Act. The shackles cannot persist till the death of the assessee. The Gujarat High Court had to deal with a similar situation in Pratapsinhji N. Desai v. CIT, [1983] 139 ITR 77. Mehta J. with whom Divan C.J. concurred observed as follows (p. 87):
“The clear effect of Section 4 is that if there is any provision made in the Act in respect of any matter governed by the custom or usage of Hindu law previously, then the said provision would prevail and the previous Hindu law to the extent it related to those matters would stand nullified. The question, in the present reference, is whether any provision has been made in the Act with reference to the rule of inheritance by single heir. If any provision is made contrary to classical Hindu law in that behalf in any of the sections of the Hindu Succession Act, that provision would prevail against the earlier law as ordained by custom, usage or interpretation of Hindu law as in force immediately before the commencement of the Act ”
16. It was contended before their Lordships of the Gujarat High Court as well that the provisions of Section 4 of the Hindu Succession Act would not come into operation until succession reopened on the death of the holder of the impartible estate. Their Lordships in clear terms rejected it in the following words (p. 92):
” Section 4(1)(a) prescribes that save as otherwise expressly provided in the Hindu Succession Act, any text, rule or interpretation of Hindu law or any custom or usage as part of that law in force immediately before the commencement of the said Act ‘ shall cease to have effect with respect to any matter for which provision is made in this Act’. On a plain reading of this Sub-section (1)(a), we are unable to agree with the contention urged on behalf of the Revenue that the classical Hindu law as contained in the custom or usage would continue to be in operation even though a contrary provision has been made in that behalf in the Hindu Succession Act, till the succession opens after the said Act coming into force. ”
17. A similar view was taken by the Punjab High Court in Mst. Taro v. Darshan Singh, AIR 1960 Punjab 145 and Hans Raj Basant Ram v. Dhanwat Singh Balwant Singh, AIR 1961 Punj 510. I am in complete and respectful agreement with the views of their Lordships of the Punjab and Gujarat High Courts.
18. From what has been stated above, I am clearly of the view that the impartibility of the estate of the assessee disappeared in September, 1956. Thereafter, he became a part of Hindu undivided family. The status of the assessee had, therefore, to be accepted as Hindu undivided family.
19. The assessment order shows that the assessee had shown income from house property. In regard to this item, learned counsel for the Revenue submitted that in terms of Section 27(ii) of the Income-tax Act, the house property at least must be treated as individual property of the assessee; His status in regard to that property must be deemed as ” individual “. It was submitted that Section 27 of the Income-tax Act lays down who shall be deemed to be the owner of house property. Clause (ii) thereof lays down that the holder of the impartible estate shall be deemed to be the individual owner of all the properties comprised in the estate. It was submitted that the assessee having inherited the impartible estate of Ratu Raj, he must be deemed to be an individual owner of the properties in the estate including house property. The submission, with respect to learned counsel for the Department, is fallacious. Section 27(ii) deals only with property of the holder of an impartible estate. The assessee did inherit an impartible estate and was assessed accordingly for some years, but the impartible estate towards the end of 1956 evaporated under the impact of the Hindu Succession Act. In the assessment years, therefore, there was no impartible estate. The assessee was not the holder of an impartible estate and, therefore, the properties held cannot be treated as individual property of the assessee. In reply thereto, learned standing counsel submitted that if that be the view of the law, as I have enunciated, then Section 27(ii) must be held to be a dead letter. Mr. Rajgarhia submitted that the Hindu Succession Act came into being in 1956. The Income-tax Act, 1961, was enacted in 1961. The law-makers must be deemed to have knowledge of the effect of Section 4 of the Hindu Succession Act. There could have, been, therefore, no sense in enacting Section 27(ii). Thus submitted learned standing counsel for the Revenue. I regret, I am unable to accede to this submission. Section 27(ii) is not a dead letter. Section 4 of the Hindu Succession Act does away only with custom or usage. Thus, only such impartible estates disappeared on the enactment of the Hindu Succession Act as were impartible by custom. There were several estates in the country in 1961 which were impartible by grant and some by covenant. The estates which were impartible by grant or covenant continued. Section 27(ii) would be operative in regard to those estates. The assessee’s estate may have disappeared in Bihar, but in the whole of the country there were several estates which continued to be impartible. Section 27(ii), therefore, was not a dead letter in 1961 when the Income-tax Act was enacted. Those being my views in regard to scope of Section 27, I am unable to accept the submission urged on behalf of the Revenue that the assessee must be treated as an individual owner of all the properties comprised in the estate and returned by the assessee.
20. Another item of income of the assessee was his salary as M.L.C. which has been shown in Part IV of the return. The income on this account certainly cannot be treated as income of Hindu undivided family. That is the result of individual act or acquisition of the assessee. The income under that head is, however, a different question. If the assessee has any other income as individual above flooring for assessable income, the authorities may consider assessing him as such. But that is for them to consider and not for us.
21. For the reasons stated above, I am of the view that the Tribunal was correct in law in determining the status of the assessee as Hindu undivided family. The reference must, therefore, be answered in the affirmative, in favour of the assessee and against the Department. There shall be no order as to costs.
Nazir Ahmad, J.
22. I agree.