JUDGMENT
S.K. Homchaudhuri, J.
1. In this case, pursuant to the direction of this court under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), the learned Income-tax Appellate Tribunal (Patna Bench), Patna, referred the following questions, framed by this court, for
opinion :
“(i) Whether, on the facts and in the circumstances of the case, the female heirs of a Hindu governed by the Dayabhaga school of Hindu law dying intestate could form a joint Hindu family by means of agreement ?
(ii) Whether the female heirs of a Hindu governed by the Dayabhaga school of Hindu law dying intestate could impress upon their inherited property the character of joint family property ?
(iii) Whether, on the facts and in the circumstances of the case, one-third of the properties inherited from her husband was assessable in the hands of the assessee in the status of an individual ?”
2. For answering the questions referred for opinion, it is necessary to state the material facts in brief leading to making the reference.
3. One Har Govind Dutta, a Hindu governed by the Dayabhaga school of Hindu law, died intestate on June 19, 1972, leaving behind his widow, Smt. Sandhya Rani Dutta (the assessee), and two daughters, Kumari Priya Dutta and Kumari Keya Dutta. The widow and the two daughters inherited the entire self-acquired properties of the late Har Govind Dutta in equal shares. The properties left by Har Govind Dutta consisted of residential house at P.N. Bose Compound, Ranchi, a house at Jharia and 50 per cent. interest in another house at Amla Para, Jharia. The assessee, Smt. Sandhya Rani Dutta, while filing the returns in respect of the assessment year 1974-75 and of subsequent years, did not disclose the income from the one-third share in the aforesaid properties inherited by her, on the ground that those properties did not belong to the assessee alone in the status of an individual inasmuch as, after the death of her husband, by a deed of agreement executed on July 26, 1972, she and her daughters formed a Hindu undivided family (hereinafter to be referred to as “HUF”) and the properties left by the late Har Govind Dutta were held by the Hindu undivided family consisting of herself and her two daughters.
4. The Income-tax Officer, Ranchi, rejected the assessee’s contention holding that the properties in question having been owned and held by the late Har Govind Dutta, governed by the Dayabhaga school of Hindu law as an individual, the assessee and her two daughters inherited properties left by him as tenants-in-common, each with a one-third separate ascertained share thereof. As such, the properties left by the late Har Govind Dutta and inherited by the assessee and her two daughters could not be treated as properties held by the Hindu undivided family. The Income-tax Officer, accordingly, assessed the income of the assessee, Sandhya Rani Dutta, including one-third of the income from the properties left by the late Har Govind Dutta, as earned in her individual capacity.
5. The assessee preferred an appeal before the Appellate Assistant Commissioner impugning the assessment order passed by the Income-tax
Officer. But the Appellate Assistant Commissioner dismissed the appeal and upheld the decision of the Income-tax Officer. The assessee, thereafter, preferred an appeal before the Income-tax Appellate Tribunal, Patna Bench, Patna, and the Tribunal by its order dated May 5, 1979, allowed the appeal holding that by virtue of the agreement executed on July 26, 1972, between the assessee and her two daughters, the properties of the late Har Govind Dutta inherited by them were held by the Hindu undivided family constituted by the assessee and her two daughters and, as such, the income from the properties left by Har Govind Dutta was not assessable in the hands of the assessee in the status of an individual and the whole income from the properties left by Har Govind Dutta was assessable in the hands of the Hindu undivided family consisting of the assessee and her two daughters. The Income-tax Department thereafter filed an application under Section 256(1) of the Act for referring the questions of law framed by the Department to this court for opinion. The Tribunal, by order dated December 17, 1979, refused to state a case to this court under Section 256(1) of the Act and rejected the reference application. The Commissioner of Income-tax, Bihar-II, Ranchi, thereafter moved this court under Section 256(2) of the Act and this court by order dated December 2, 1981, directed the Tribunal to state a case and refer the aforesaid questions under Section 256(2) of the Act.
6. We have heard Mr. Vidyarthi, learned standing counsel for the Income-tax Department, and Mr. Moitra, learned counsel for the assessee. On behalf of the Revenue, Mr. Vidyarthi urged the following points :
(i) The Hindu undivided family properties have not been defined either in the Income-tax Act or the Wealth-tax Act and has to be understood in its common parlance.
(ii) The Hindu undivided family is not a creature of contract and accordingly even if the existence of an agreement is accepted, it does not materially change the nature of the properties in question in the hands of the widow and the daughters.
(iii) The properties in question inherited by the assessee and the two daughters in equal shares are ordinarily individual properties in the hands of the deceased and as such it could devolve in the hands of the assessee and the two daughters as individual properties. Existence of a coparcenary property is absolutely necessary before a coparcener can throw his individual property in the hotchpotch of the Hindu undivided family properties.
(iv) Under the provisions of Section 14 of the Hindu Succession Act, 1956, any property passing to a widow on the death of her husband becomes her absolute property even under the Mitakshara school of Hindu law. Under the Dayabhaga school of Hindu law, it applies with greater force, as the heirs under this school of Hindu law remain co-owners with definite ascertained shares for all the time.
(v) Under Section 19 of the Hindu Succession Act, 1956, the heirs of a Hindu dying intestate inherit his property as tenants-in-common and not as joint tenants.
7. In support of the aforesaid submissions, learned counsel cited the following decisions of the Supreme Court and the High Courts :
(i) The decision of the Orissa High Court in the case of Rukmini Bai Rathor v. CWT [1964] 54 ITR 430.
(ii) The decision of the Calcutta High Court in the case of CWT v. Gouri Shankar Bhar [1968] 68 ITR 545.
(iii) The decision of the Supreme Court in the case of CWT v. Gauri Shankar Bhar [1972] 84 ITR 699.
(iv) The decision of the Calcutta High Court in CIT v. Prafulla Kumar Panja [1993] 200 ITR 706.
8. In the case of Rukmini Bai Rathor [1964] 54 ITR 430, the Orissa High Court held that the Hindu Succession Act, 1956, has completely changed the law on the subject, and introduced radical reforms in the Mitakshara law of joint family property. Though the joint family and the coparcenary continue to a limited extent, the property in the hands of the female has been made their absolute property with a separate law of devolution by succession. Those properties which were possessed by a widow as “widow’s estate” became her absolute properties by virtue of Section 14 of the Hindu Succession Act and succession to those properties was, therefore, regulated not by the ordinary rules of Hindu law but by Section 15 of that Act.
9. In the case of Gouri Shankar Bhar [1968] 68 ITR 345, the Calcutta High Court held that on the death of a Hindu governed by the Dayabhaga school of Hindu law, his heirs do not spontaneously, by operation of law, become members of a Hindu joint family. They remain as co-owners with definite and ascertained shares in the properties left by the deceased, unless they voluntarily decide to live as a joint family. The heirs of a Hindu governed by the Dayabhaga school cannot, therefore, be assessed
to wealth-tax as a Hindu undivided family on the entire net wealth left by the deceased but each of the heirs must be separately assessed to wealth-tax on his share as an individual, unless there is evidence to show that the heirs had voluntarily decided to constitute themselves into a Hindu joint family. This decision of the Calcutta High Court was affirmed by the Supreme Court in the case of Gauri Shankar Bhar [1972] 84 ITR 699.
10. In the case of Prafulla Kumar Panja [1993] 200 ITR 706, the Calcutta High Court held that the essence of a coparcenary under the Dayabhaga law is unity of possession. It is not unity of ownership at all. Every coparcener takes a defined share in the property, and he is the owner of that share. That share is defined immediately the inheritance falls in. Even before partition, any coparcener can say that he is entitled to a particular share. Income from house properties which are in the joint possession of the coparceners of a Hindu undivided family governed by the Dayabhaga school of Hindu law should be assessed separately in their individual hands in proportion to their shares in the family properties under Section 9(3) of the 1922 Act, and Section 26 of the 1961 Act.
11. Mr. Vidyarthi submitted that in view of the aforesaid decisions of the different High Courts and the Supreme Court, questions Nos. (i) and (ii) be answered in the negative, while question No. (iii) be answered in the affirmative, in favour of the Revenue.
12. Learned counsel for the assessee, on the other hand, submitted that no doubt under Section 19 of the Hindu Succession Act, the heirs of a Hindu dying intestate, inherit the properties as tenants-in-common, but by agreement, the heirs may form the Hindu undivided family and the properties left by the deceased may be held in the hands of the Hindu undivided family. The Calcutta High Court, in the case of Gouri Shankar Bhar [1968] 68 ITR 345, has clearly observed that the heirs of a Hindu dying intestate, and governed by the Dayabhaga school of Hindu law, may by agreement constitute themselves into a joint family and form the Hindu undivided family for the purpose of assessment of tax and the said decision of the Calcutta High Court was affirmed by the Supreme Court. Learned counsel for the assessee has drawn our attention to the decision in the case of CWT v. Bishwanath Chatterjee [1976] 103 ITR 536, wherein the Supreme Court has taken note of the decision of the Calcutta High Court in the case of Gouri Shankar Bhar [1968] 68 ITR 345 holding that on the death of a Hindu intestate, governed by the Dayabhaga school of a Hindu law, his heirs do not spontaneously, by operation of law, become members
of a Hindu joint family. They remain as co-owners with definite and ascertained shares in the properties left by the deceased, unless they voluntarily decide to live as a joint family. As such the Tribunal has rightly held that by agreement dated July 26, 1972, the assessee and her two daughters became the joint owners of the properties inherited by them and constituted a Hindu undivided family.
13. I have considered the submissions advanced by learned counsel for the parties and perused the materials on record. It is not in dispute that after the coming into force of the Hindu Succession Act, there remains no difference between a male and female heir of the properties left by a Hindu dying intestate and each of them gets an ascertained share as individual property. No doubt, under Section 19 of the Hindu Succession Act, the properties left by a Hindu dying intestate are inherited by the heirs with ascertained shares under the Act as tenants-in-common and not as joint tenants. But it cannot be said that under the Dayabhaga school of Hindu law, the Hindu undivided family cannot be formed by agreement. In my opinion, there cannot be any bar in constituting a Hindu undivided family in respect of the properties inherited by the heirs, whether female or male, of a Hindu dying intestate governed by the Dayabhaga school of Hindu law by throwing ascertained share into a common hotchpotch by agreement. In respectful agreement with the decision of the Calcutta High Court in the case of Gouri Shankar Bhar [1968] 68 ITR 345, I hold that the heirs, whether male or female, of a Hindu dying intestate, governed by the Dayabhaga school of Hindu law, may, by agreement, become joint owner of the properties inherited by them and constitute themselves into a Hindu undivided family.
14. For the reasons stated above, questions Nos. (i) and (ii) are answered in the affirmative, in favour of the assessee and question No. (iii) is answered in the negative, against the Revenue.
15. The reference is, accordingly, answered.
Gurusharan Sharma, J.
16. I agree.