ORDER
1. In this case, the assessment of Income-tax has been made upon Kali Prasad Singh and others in the status of a Hindu undivided family for the assessment year 1948-49. The previous
holder of the impartible estate was Raja Shiva Prasad Singh who died on 1-1-1947. Raja Shiva Prasad Singh was the karta of the Hindu undivided family, and after his death, the impartible estate devolved upon his eldest son, Kali Prasad Singh. Kali Prasad Singh submitted two returns for the accounting year 1354 Bengali Sambat for which the assessment year is 1948-49.
In the first return submitted by the assessee, in the status of a Hindu undivided family, the rents and royalties which accrued during the lifetime of Raja Shiva Prasad Singh, but which were realised after his death, were dealt with. The
assessee submitted a second return in the status of an individual for the rents and royalties which
accrued to the assessee after the death of Raja Shiva Prasad Singh.
In the present case, we are concerned with
the first return submitted by the assessee in the
status of Hindu undivided family for rents and
royalties which accrued during his lifetime of “Raja Shiva Prasad Singh but which were realised after his death. It was submitted on behalf of the assessee that the rents and royalties were not income but capital receipt and as such were not liable to be taxed. The argument was rejected by the Income-tax Officer who considered that amount of rents and royalties was tax-able in the hand of the Hindu undivided family represented by Kali Prasad Singh.
An appeal was taken to the appellate Assistant Commissioner against the decision of the Income-tax Officer. The Appellate Assistant Commissioner took the view that the rents and royalties were capital receipts and they were not liable
to be taxed in the hands of the Hindu undivided
family. The Income-tax Department preferred
an appeal before the Appellate Tribunal. The Appellate Tribunal dismissed the appeal holding
that the income was not assessable in the hands
of the Hindu undivided family. The basis of the
decision was that arrears of rents and royalties
were actionable claims and, therefore, moveable
property within the meaning of General Clauses
Act.
It was held by the Appellate Tribunal that the arrears of rent and royalties belonged absolutely to the last holder of the impartible estate, and after his death the rents and royalties devolved upon the heirs of the last male holder. In other words, it was held by the Income-tax Appellate Tribunal that there could be no accretion of the arrears of rents and royalties to the assets the impartible estate, and the Hindu undivided family represented by Kali Prasad Singh could not be taxed upon this amount.
2. In this state of facts, the Income-tax Appellate Tribunal has stated a case upon the following question of law :
“Whether in the facts and circumstances of the case, the rents, royalties, etc., which accrued, to the late Raja Shiva Pd. Singh, who was the holder of the impartible estate, during his life time, but were realised after his death, are taxable in the hands of the assessee Hindu Undivided Family?”.
3. On behalf of the Income-tax Department, the Standing Counsel, Mr. R. J. Bahadur, made the submission that the view taken by the Appellate Tribunal was erroneous and that the amount of rents and royalties to the extent of Rs. 2,19,293/- was taxable in the hands of the assessee. In our opinion, this argument is unsound. It is well established by a chain of authorities that in the case of an impartible estate, which is joint family property, the income of such impartible estate and the accumulations of such income are the absolute property of the holder.
That was the view taken by a Bench of this Court in Aparna Debi v. Shiva Prasad Singh, 1924 Pat 451 (AIR V 11) (A). It was expressly held in that case that the right to recover arrears of rent which fell due during the lifetime of the holder of an impartible estate but which were not realised by such holder, passes to the latter’s heirs and not to the person who succeeds to the estate A similar view has been taken by the Madras High” Court in Guruswami Pandian v. Chinna Thambiar, 1921 Mad 340 (AIR V8) (B).
The question of law has been settled beyond dispute by the decision of the Judicial Committee in Shiva Prasad Singh v. Prayag Kumari Debi, 1932 PC 216 (AIR V19) (C). It was observed by Sir Dinshah Mulla, who pronounced the opinion of the Judicial Committee, that it was open to the holder of an impartible estate by a declaration of his intention to incorporate with the estate self-acquired immoveable property, and thereupon the property accrued to the estate and was impressed with all its incidents, including a custom of descent by primogeniture. But the position is different as regards movable property.
As regards this class of property, there can be no question of accretion and the income received is absolute property of the owner of the impartible estate. It was held by the High Court in that case that the plaintiffs, who were the Ranis of the last male holder and who were also his heirs, were entitled to the rents and royalties and other monies which had accrued in the life-time of the late Raja but had been realised by the defendant after his death. This portion of the decree of the High Court was expressly affirmed by the Judicial Committee in appeal, though there was a remand to the High Court for investigation into certain other matters.
The principle upon which the decision is based is that the right of joint enjoyment which ia ordinarily incident to the Mitakshara coparcer-nary is excluded by the custom of impartibility and premogeniture. The keynote of the whole position is explained in a later judgment of the
Judicial Committee in Commissioner of Income-tax, Punjab, N. W. P. 63 Delhi Provinces, Lahore v. Krishna Kishore, 1941 PC 120 (AIR V 28) CD). The
question debated in that case was whether the income of the holder of an impartible estate from interest on securities was chargeable in his hand as an individual or as income of the Hindu undivided family.
It was held by the Judicial Committee that the income of the impartible estate was not income of the Hindu undivided family but was the income of the present holder notwithstanding that he had sons from whom he was not divided. It was argued in that case on behalf of the assessee that the sons had a right to be maintained by him and that the right arose from the fact that the assessee was the present holder of the impartible estate and that the right of the sons was the right to maintenance out of the current income thereof.
It was observed by the Judicial Committee that even if this proposition was assumed to be correct it was not true to say in fact or in law that the income from the impartible estate was assessable in the hands of the assessee as income of a joint. Hindu family receivable by the karta. At p. 125, Sir George Rankin states:
“General considerations of theory have their proper place, but impartibility and premogeniture when introduced into the Mitakshara involve competition and compromise between different lines of theory: if the doctrine that ‘there is no coparcenary’ may be pushed too far in one direction the doctrine that the junior members ‘are in a sense co-owners’ may be pushed too far in another : the special Incidents of joint family property which is impartible being overlaid in either case by rigid theory.”
At p. 123 Sir George Rankin further proceeds to state :
“The, son’s right of maintenance out of impartible property cannot be accounted for as an original and separate right untouched when custom takes away his right to joint possession. It is not something that is left after something else has been subtracted. It is a different right given sometimes to sons only and sometimes to others in consequence of the impartible character of the property; being sometimes a right of maintenance simply and sometimes a right to a maintenance grant of lands. In their Lordships’ judgment, it can only be ascribed to custom, as has repeatedly been held. It may be excessive to say that there is no coparcenary, but it is certain that there is no joint possession”.
If there is no right of joint enjoyment, it follows that the income of the impartible estate and the accumulations to such income is the absolute property of the holder of such estate. After the death of the holder, the income and accumulations go to not to the Hindu joint family but to the personal heirs of the last male holder. The question may be different if there is an accretion to the estate of the income but as we have already mentioned, the Privy Council held in 1932 PC 216 (AIR V 19) (C) that there could be no question of accretion in regard to movable properties like arrears of rent and royalties which accrued during the life time of the last holder of the impartible estate.
Applying the principle to the present case, it is clear that the rents and royalties etc. which accrued to the late Raja Shiva Prasad Singh during his life time but were realised after his death are not taxable in the hands of the Hindu undivided family.
4. Accordingly, the question referred to the High Court must be answered in favour of the assessee and against the Income-tax Department.
The assessee is entitled to costs of this reference,
Hearing fee : Rs. 250/-.