COMMISSIONER OF WEALTH TAX, KANPUR ETC. ETC. versus CHANDER SEN ETC.

Citation: [1986] 3 S.C.R. 254 · Decided: 16-07-1986 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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COMMISSIONER OF WEALTH TAX, KANPUR ETC. ETC. 
v. 
CHANDER SEN ETC. 
JULY 16, 1986 
IRS. PATHAK AND SABYASACHI MUKHARJI, JJ.] 
Hindu Succession Act, 1956-ss. 4, 8 and 19-Property of father 
who dies intestate-Whether devolves on son, who separated by parti-
tion from his father, in individual capacity or Kart a of his HUF. 
Wealth Tax Act, 1957--ss. 3 and 4-Property inherited under s. 8 
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Hindu Succession Act, 1956-Whether HUF or individual property. 
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Income Tax Act, 1961/Income Tax Act, 1922-Income from as-
sets inherited by son from father-Whether assessable as individual 
income. 
Rangi Lal and his son Chander Sen constituted a Hindu undivided 
family. They had some immovable property and the family business. By a 
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partial partition the HUF business was divided between the two and 
thereafter it was carried on by a partnership consisting of the two. The 
house property of the family continued to remain joint. The firm was 
assessed to income-tax as a registered firm and the two partners were 
separately assessed in respect of their share of income. The mother and 
wife of Rangi Lal having pre-deceased him, when he died he left behind 
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him his only son Chander Sen and his grandsons. On his death there was 
a credit balance of Rs.1,85,043 in his account in the books of the firm. 
In the wealth tax assessment for the assessment year 1966-67, 
Chander Sen, who constituted a joint family with his own sons, filed a 
return of his net-wealth by including the property of the family which 
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on the deathofRangi Lal passed on to him by survivorship and, also the 
assets of the business which devolved upon him on the death of his 
father. The sum of Rs.1,85,043 standing to the credit ofRangi Lal was, 
however; not included in the net-wealth of the assessee-family. Sim.i-
larly, in the wealth tax assessment for the assessment year 1967-68 a 
sum of Rs.1,82, 742 was not included, in the net wealth of the assessee-
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family. u was contended that these amounts devolved on Chander Sen 
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COMMR. OF WEALTH TAX v. C. SEN 
255 
in his individual capacity and were not the property of the assessee-
family. The Wealth-tax Officer did not accept this contention and held 
that these sums also belonged to the assessee-famil~. 
A sum of Rs. 23,330 was also credited to the account of late Rangi 
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Lal on account of interest accruing on his credit balance. In the pro-
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ceedings under the Income Tax Act for the assessment year 1967-68 this 
sum was claimed as deduction on the same ground. The Income-tax 
Officer disallowed the claim on the ground that it was a payment made 
by Chander Sen to himself. 
On appeal, the Appellate Assistant Commissioner of Income-tax 
accepted the assessee's claim in full and held that the capital in the 
name of Rangi Lal devolved on Chander Sen in his individual capacity 
and as such was not to be included in the wealth of the assessee family. 
The sum of Rs.23,330 on account of interest was also directed to be 
allowed as deduction. 
The Income-tax ~pellate Tribunal dismissed the appeals filed by 
the Revenue and its orders were affirmed by the High Court. 
On the question: "Whether the income or asset which a son in-
herits from his father when separated by partition should be assessed as 
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income of the Hindu Undivided Family consisting of his own braqch 
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including his sons or his individual income", dismissing the appeals and 
Special Leave Petition of the Revenue, the Court, 
HELD: 1. The sums standing to the credit of Rangi Lal belong to 
Chander Sen in his individual capacity and not the Joint Hindu Family. 
The interest of Rs.23,330 was an allowable deduction in respect of the 
income of the family from the business. [268C-D] 
2 .1 Under s. 8 of the Hindu Succession Act, 195,, the property of 
the father who dies intestate devolves on his son in bis individual capa-
city and not as Karta of his own family. Section 8 lays down the scheme 
of succession to the property of a Hindu dying intestate. The Schedule 
classified the heirs on whom such property should devolve. Those 
specified in class I took simultaneously to the exclusion of all other 
heirs. A son's son was not mentioned as an heir under class I of the 
Schedule, and, therefore, he could not get any right in the property of 
his g~andfather under the provision. [265F-G J 
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256 
SUPREME COURT REPORTS 
11986) 3 S.C.R. 
2. 2 The right of a son's son in his grandfather's property dur

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