# SURJIT LAL CHHABDA v. COMMISSIONER OF INCOME TAX, BOMBAY October 6. 1975

- **Citation:** [1976] 2 S.C.R. 164
- **Court:** Supreme Court of India
- **Decided:** 1976
- **Bench:** Y. V. Cl!ANDRACHUD, R. S. Sarkaria, A. C. Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/surjit-lal-chhabda-v-commissioner-of-income-tax-bombay-october-6-1975-6702
- **Pages:** 20

## Headnote

Income Tax Ac/9 1922-Section 2(9)-Hindu Undh·id,ed
Family as an
assessee-eoparcenary and Hindu Undivided Fami/1-In the absence of a nucleus
whether H.U.F. can consist of one male men'/iber-Presun1ption of Union of a
lli,.du family-Composition of 'H.U..F. whether relevant for assessment in case
where property belong to subsisting undivided family gr in case where property
is 'thrown into common hotchpotch for the· first -time-lVhether asseBSn1ent to
be 1nade depending on the nature and character of the prlJperty ·under the
personal law.
The appellant Surjit Lal Was the owner of an immov~ble property called
"'Kathoke Lodge·~ · He used to derive rent income from the said property in
addition to deriving income under other heads. In 1956, he made a declaration
throwing the said property into the family hotcbpot. The family consisted of
himself his wife and an unmarried daughter.
The appellant contended before the Income Tax Officer that the rent income
derived from the said property should be assessed in the status of a Hindu
Undivided Family. The Income Tax Officerheld :
1. In the absence of a nucleus of,joint family propert}' th.ere was nctbing
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with which the appellant c·ould mingle his separate property.
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2. There could not be a HindU Undivided f3.mily v;ithout there being
Undivided family property.
An· aPpeal filed before the Appellate Assistant Commissio::ier wa'i dismissed
but on the following grounds :
( 1) After the declaration the appellant was dealing v.·ith the income of
the property in the ~ame way as before and. therefore, the declaration
was not acied upan.
(2) Even assuming that the property was thrown into the common stock
and was therefore joint family property.
the income from
that
property could still be taxed in the appellant's hands as he was the
sole male member of the family.
- The ma:tter was further taken to the Income Tax Appellate Tribunal by
the appellant. The ·Tribunal accepted the declaration as genuine and differed
from the A.A.C. that it was not acted upon. The Tribunal, however, held -that
though the appella:nt had invested his separate property ,,·ith the character of
joint family property, he being a sole surviving coparcener continued to have
the same absolute and unrestricted interest in the propert}' as before and,
therefore, in law, the property had to be treated' as his separate property.
Thereafter. the Tribunal ieferred the question of law to the High Court.
Before the High Court it was contended by the appellant that it is open to a
male member of a joint Hindu Family to convert his 5elf-acquired property into
joint family property by throwing it into· the common botch pot, and that it
was not necessary that there should· be an ancestral nucleus or that there
should he mo"re than one male in the joint family. On the other h:lnd, the
department contended that it was contrary to the basic concept of a Hindu.
undivided family that a single male alongwith females could form a joint Hindu
family and that it was necessary for the formation of. a joint Hindu family
that there should be more than one male entitled to claim partition of the joint
family property.
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S. L· CHHABDA v. C.l.T.
165
The High Court did not go into the larger question and assumed for the
purpose of a.rgument that there need not be more than one male . member for
forming a joint Hindu family as a taxable unit.
The High Court held that
since the assessee ha,d no son, there wa·3 no undivided family.
According to
the High Court, the case of the appellant fell within the ratio laid down by
the Privy Council in Kalyanji's case and that since under the personal law,
the right to the income remained as it was before the appellant made the
declaration, the income from Kathoke Lodge was !ia!>le to be assessed as the
appellant's individu.al in:ome.
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Dismissing an appeal by Special Leave,
HELD :
(1) Even in the absence of an antecedent history of jointness, the appellant
could constitute a joint Hindu Fam

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164
SURJIT LAL CHHABDA
v.
COMMISSIONER OF INCOME TAX, BOMBAY
October 6. 1975
(Y. V. Cl!ANDRACHUD, R. S. SARKARIA AND A. C. GUPTA, JJ .]
Income Tax Ac/9 1922-Section 2(9)-Hindu Undh·id,ed
Family as an
assessee-eoparcenary and Hindu Undivided Fami/1-In the absence of a nucleus
whether H.U.F. can consist of one male men'/iber-Presun1ption of Union of a
lli,.du family-Composition of 'H.U..F. whether relevant for assessment in case
where property belong to subsisting undivided family gr in case where property
is 'thrown into common hotchpotch for the· first -time-lVhether asseBSn1ent to
be 1nade depending on the nature and character of the prlJperty ·under the
personal law.
The appellant Surjit Lal Was the owner of an immov~ble property called
"'Kathoke Lodge·~ · He used to derive rent income from the said property in
addition to deriving income under other heads. In 1956, he made a declaration
throwing the said property into the family hotcbpot. The family consisted of
himself his wife and an unmarried daughter.
The appellant contended before the Income Tax Officer that the rent income
derived from the said property should be assessed in the status of a Hindu
Undivided Family. The Income Tax Officerheld :
1. In the absence of a nucleus of,joint family propert}' th.ere was nctbing
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with which the appellant c·ould mingle his separate property.
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2. There could not be a HindU Undivided f3.mily v;ithout there being
Undivided family property.
An· aPpeal filed before the Appellate Assistant Commissio::ier wa'i dismissed
but on the following grounds :
( 1) After the declaration the appellant was dealing v.·ith the income of
the property in the ~ame way as before and. therefore, the declaration
was not acied upan.
(2) Even assuming that the property was thrown into the common stock
and was therefore joint family property.
the income from
that
property could still be taxed in the appellant's hands as he was the
sole male member of the family.
- The ma:tter was further taken to the Income Tax Appellate Tribunal by
the appellant. The ·Tribunal accepted the declaration as genuine and differed
from the A.A.C. that it was not acted upon. The Tribunal, however, held -that
though the appella:nt had invested his separate property ,,·ith the character of
joint family property, he being a sole surviving coparcener continued to have
the same absolute and unrestricted interest in the propert}' as before and,
therefore, in law, the property had to be treated' as his separate property.
Thereafter. the Tribunal ieferred the question of law to the High Court.
Before the High Court it was contended by the appellant that it is open to a
male member of a joint Hindu Family to convert his 5elf-acquired property into
joint family property by throwing it into· the common botch pot, and that it
was not necessary that there should· be an ancestral nucleus or that there
should he mo"re than one male in the joint family. On the other h:lnd, the
department contended that it was contrary to the basic concept of a Hindu.
undivided family that a single male alongwith females could form a joint Hindu
family and that it was necessary for the formation of. a joint Hindu family
that there should be more than one male entitled to claim partition of the joint
family property.
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S. L· CHHABDA v. C.l.T.
165
The High Court did not go into the larger question and assumed for the
purpose of a.rgument that there need not be more than one male . member for
forming a joint Hindu family as a taxable unit.
The High Court held that
since the assessee ha,d no son, there wa·3 no undivided family.
According to
the High Court, the case of the appellant fell within the ratio laid down by
the Privy Council in Kalyanji's case and that since under the personal law,
the right to the income remained as it was before the appellant made the
declaration, the income from Kathoke Lodge was !ia!>le to be assessed as the
appellant's individu.al in:ome.
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Dismissing an appeal by Special Leave,
HELD :
(1) Even in the absence of an antecedent history of jointness, the appellant
could constitute a joint Hindu Family with his wife and unmarried daughter.
True th&t the appellant could not constitute a coparcen~ry with . h!s wife ~nd
unmarried daughter but under the Income Tax Act a Hmdu undivided famtly,
not a coparcenary is taxable unit. A Hindu .:oparcenary is a much narrower
body than the j'oint family. [170F, 171B]
(2) The joint family with all its incidents, is a creature of iaw and cannot
be created by act of parties except to the extent to which a stranger may be
affiliated to the family by adoption. The appellant, however, was not by contract seehng to introduce in his family strangers not bound to the family by
the tie of a sapindaship. That it does not take more than one male to form
a joint Hindu family with females, is well established. [172A & GJ
(3) The contention of the Department that since prior to the declaration.
the family hotchpot in the instant case was empty and there was nothing with
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which the property or its income could be blended and. therefore, the declaration
is ineffective to convert that property into joint family property was not raised
before the Tribunal, and the same was not pressed in the High COurt.
~t was,
therefore, not open to the department to take before thi•3 Court a contention
,_ which in the first place does not arise out of the reference and whkh the
department's counsel in the High Court raised but did not press.
[173G-H, l 74A-C]
(4) The cases of Kanji and Sewdas in Kalyanji's case furnish a near parallel
to the present case. Though the property in their hands was assumed to be
ancestral, iJJcome which Kanji and Sewdas received from it was treated as .
their separate property, as nei_ther of them had a son who could take interest
in the ancestral property by birth. Applying that analogy, even if ~athoke
lodge were to be an an~estral asset, its income would still have to be treated
as the appellant's separate property as he had no son who could take interest
in that property by birth. The ratio of Kalyanji's case would, therefore, apply
to the mstant case.
The reason why the case of Kanji and Sewdas furnished
a close parallel is the very reason for which their cases were held by this Court
to be distinguishable from Lakshmi Narain's ,case.
In Lakshmi Narain's case
the property was ancestral in the hands of the father, the son had acquired
, an interest by birth therein. there was a subsisting Hindu Undivided family
,,.
during !he lifetime of the father and since that family did not come to an
end on the death of the father, the Bombay High Court ri.ghtly held that the
income continued to be the income of the joint family and was liable to be
• taxed as such. The property of a joint family does not cease to belong to the
family merely because the family is represented by a single coparcener who
possesses rights which an owner of property may possess.
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(176-D-G, 177A, 1i8, G-H, 179A]
( 5) There are thus two classes of cases each requiring a different approach.
In case·3 where the property belongs to a subsisting undivided family the property
does not cease to have that character merely because the family is represented
by a sole surviving coparcener who possesses rights which an owner of property
may possess, or for that matte' even if the family for the time being consists
only of widows of deceased coparceners.
Jn cases where the property did not
belong to a su.bsistinl? undivided family, whether an)'. property has acquired the
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166
SUPREME COURT REPORTS
[1976] 2 S.C.R.
character of joint family property has acquired the character of joint family
property in the hands of an assessee depends on the composition of the family.
A joint Hindu family can consist of a man, his wife and daughter but the mere
existence of a wife or daughter will not justify the assessment of income from
the joint family property in the status of the head as a manager of the joint
family.
Once it is realised that there are two distinct classes of eases which
require a different approach there would be no difficulty in understanding the
implications of the apparently confticti.ng tests evolved as guides for deciding
the two classes of cases.
Kathoke Lodge was not an asset of a pre-existing
joint family. It became an item of joint family property for the first time
when the appellant threw what was his separate property into the family
hotchpot. The appellant had no son.
His wife and unmarried daughter were
entitled to be maintained by him from out of the income of Kathoke Lodge
while it was- his separate property. Their rights in that property are not enlarged
for the reason that the property was thrown into t~e family hotchpot. Not
being w-parceners of the appellant, they have neither a right by birth in· the
property nor the right to demand partition nor indeed the right to restrain the
appellant from alienating the property for any purpose whatsoever. The property which the appellant has put into the common stock may change it'3 legal
incidence on the birth of a son but until that event happens, the property
in the eyes of Hindu Law is really his.
He can deal with it as a full owner,
unrestrained by 'considerations of legal necessity or benefit of the estate. He
may sell it, mortgage it or make a gift of it.
Even a son born or adopted
after the alienation shall have to take the family hotchpot as he finds it.
[180-G, H, 181 A-D, 182-E-H, 183A]
(7) Since the personal law of the appellant regards him as the owner of
Kathoke lodge and the income therefrom as his income· even after the property
was thrown into the family hotchpot, the income would be chargeable to
income tax as his individual income and not that of the family.
[183B-C]1
CrvrL APPELLATE JURISDICTION: Civil Appeal Nos. 1819-1821
of 1970.
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Appeals by Special Leave from the Judgment and Order dated the
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8/9th July 1969 of the High Court at Bombay in Income Tax Reference No. 29 of 1963.
G. C. Sharma, 0. P. Dua, Annoop Sharma and P. K. Mukherjee
for the Appellants.
S, T~ Desai, P. L. Juneja and S. P. Nayar for the Respo11.dent.
The Judgment of the ~ourt was delivered by
CHANDRACHUD, J.-The appellant, Surjit Lal Chhabda, had three
sources of income. He had a share in the profits of two partnership
firms, he ·received interest from Bank acocunts and he received rent
from an immovable property called "Kathoke L08ge". These were
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his self-acquired properties and until the assessment year 1956-57, he
used to be assessed as an individual in respect of the income thereof.
On January 26, 1956 he made,a sworn declaration before a Presidency
Magistrate in Bombay that he had thrown the poperty Kathoke Lodge
into the 'family hotchpot' in order to impress tlj.at property with the
character of joint family property and that he would be holding that
property as the Karta of the joint Hindu family consisting of himself,
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his wife and one child. · That -child was an unmarried daughter.
In the assessment proceedings for 1957-58, the appellant contended that since he had abandop.ed all separate claims to Kathoke Lodge,
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s. L. CHHABDA v. C.I.T. (Chandrachud, J.)
167
the income which he received from that property should be assessed in
the status of a Hindu Undivided Family.
The income-tax authorities
and the Income-tax Appellate Tribunal rejected that contention for
varying reasons.
The Income-tax Officer held that in the absence of
a nucleus of joint family property, there was nothing with which the
appellant could mingle his separate property and secondly, that there
could not be a Hindu undivided family without there being undivided
family property.
The appellant carried the matter in appeal to the
Appellant Assistant Commissioner who differed from the Income-tax
Officer on both the points but dismissed the appeal on
two
other
grounds.
The A.A.C. held that even after the declaration, the appellant was dealing with the income of Kathoke Lodge in the same way
as before which showed that the declaration was not acted upon and
secondly, that even assuming that the property was thrown into the
common stock and was therefore joint family property, the income
from that property could still be taxed in the appellant's hands as he
was the sole male member of the family.
The Tribunal accep'.cd th;;
declaration as genuine and differed from the A.A.C.'s finding that it
was net acted upon.
The appellant, according to the Tribunal, was
the Karta of the joint Hindu family and it was irrelevant as to how
he dealt with the joint family income.
The Tribunal however held
that though the appellant had invested his separate property with the
character of joint family property, he being a
sole surviVing coparcener continued to have the same absolute and unrestricted interest in
the property as before and therefore, in law, the property had to be
treated as his separate property.
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The appellant moved the Tribunal for rcfering five questions to
the High Court while the respondent applied for the reference of one
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other question. The Tribunal referred the following question only for
the opinion ~ the Bombay High Court under section 66 (I) of the
Income-tax Act, 1922:
"Whether, on the facts .and in the circumstances of the
case, the income from property known as 'Kathoke Lodge'
WM to be assessed separately as the income of the Hindu
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undivided family of which the assessee was the karta?"
. . In tho High Court, it was con~ei:ided ?n beh~ of the appellant that
1t 1s open to a male member of a JOmt Hindu fanuly to convert his selfacquired property into joint family property by throwing it into the
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common hotchpot; that for effectuating this purpose it
is
neither
necessary that there should be an ancestral or joint family nucleus nor
that there should be more than one male in the joint family; and since
Kathoke Lodge was impressed with the character of joint family property, its income belonged to the joint Hindu family of which the appellant WllS the Karta, the other members being his wife and unmarried
.daughter.
On the other hand, the Department contended that it was. contrary to the basic· concept of a Hindu Undivided Family that a single
m~l~ alon_g with fe_males co~ld form a j?int Hindu family; that though
a JOmt Hmdu family could mclude a wife and unmarried daughters, a
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168
SUPREME COURT REPORTS
[ 197 6] 2 S.C.R.
sole male member could not constitute a joint Hindu family
along
with females; and that it was necessary for the formation of a joint
Hindu family that there should be more than one male capable of
claiming partition of the joint family property.
In the alternative, it
was urged by the Department that a single male could form a joint
Hindu family along with a coparcener's widow who is
capable of
making an adoption to her deceased husband but not with his own wife
and unmarried daughter.
The argument that the existence of ancestral or joint family property was an essential pre-requisite to throwing
the self-acquired property into the common stock was raised but was
not pressed in the High Court.
On these contentions, the real controversy before the High . Court
was whether a single male can form a joint Hindu family with
his
wife and unmarried 'daughter; if yes, whether the Karta of such a family
can impress his self-acquired property with the character of joint family
property by throwing it into the family hotchpot; and, lastly, whether
the income of such property can be assessed as the income of the.
joint family.
The High Court did not enter into these questions and
made its task simple by saying :
"Several authorites were referred to on either side in
support of their respective contentions. We do not, however,
propose in deciding this reference to go into the larger question as to whether the property of the assessee, which was
originally self-acquired property, assumed the character of a
Hindu undivided family property, as to what are the incidents of a Hindu undivided family property and under what
circumstances can separate property become Hindu undivided
family property. Some of these questions have been directly answered in the authorities which were cited before us.
"The question referred is confined to the 'income' from
Kathoke Lodge.
We would, therefore, without going into
these larger questions, prefer to rest our decision on the
short point whether the income from the property known as
Kathoke Lodge after the declaration was the income .of a
Hindu undivided family and in this respect
whether
the
principle laid down by the Privy Council in Kalyi141ji's case
was correctly applied."
The High Court assumed for the purposes of argument that there need
not be more than one male member for forming a joint Hindu family
as a taxable unit and that a joint Hindu family could lawfully consist
of a single male member, his wife and unmarried daughter. On these
assumptions the High Court concluded that Kathoke Lodge, from the
date of the declaration by which it was thrown into the common stock,
was the property of the Hindu undivided family. It, however, held :
"But the assessee has no son and therefore no undivided
family.
His ownership of the property and its income in
fact remains the same as before. The fact of the existence
of a wife or of a wife and daughter would make no difference
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s. L. CHHABDA v. C.I.T. (Chandrachud, J.)
169
to his ownership of that property . . . . . . His position
as a member of the joint family after the declaration would
be the same as that of a sole surviving coparcener, but it is
now settled law that a person who for the tinie being is the
sole surviving coparcener is entitled to dispose of the coparcenary property as if it were his separate property . . . .
That is the position which the assessee held so far as his property is concerned.
So far as the income is concerned, he
has the complete power of disposal over the income and,
even assuming that he is the karta of a joint Hindu family,
there is no one who can question his spending, i.e., whether
or not it is for legal necessity or other justifiable purpose.
If then, his right to the income remains under his personal
law the same as it was before he made the declaration, the
question arises whether under the Income-tax A"t it must
be held to be the income of the karta of the Hindu undivided
family.
That is precisely the question
which
tlJ.e
Privy
Council answered against the assessee in
Kalyanji's · case
. . . . In our opinion, therefore, the assessee's case would
fall squarely within the principle enunciated by their Lordships of the Privy Council in Kalyanji's case and upon that
view the income in the hands of the assessee would be liable
to be assessed as his individual income."
The Privy Council decision on which the High Court relies is Kalyanji
Vithaldas v. Commissioner ·of Income-tax.(')
The judgment of the
High Court is reported in 75 I.T.R. 458.
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Before examining the validity of the High Court's reliance on
Kalyanji's case and the correctness of its conclusion that the instant
case falls within the ratio of that decision, it is necessary to have regard
to the principles of Hindu Law governing joint families.
The High
Court did not examine those principles, calling them "larger questions'',
and preferred wholly to rely on, so to say, the magic touch of Kalyanji's
case.
It assumed that a joint family may consist of a single male, a
wife and daughter which means that it assumed that the appellant was
a member of a joint Hindu family consisting of himself, his wife and
daughter.
However, in the very next. breath the High
Court concluded : "But the assessee has no son and
therefore no undivided
family."
An examination of fundamentals might
~ave saved
the
High Court from the inconsistency that a single male can constitute a
"joint family" with his wife and daughter but if that male has no son,
there can be no "undivided family".
In the first place, joint family
and undivided family are synonymous terms. Secondly, when one
says that a joint Hindu family consists of a single male, his wife and
daughter, one implies necessarily that there is no son: If there were
a son, there would be two males.
For our limited purpose, fundamentals do not any more require a
i;tudy of Sastric texts, digests and
commentaries
because
judicial
decisions rendered over the last century and more have given a legalistic form to what was in a large measure a mingling of religious and
(1) (1937) 5 I. T. R. 90.
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SUPREME COURT REPORTS
[1976] 2 S.C.R.
moral edicts with rules of positive laws. Hindu law today, apart from
the piecemeal codification of some of its branches like the laws
of
marriage, succession, minority, guardianship, adoption and maintenance is Judge-made law, though that does not detract from the juristic weight of Smritis like the Yajnavalkya Smriti nor from the profundity of Vijnaneshwara's Commentary on it, the critique bearing the
humble title of 'Mitakshara'.
The appellant is governed by the Mitakshara school of Hindu law
but that is not of any particular consequence for the purposes of this
appeal.
The differences between the Mitakshara
and
Dayabhaga
schools on the birth-right of coparceners and the rules of inheritance
have . no bearing on the issues arising in this appeal, particularly on
the question whether a single male can constitute a joint or undivided
family with his wife and unmarried daughter. A joint Hindu family
under the Dayabhaga is, like a Mitakshara family, normally joint in
food, worship and estate. In both systems, the property of joint family
may consist of ancestral property, joint acquisitions . and of selfacquisitions thrown into the common stock('). In fact, whatever be
the school of Hindu law by which a person is governed, the basic concept of a Hindu undivided family in the sense of who can be its members is just the same.
Section 2(9) of the Income-tax Act, 1922 defines a "person" to
include inter alia a "Hindu undivided family". Under sections 3 and
55 of that Act, a Hindu undivided family is a taxable unit for the purposes of income-tax and super-tax. The expression 'Hindu undivided
family' finds reference in these and other provisions of the Act but that
expression is not defined in the Act. The reason of the omission evidently is that the expression has a well-known connotation under the
Hindu Law and being aware of it, the legislature did not want to define
the expression separately in the Act. Therefore, the expression 'Hindu
undivided family must be construed in the sense in which it is understood under the Hindu law(8 ).
There is no substance in the contention of the respondent that in
the absence of an antecedent history of jointness,
appellant cannot
constitute a joint Hindu family with his wife and unmarried daughter.
The lack of such history was never before pleaded and not only does
it find no support from the record but such an assumption ignores
the plain truth that the joint and undivided family is the normal condition of Hindu society. The presumption therefore fs that the members of a Hindu family are living in a state of union, unless the contrary is established.(')
The strength of the presumption may vary
from case to case depending upon the degree of relationship of the
members and the farther one goes from the founder of the family, the
(1) Mayne's Hindu Law and Usage, Eleventh Ed., pp. 364-365, paragraph 297, Mulla'S
Hindu Law, Fourteenth Ed., p. 277, Paragraph 227 (3).
(2) Gomedalli Laxminarayan (deceased), heirs of v. The Commissioner of Income-tax,
Bombay, 8 I. T. C. 239 (See particularly the judgment of Ranganekar J. at p.
244), 3 I. T. R. 367 at 369-370.
(3) Mayne's Hindu Law and Usage, Eleventh Ed., p. 323; Mulla's Hindu LaVI'.,
Fourteenth Ed., p. 284.
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s. L. CHHABDA v. C.I.T. (Chandrachud, J.)
171
weaker may be the presumption. But, generally speaking, the normal
state of every Hindu family is joint and in the absence of proof of
division, such is the legal presumption.
Thus, a man who separates
from his father or brothers may, nevertheless continue to be
joint
with the members of his own branch.
He becomes the head of a new
joint' family, if he has a family, and if he obtains prop~rty on partition
with his father and brothers, that property becomes
the
ancestral
property of his branch, qua him and his male issue.
It is true that the appellant cannot constitute a coparcenary with
his wife and unmarried daughter but under the Income-tax Act
a
Hindu undivided family, not a coparcenary, is a taxable
unit.
A
Hindu coparcenary is a niuch narrower body than the joint family.
It includes only those persons who acquire by birth an interest in
the joint or coparcenary property and these are the sons, grandsons
and great-grandsons of the holder of the joint property for the time
being, that is to say, the three generations next to the holder in unbroken
male descent.
Since under the Mitakshara Law, the right to joint
family property by birth is vested in the male issue only, females who
come in only as heirs to obstructed heritage (sapratibandha days),
cannot be coparceners. But we are concerned under the Income-tax
Act with the -question whether the appellant's wife
and
unmarried
daughter can with him be members of a Hindu undivided family and
not of a coparcenary.
In the words of Sir George Rankin who delivered the opinion of the Judicial Committee in Kalyanji's case :
"The phrase 'Hindu undivided family' is used m the
statute with reference, not to one school only of Hindu law,
but to all schools; and their Lordships think it a mistake in
method to begin by pasting over the wider phrase of the Act
the words 'Hindu co-parcenary', all the more that it is not
possible to say on the face of the Act that no female can be
a member." (p. 95).
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Outside the limits of coparcenary, there is a fringe of persons,
males and females, who constitute an undivided or joint family. There
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is no limit to the number of persons wh'O can compose it nor to their
remoteness from the common ancestor and to their relationship with
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one another.
A joint Hindu family consists of persons lineally descended from a common ancestor and includes their wives and unmarried daughters. The daughter, 'On marriage, ceases to be a member
of her father's family and becomes a member of her husband's family.
The joint Hindu family is thus a larger body consisting of a group of
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persons who are united by the tie of sapindaship arising by birth,
marriage or adoption. "The fundamental principle of the Hindu joint
family is the sapindaship.
Without that it is impossible to form a
joint Hindu family.
With it as long as a family is living together, it
is almost impossible not to form a joint Hindu family.
It is the
family relation, the sapinda relation, which distinguishes
the
joint
family, and is of its very essence."(1)
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(!) Per Beaman J. in Karsondas v. Gangabai (1908) 32 Born. 479, 493; See also Hindu
Law_ in British India by S. V. Gupte, Second Ed., p. 59.
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SUPREME COURT REPORTS
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The joint Hindu family, with all its incidents, is thus a creature of
law and cannot be created by act of parties, except to the extent to
which a stranger may be affiliated to the family by adoption.
But
the absence of an antecedent history of jointness between the appellant and his ancestors is no impediment to the appellant, his wife and
unmarried daughter forming a joint Hindu family.
The appellant's
wife became his sapinda on her marriage with him. The daughter too,
on her birth, became a sapinda and until she leaves. the family by
marriage, the tie of sapindaship will bind her to the family of her
birth.
As. said by Golapchandra Sarkar Sastri in his "Hindu Law"
(Eighth Ed., p. 240), "Those that are called by nature to live together,
continue to do so" and form a joint Hindu family.
The appellant is
not by contract seeking to introduce in his family. strang~rs not bound
to the family by the tie of sapindaship.
The wife
and unmarried
daughter are members of his family. He is not by agreement making
them so. And as a Hindu male, he himself can be the stock of a fresh
descent so as to be able to constitute an undivided family with his
wife and dau~ter.
That it does not take more than one male to fonn a joint Hindu
family with females is well-established.
In Gowli Buddanna v. ComD
missioner of Income-tax, Mysore; Bangalore(!), one Buddappa, his
•
wife, his two unmarried daughters. and his adopted
son Buddanna
were members of a Hindu undivided family. On Buddappa's death a
question arose whether the adopted son who was the sole surviving
coparcener could form a joint Hindu family with his
mother and
sisters and could accordingly be assessed in the status of a manager
of the Hindu undivided family.
Speaking for the Olurt, Shah J.
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observed:
"The plea that there must be at least two male members
to form a Hindu undivided family as a taxable entity also
has no force.
The expression 'Hindu undivided family' in
the Income-tax Act is used in the sense in which a Hindu
joint family is understood under the personal law of Hindus.
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Under the Hindu system of law a j'Oint family may consist
of a single male member and widows of deceased
male
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members, and apparently the Income-tax Act does not indi-
,
. cate that a Hindu undivided family as an assessable entity
must consist of at least two male members."
In N. V. Narendranath v. Commissioner of Wealth-tax, Andhra
Pradesh, Hyderabad( 2 ), the appellant filed returns for Wealth Tax in
the status of a Hindu undivided family which at the material time
consisted of himself, his wife and two minor daughters.
The claim
to be assessed in the status of a Hindu undivided family rested on the
circumstance that the wealth returned consisted of ancestral property
received or deemed to have been received by the appellant on partition
with his father and brothers. The High Court held that as the appellant's family did not have any other male coparcener, the assets must
(1) [19661 3 S. C. R. 224.
(2) [1969] 3 S. C. R. 882.
'S. L. ClllIABDA v. C.I.T. (Chandrachud, /.)
173
be held 1'o belong to him as an individual and not to the Hindu undivided family.
That decision was set aside by this Court on the
ground that a joint Hindu family could consist under the Hindu law
of a single male member, his wife and daughters and that it was not
necessary that the assessable unit should consist of at least two male
members.
In both of these cases, Gowli Buddanna's and Narendranath's the
assessee was a member of a pre-existing joint family and had, in one
case on the death of his father and in the other on partition, become
the sole surviving coparcener. But the decision in those cases did not
rest on the consideration that there was an antecedent history of jointness.
The alternative argument in Gowli Buddanna's case (p. 266)
was an independent argument uncorrelated to the pre-existence of a
joint family.
The passage which we have extracted from the judgment of Shah J. in that case shows that the decision of this Court did
not proceed from any such consideration.
The Court held in terms
categorical that the Hindu undivided family as an assessable entity
need not consist of at least two male members.
The same is true of
the decision in N arendranath' s case (see p. 8 8 6) .
Thus the contention of the Department that in the absence of a
pre-existing joint family the appellant cannot constitute a Hindu undivided family with his wife and unmarried daughter must fail.
The
view of the High Court that the appellant has "no son and therefore
no undivided: family" is plainly unsound and must also be rejected.
Accordingly, the question whether the income of the Kathoke Lodge
can be assessed in the hands of the appellant as a Karta or manager of
the joint family must be decided on the basis that the appellant, his
wife and unmarried daughter are members of a Hindu undivided
family.
' • r
By the declaration of January 26, 1956, the appellant threw Kathoke
Lodge into the family hotchpot abandoning all separate claims to that
property.
The genuineness of that declaration was accepted by the
Tribunal.
The High Court too decided the reference on the footi~!l
that the appellant had thrown the property into the common hotchpot
and that 'after the ;;!eclaration, the property . . . . . would be property
of a Hindu undivided family in the hands of the assessee" (p. 471).
Learned counsel for the Department attempted to raise a new contention before us. that there is no such thing under the Hindu law as
impressing separate property with the character of joint,family property,
that the only doctrine known in this behalf to Hindu law is the doctrine
of blending and since, prior to the declaration the family hotchpot in
the instant case was empty, there was nothing with which the Kathoke
Lodge or its income c·ould be blended and therefore, the declaration is
ineffective to convert that property into joint family property. Learned
counsel for the appellant cited several decisions of the High Courts to
controvert the Department's contention. But dpart from the merits of
the point we ruled that the contention was not open to the Department.
The statement of case framed by the Tribunal shows that such a contention was not raised before the Tribunal.
The Commissioner of
Income-tax himself asked for the reference of a question to the High
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SUPREME COURT REPORTS
[1976] 2 S.C.R.
Court for its opinion. That question concerns the point whether having
regard to the conduct of the appellant his self-acquired property could
be said to be impressed with the character of joint family property.
The question did Il'vt cover the contention raised before us on behalf
of the Department. But above all, though an argument was raised in
the High Court on behalf of the Department that for the operation of
the doctrine of blending it was essential that there should exist not
only a coparcenary but also a coparcenary property, learned counsel
who appeared for the Department in the Higb Court "did not, after
some discussion, press that there should necessarily be coparcenary
property." This was not a concession on a question of law in the
sense as t·o what the true legal position was.
What the Department's
counsel stated in the Higb Court was that he did not want to press the
particular point.
In our opinion, it is not open to the Department to
take before us a contention which in the first place does not arise out
of the reference and which the Department's counsel in the High Court
raised but did not press.
Having examined the true nature of an undivided family under the
Hindu law and in view of the findings of the Tribunal and the High
Court on the second aspect, two points emerge clear : Firstly that the
appellant constituted a Hindu undivided family with his wife and Ull"
married daughter and secondly that Kathoke Lodge which was the
appellant's separate property was thrown by him in the family hotchpot.
It remains now to consider whether the income of Kathoke Lodge
m11st be assessed in the hands of the appellant as an individual or whether it can be assessed in his status as manager of the Hindu undivided
family.
Sine:: tfie conclusion reached by the High Court that the income of
Kathoke Lodge cannot be assessed in the appellant's
status
as
a
manager of the Hindu undivided family is based wholly on the -Oecision
in Kalyanji's case and since that decision also loomed large in the
arguments before us, it is necessary to examine it closely.
The relevant facts of that case are these : One Sicka had two sons,
Moolji and Purshottom.
From his first wife, Moolji had two sons,
Kanji and Sewdas both of whom were married but neither of whom had
a son. From his second wife, Moolji had a son Mohan Das.
Kan.ii
had a wife and a daughter while Sewdas had a wife but no issue. Moolji,
Kanji and Sewdas separated from one another in about 1919. In the
same year Moolji made gifts of capital to Kanji and Sewdas.
Moolji
continued to Jive jointly with his second wife and the son Mohan Das
born of her. Purshottom had a wife, a son and a daughter.
There was another family of which the head was one Vithaldas.
He had three sons, Kalyanji, Chaturbhuj and Champsi. Kalyanji had
a wife, three sons and a daughter while Chaturbhuj had a wife and
daughters.
Moolji and Purshottom, the two sons of Sicka, who had already
separated from each other started in 1912 a business called Moolji
Sicka and Company in partnership with Kalyanji, the son of Vithaldas.
\
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s. L. CHHABDA v. c.r.T. (Chandrachud, J.)
175
The three partners employed their self-acquired properties for the purpose of that business.
In course of time, Moolji's ·sons Kanji and
Sewdas, and Vithaldas' S\:Jns Chaturbhuj and Champsi were taken: into
the partnership with the result that by 1930 the partnership came to
consist of seven partners : Moolji, his sons Kanji and Sewdas; Moolji's
brother Purshottom; and Vithaldas's sons Kialyan~i. Chaturbhuj
and
Champsi. The interest of Kanji and Sewdas in the firm was a gift from
their father Moolji and that of Chaturbhuj a gift from his brother
KaJyanji.
Those of the partners whose interest in the firm was separate property were not shown to have thrown that property or the
receipts therefrom into the common stock.
The Pri.vy Council had six appeals before it which were filed by the
partners of the firm except Chapsi. The appeals related to the assessment year 1931-32. The controversy was whether the partners should
each be assessed to super-tax upon his share of the profits as an individual or whether the six shares should each be assessed as income of a
Hindu undivided family.
Three partners out of the six, namely,
Moqlji, Purshotom and
Kalyanji, were each members of a Hindu undivided family.
Each of
these three partners had a son or sons from whom he was not divided.
But the income which these partners received from the firm was their
separate and self-acquired property. Since the income was not thrown
into the common stock, the Privy Council held that it could not he regarded as the income of the respective joint families.
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The fourth partner Chaturbhuj had no s·on. His interest in the firm
was obtained from his brother Kalyanji and therefore the income which
he received from his share in the profits of the firm was a self-acquired
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and not ancestral property.
The Privy Council observed that even if
Chaturbhuj were to have a son, that son would have taken by birth
no interest in the income which fell to Chaturbhnj's share and therefore
the income was assessable in the hands of Chaturbhuj as his separate
income and not that of the joint Hindu family ..
According to the Privy Council, in none ·of the cases of these four
partners was the result affected by the fact that any partner had a wife
and a daughter or a wife and more than one daughter. If the mere
existence of a son did not make a father's self-acquired property joint
family property, i:t was untenable that the existence of a wife
or a
daughter could do so.
In the case of the remaining two partners, Kanji and Sewdas, their
interest in the firm was obtained under a gift from their father. The
Privy Council assumed, without deciding the question, t
11at such an
interest was ancestral property in the hands of the sons
so
that if
either Kanji or Sewdas had a son, the son would have taken interest in
the property by birth. But neither Kanji nor Sewdas had a son.