http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

PETITIONER: COMMISSIONER OF WEALTH TAX, WEST BENGAL

       Vs.

RESPONDENT: BISHWANATH CHATTERJEE AND OTHERS

DATE OF JUDGMENT08/04/1976

BENCH: SHINGAL, P.N. BENCH: SHINGAL, P.N. RAY, A.N. (CJ) BEG, M. HAMEEDULLAH SARKARIA, RANJIT SINGH SINGH, JASWANT

CITATION:  1976 AIR 1492            1976 SCR  (3)1096  1976 SCC  (3) 385  CITATOR INFO :  E&D        1987 SC 522  (13,32)

ACT:      Wealth Tax  Act,s. 3-Coparceners  governed by Dayabhaga School of  Hindu Law-If could be assessed as Hindu Undivided Family.      Hindu Law-Coparcener under Dayabhaga School-If could be assessed as Hindu Undivided Family.

HEADNOTE:      Rejecting  the   respondents’  plea   that  as  persons governed by  the Dayabhaga School of Hindu Law they had held definite and  determined shares  in the properties inherited by them  from their  father  and  were  liable  to  separate assessment of  wealth tax,  the Wealth  Tax Officer assessed them as  a Hindu  Undivided Family.  On appeal the Appellate Assistant Commissioner  held that  the properties  should be taxed in  the hands of the co-sharers separately. On further appeal, the  Appellate Tribunal  held  that  notwithstanding that  there  was  no  unity  of  ownership  amongst  members governed by  the Dayabhaga School of Hindu Law in respect of family property  and each  member thereof  had  no  definite share  in   it,  such   property,  until   partitioned,  was assessable to wealth tax in the hands of the Hindu Undivided Family. On  reference, the  High Court held in favour of the assesses.      Dismissing the appeal to this Court, ^      HELD:  Dayabhaga   means  partition   of  heritage.   A Dayabhaga male’s wife or sons or daughters have no ownership in his  property during his lifetime. Ownership of wealth is vested in  the heirs by the death of their father, when they become co-heirs  and can  claim partition. The heritage of a Dayabhaga male  does not  become the  joint property  of the heirs or of the joint family on the demise of the last owner but becomes  the fractional  property of  the heirs in well- defined shares.  That  is  why  partition  in  Dayabhaga  is defined  as   an  act   of  particularising   ownership.  In Dayabhaga, the  sons become  tenants in common and not joint

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

tenants in  respect of  the estate  inherited by  them  from their father.  While Mitakshara  is known  as the  School of "aggregate ownership",  Dayabhaga is  known as the school of "fractional ownership".  The essence  of a coparcenary under the  Mitakshara   Law  is  unity  of  ownership;  under  the Dayabhaga it  is unity of possession, not unity of ownership at all.  Under the Dayabhaga school every coparcener takes a definite share  in the  property and he is the owner of that share which  is defined  immediately the  inheritance  falls in.[1099D-G: 1100B-H]      Sreemutty Soorjeemoney  Dossee v. Denobundoo Mullick, 6 M.I.A. 526 at p. 553.      1. Hindu Law by Colebrooke p. 9. 2. Law relating to the Joint Hindu  Family (Tagore  Law Lecrures)  by Krishna Kamal Bhattacharya p.  168 and 3. Principles of Hindu Law by Mulla (14th Edition)  p. 348.  Hindu Law  & Usage,  by  Mayne,11th Edition 364, approved.      (i) Under  s. 3,  the liability of wealth tax arises in respect of  the net  wealth of  the assesses.  The term "net wealth" means  all the  assets belonging to the assesses, on the valuation date. The expression "belong" according to the Oxford Dictionary  means "to  be the  property  or  rightful possession of". [1098G-H]      (ii)  The   liability  to  wealth  tax  arises  out  of ownership of the asset and not otherwise. Mere possession or joint possession  unaccompanied by the right to or ownership of property  would, therefore, not bring the property within the 1097 definition of  "net wealth",  for it  would not  then be the asset belonging to the assesses. [1099C]      In the  instant case,  the property in question was the individual property  of the father of the respondents and it devolved on  the heirs  according to  the provisions  of the Hindu Succession  Act, 1956.  The coparcenary  had unity  of possession but  not unity of ownership on the property. Each coparcener took  a defined share in the property and was the owner of his share. Each such defined share thus belonged to the coparcener.  It was his net wealth within the meaning of s. 2(m)  of the Wealth Tax Act and was liable to wealth tax, as such, under s. 3. [1102C-D]      Commissioner of Wealth-tax West Bengal v. Gouri Shankar Bhar, (1972) 84 I.T.R. 699. explained.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1101 of 1969.      From the  Judgment and  Order dated the 26th April 1968 of the  Calcutta High  Court in Wealth Tax Matter No. 421 of 1964.      S. T.  Desai, B.  B. Ahuja,  S   P.  Nayar  and  R.  N. Sachthey, for the Appellant.      S. K.  Sen, A.  K. Nag  and D.  P.  Mukherjee  for  the Respondents.      The Judgment of the Court was delivered by      SHINGHAL, J. This appeal by certificate has come before us as the question of law arising for decision is said to be of great importance. The facts giving rise to the appeal are quite simple and may be shortly stated.      One Bireswar Chatterjee, who was admittedly governed by the Dayabhaga  School of  Hindu law, was assessed to income- tax as  an individual. He died intestate on January 7, 1957, leaving  his  widow,  sons  and  daughters.  The  Wealth-tax

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

officer rejected  their plea  that on  the death of Bireswar Chatterjee they  held definite  and determined shares in his properties and  were  liable  to  separate  assessment,  and assessed them as a Hindu undivided family for the assessment year   1958-59.   On   appeal,   the   Appellate   Assistant Commissioner held  that since  the assesses  was governed by the Dayabhaga  School of Hindu law, the properties could not belong to  the Hindu  undivided family  and were to be taxed "in the  hands of the co-sharers separately." The department took an  appeal to  the Income-tax  Appellate Tribunal,  ’B’ Bench, Calcutta. There was difference of opinion between the members of  the Tribunal, and in accordance with the opinion of  the   majority  of  the  members  it  was  ordered  that "notwithstanding  that  there  was  no  unity  of  ownership amongst members  governed by  the Dayabhaga  School of Hindu law in  respect of  the  family  property  and  each  member thereof had  definite shares  in it,  such  property,  until partitioned, was  assessable to  wealth-tax in  the hands of the Hindu  undivided family."  The Tribunal however referred the following question of law to the Calcutta High Court for decision      "Whether on the facts and in circumstances of the case,      the Tribunal  was  right  in  holding  that  properties      possessed  jointly  by  the  members  governed  by  the      Dayabhaga  School  of  Hindu  law  were  assessable  to      wealth-tax jointly  in the  status of a Hindu undivided      family?" 1098 The High  Court accepted  the contention  that the  question assumed that  the property  was owned jointly by the members of a Hindu undivided family governed by the Dayabhaga School of Hindu law, and reframed it as follows,-           "Whether on  the facts and in the circumstances of      the case,  the Tribunal  was right  in holding that the      property  possessed  by  the  heirs  of  a  Hindu  male      governed by  the Dayabhaga  School of  Hindu  law  were      assessable to  wealth tax  jointly in  the status  of a      Hindu undivided family?"      It took  the view  that the  matter was  covered by its earlier decisions including Commissioner of Wealth-tax. West Bengal v.  Gouri Shankar Bhar where it had been held that on the death  intestate of  a Dayabhaga  male, his heirs do not inherit his  estate as  members of a Hindu undivided family, and remain as co-owners with definite and ascertained shares in  the   properties  left   by  the  deceased  unless  they voluntarily decide to live as members of a joint family. The High Court  also took  notice of  the fact  that a  suit for partition had  been filed  and a preliminary decree had been obtained on July 4, 1959, and answered the reframed question in the  negative. As  has been  stated, the  High Court  has certified this to be fit case for appeal to this Court.      Mr. S.  T. Desai  appearing  for  the  Commissioner  of Wealth-tax has  challenged the  view taken by the High Court and has  argued that under the Dayabhaga School of Hindu law the property left by the father is taken by the sons jointly by descent, as coparceners, as their joint family comes into existence by  operation of  law. He  has accordingly  argued that the  father’s property  is liable  to  be  taxed  under section 3  of the Wealth-tax Act, hereinafter referred to as the Act,  as a  unit until  it is  partitioned  amongst  its members  by   metes  and   bounds.  Reference  has  in  this connection been  made to  certain commentaries and judgments and we shall refer to them as and when necessary.      Section 3  of the  Act is  the charging section and the correctness or otherwise of the view taken by the High Court

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

depends on its meaning and content. The section provides for the charge of wealth-tax in these terms.-      "3. Subject  to the  other provisions contained in this      Act, there  shall be  charged for every assessment year      commencing on  and from the first day of April, 1957, a      tax (hereinafter  referred to as Wealth-tax) in respect      of the  net wealth  on the corresponding valuation date      of every  individual Hindu undivided family and company      at the rate or rates specified in the Schedule." The liability  to wealth-tax  therefore arises in respect of the "net  wealth" of the assessee, which expression has been defined as follows in section 2(m),-      "(m)  "net  wealth"  means  the  amount  by  which  the      aggregate  value   computed  in   accordance  with  the      provisions 1099      of this  Act  of  all  the  assets,  wherever  located,      belonging  to  the  assessee  on  the  valuation  date,      including assets  required to  be included  in his  net      wealth as  on that date under this Act, is in excess of      the aggregate  value of  all the  debts  owned  by  the      assessee on the valuation date other than, ..."      The expression  "belong" has been defined as follows in the Oxford English Dictionary.-      "To be  the property  or rightful possession of." So it is the  property of  a person,  or  that  which  is  in  his possession as  of right,  which is  liable to wealth-tax. In other words,  the liability  to  wealth-tax  arises  out  of ownership of  the asset, and not otherwise. Mere possession, or joint  possession, unaccompanied  by  the  right  to,  or ownership of property would therefore not bring the property within the  definition of  net wealth" for it would not then be an asset "belonging" to the assessee.      The question  is whether  the  estate  or  property  of Bireswar Chatterjee  could be  said to belong jointly to his heirs, after his death?      It is not in controversy, and is in fact admitted, that the property in question belonged to Bireswar Chatterjee who was its  sole owner  in his  life time  and was  assessed to income-tax as  an individual.  His family  consisted of  his widow, sons  and daughters and was governed by the Dayabhaga School of  Hindu law.  Bireswar  Chatterjee’s  property  was therefore the  heritage, or  the wealth, which vested in his heirs on  his death. According to Jimuta Vahana, his wife or sons or  daughters had  no ownership  in his property during his life  time for "sons have not ownership while the father is alive  and free  from defect."  (Hindu Law by Colebrooke, P.9) ownership  of wealth is however vested in the heirs "by the death of their father" (page 54, supra) when they become coheirs and  can claim  partition. It  is on this basis that "Dayabhaga" (partition  of heritage)  has been  expanded  by Jimuta Vahana.  According to  him, "since anyone parcener is proprietor of  his own  wealth, partition at the choice even of a  single person  is thence deducible." (page 16, supra). The heritage does not therefore become the joint property of the heirs,  or the  joint family,  on the demise of the last owner, but  becomes the  fractional property of the heirs in well defined  shares. This  concept of  fractional ownership has been  stated as follows by Krishna Kamal Bhattacharya in his "Law  relating to  the Joint  Hindu Family"  (Tagore Law Lectures) with  reference to the doctrine of negation of the son’s right by birth (page 168),-      "As a  corollary  of  the  doctrine  set  forth  above,      negativing  the   son’s  right  by  birth,  is  another      peculiar doctrine of the Bengal School, that of what is

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

    called  the   ’fractional  ownership’   of  the  heirs,      contrasted with  the doctrine  of ’aggregate  ownership      expounded by all other schools."      That is  why ’partition’  in Dayabhaga is defined as an act of  "particularising ownership",  and is  not the act of fixing  diverse   ownerships  on   particular  parts  of  an aggregate of properties as in Mitakshara. The 1100 learned author  has clarified  the position  in unmistakable terms as follows (pages 172-73),-           "From what has been said above, it is evident that      there is  no unity of ownership in Bengal joint family,      although  there  may  be  something  like  a  unity  of      possession." (Emphasis added)      This is  why Mitashara  is designated  as the School of "aggregate ownership",  while  Dayabhaga  is  known  as  the School of  "fractional ownership."  As has  been  stated  in Gopalchandra Sarkar  Sastri’s "Hindu  law"  (eighth  edition page 465), while the joint family system prevails in Bengal, "there cannot  be a  real joint  family consisting of father and sons  during the  father’s life-time,  inasmuch as joint property which  is the  essence of  the conception  of joint family, would  be wanting  to make them joint." This is why, according to  the Bengal School, the sons become tenants-in- common and  not  joint-tenants  in  respect  of  the  estate inherited by them from their father.      The position  of joint  family under  the Dayabhaga law has been stated as follows in Mayne’s Treatise on "Hindu Law and Usage" (eleventh edition, page 364),-           "It follows  therefore that  under  the  Dayabhaga      law, a  father and  his sons do not form a joint family      in the technical sense having coparcenary property. But      as soon  as   it has  made a  descent, the  brothers or      other co-heirs  hold their  shares in  quasi-severalty.      Each coparcener  has full  powers of  disposal over his      share which  is defined and not fluctuating with births      and deaths  as in  the case  of a Mitakshara family and      his interest,  while still undivided, will on his death      pass on  to his own heirs male or female or even to his      legatees." That was  stated to  be the  law in  Sreemutty  Soorjeemoney Dossee v. Denobundoo Mullick      The position has been dealt with in Mulla’s "Principles of  Hindu   Law"  (fourteenth  edition,  at  page  348),  as follows,-           "The essence of a coparcenary under the Mitakshara      law is  unity of  ownership. On  the  other  hand,  the      essence of  a coparcenary  under the  Dayabhaga law  is      unity of  possession. It  is not  unity of ownership at      all. The  ownership of  the coparcenary property is not      in the  whole body  of  coparceners.  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.  It does  not fluctuate with      births and  deaths in the family. Even before partition      any coparcener  can  say  that  he  is  entitled  to  a      particular share,  one-third or  one-fourth. Thus  if A      dies leaving  three sons, B, C, and D, each one will be      the  owner   of  his   on-third  share.  The  sons  are      coparceners in this sense that 1101      possession of  the property  inherited from A is joint.      It  is   the  unity   of  possession  that  makes  them      coparceners. So  long as  there is unity of possession,      no coparcener  can say  that a  particular third of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

    property belongs  to him;  that he can say only after a      partition. Partition  then, according  to the Dayabhaga      law, consists  in splitting  up  joint  possession  and      assigning specific  portions of  the  property  to  the      several coparceners. According to the Mitashara law, it      consists  in   splitting  up  joint  ownership  and  in      defining the share of each coparcener."      In fact we find that a case somewhat similar to the one before us  arose when  one Prafulla  Chandra Bhar,  a  Hindu governed  by  the  Dayabhaga  School,  died  intestate.  His mother, widow,  three sons  and one  daughter survived  him. Since the  death took place before the Hindu Succession Act, 1956 came  into operation, he was succeeded by his widow and three sons,  each inheriting one-fourth share in the estate. Gouri Shankar  Bhar, one  of the  sons, took  out letters of administration  and   filed,  a  wealth-tax  return  in  his capacity  as  ad  ministrator  descrth  the  status  of  the assessee as a Hindu undivided family.The Wealth Officer also treated the  status as  such, and made the assessment. Gouri Shankar however  filed an  appeal  and  contended  that  the family being  governed by the Dayabhaga School,the shares of the  coparceners  in  the  property  of  the  deceased  were definite and  ascertained and the assessment should not have been made  in their  status as  a Hindu undivided family and each member  should have  been assessed  separately upon the value of  his share in the inherited property. The Appellate Assistant Commissioner overruled the contention and took the view that  even though  the shares  of the  coparcencrs were definite and ascertained, the income from the prperty of the family did  not belong  to the  several members in specified shares but continued to belong to the Hindu undivided family as a whole. On further appeal, the Tribunal held that as the coparcener under  the Dayabhaga  law had a definite share in the property  left by the deceased and was legally the owner thereof, he  had a  defined share and that since the wealth- tax was levied on the basis of ownership, it was proper that the assessment  should have  been  made  on  the  individual coparceners on their respective shares and assessment of the total wealth  in the  hands of the undivided family would be illegal. The  matter was  referred to  the High Court at the instance of  the Commissioner  of Wealth-tax. The High Court of Calcutta  in Commissioner of Wealth-tax case (supra) made a reference,  inter alia,  to the  decision in  Biswa Ranjan Sarvadhikari v.  Income-tax officer,  F. Ward  District, (2) Calcutta and upheld the view that where property is owned by two or  more persons  governed by  the Dayabhaga  School and their shares  are.definite and ascertainable, then, although they are  in Joint  possession, the  tax will be assessed on the basis  of the  share of  the income  in the hands of the assessee and not as of a Hindu undivided family. It was held that the  position was  not different  under the  Wealth-tax Act. The  matter was  brought to this Court on appeal and it was  conceded   by  Solicitor   General  appearing  for  the Commissioner of  Wealth-tax that  as the  property  was  the individual property of the 1102 deceased, it devolved on his heirs in severalty. It was held that as  each of  them took a definite and separate share in the property,  each of  them was  liable,  in  law,  to  pay wealth-tax as an individual. While upholding the decision of the High Court it was however observed by this Court that it was not  necessary  to  decide,  in  that  case,  whether  a Dayabhaga family  could be  considered as  a Hindu undivided family within  the meaning  of section  3 of  the Act.  That decision is  Commissioner of Wealth-tax, West Penal v. Gauri

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

Shankar Bhar.      In the  case before  us, it  is not in dispute that the property in question was the individual property of Bireswar Chatterjee and  that it  devolved on  his heirs according to the provisions of the Hindu Succession Act, 1956. It will be recalled that  a suit  for partition  was filed  on June 21, 1957 and  a preliminary  decree was  passed on July 4, 1959. For reasons  already stated,  the coparcenary  had unity  of possession but  not unity  of ownership on the property. Eac coparcener therefore  took a  defined share  in the property and was  the owner of his share. Each such defined shar thus "belonged" the  coparcener. It  was his  "net wealth" within the meaning  of section  2(m) of  the Act  and was liable to wealth-tax as  such under  section 3.  The  High  Court  was therefore right  in answering  the  reframed question in the negative, and  as we  find no  force in  the argument of Mr. Desai, the appeal fails and is dismissed with costs. P.B.R.                                      Appeal dismissed 1