1977-VIL-22-SC-DT

Equivalent Citation: [1977] 109 ITR 730 (SC), 1977 AIR 2230, 1978 (1) SCR 329, 1977 (4) SCC 184

Supreme Court of India

C.A. 1738 OF 1971

Date: 30.08.1977

PUSHPA DEVI

Vs

COMMISSIONER OF INCOME-TAX, NEW DELHI

BENCH

Judge(s)  :  P. S. KAILASAM. and Y. V. CHANDRACHUD.

JUDGMENT

The judgment of the court was delivered by

CHANDRACHUD J.-Two questions arise for consideration in this appeal, one of them being subsidiary to the other. The main question is whether a Hindu female who is a member of an undivided family can blend her separate property with joint family property.

The appellant, Pushpa Devi, is a member of a joint Hindu family consisting of herself, her husband, her father-in-law, her mother-in-law, her minor son and three daughters. On June 19, 1958, the appellant, in her individual capacity and with the aid of her personal assets, entered into a partnership with her father-in-law, Gur Narain Khanna, in the name and style of Gur Narain Jagat Narain & Co. Her minor son, Ravi Narain Khanna, was admitted to the benefits of that partnership. Each of the three partners had a one-third share in the profits of the partnership, while the appellant and her father-in-law had an equal share in the losses.

The firm owned two cinema houses: Nishat Talkies, Kanpur, and Novelty Talkies, Lucknow. Separate accounts were maintained in respect of the two businesses and separate profit and loss accounts used to be drawn up. On August 31, 1961, a sum of Rs. 67,284.57 stood to the credit of the appellant in the books of Nishat Talkies. That amount consisted of a sum of Rs. 16,666.67 in the capital account and Rs. 50,617.90 in the current account.

On September 1, 1961, the appellant made a sworn declaration stating that she was the sole and absolute owner of the amounts standing to her credit in the books of Nishat Talkies and of her share in that business and declaring unequivocally her intention to treat both her capital and her share in the business of Nishat Talkies as the joint family property of the Hindu undivided family of which she was a member. By clause (6) of the declaration, the appellant stated that she had abandoned for ever her separate interest and ownership over the capital investment of Rs. 67,284.57, her one-third share in the net profits and one-half share in the net losses in the business of Nishat Talkies, in favour of the joint Hindu family to be wholly and exclusively enjoyed and possessed by it.

We are concerned in this appeal with the assessment year 1963-64, for which the previous accounting year ended on August 31, 1962. A sum of Rs. 20,865, being one-third share of the income from the business of Nishat Talkies for the year in question, was credited to the account of the joint Hindu family in the books of the firm. That income would have originally fallen to the share of the appellant in the business of Nishat Talkies, but it was credited to the account of the joint Hindu family in consequence of the declaration made by the appellant on September 1, 1961. The Hindu undivided family paid advance tax on the amount and filed its return in respect of that income. The appellant, on the other hand, did not include that income in her return for the year. She appended a note at the end of the return saying : " Share of income from Nishat Talkies, Kanpur, Rs. 20,865. Please see note on back page of computation of assessable income." In the note on the back page of the return, the appellant referred to the declaration of September 1, 1961, and stated that her one-third share in the income of Nishat Talkies was assessable in the hands of the Hindu undivided family since the income had ceased to be hers by reason of the declaration.

The Income-tax Officer rejected the appellant's contention on the ground that throwing the capital amount into the family stock was of no avail as the sine qua non of the matter was that "the karta should become a partner in consequence of investment". The Appellate Assistant Commisioner affirmed the order of the Income-tax Officer on the ground that since the appellant, though a member of the joint family, was not a coparcener, it was not open to her to impress her personal property with the character of joint family property. The second ground on which the appellant's claim was rejected by the Appellate Assistant Commissioner was that the joint family did not possess any joint family property and, therefore, there was no joint family stock in which the appellant could throw her separate property.

In a further appeal, the Income-tax Appellate Tribunal accepted the appellant's contention, holding that there was no justification for discriminating against a Hindu female on the ground of sex and that there was no reason why a Hindu female who was a member of an undivided family could not, by an unequivocal expression of intention, impress her separate property with the character of joint family property. The Tribunal observed that the appellant was not trying to enlarge her rights under the Hindu law or to improve her status under that law by abandoning her exclusive right in her self-acquired property. Surrender of interest by a female was not, according to the Tribunal, foreign to the genius of Hindu law and, therefore, no restriction could be placed on a female's right to abandon her exclusive interest in favour of the joint family of which she was a member.

At the instance of the revenue, the Tribunal referred for the opinion of the Delhi High Court the following question:

" Whether, on the facts and in the circumstances of the case, the Tribunal rightly held that the income of Rs. 21,544 was not the individual income of the appellant but was the income of the Hindu undivided family of which she was a member?"

Disagreeing with the Tribunal, the High Court answered the question in favour of the revenue on the ground that the right of blending could be exercised only by a coparcener and since the appellant, though a member of the joint family was not a coparcener, she could not throw her separate property into the joint family stock. The High Court, however, rejected the contention of the revenue that since the joint family did not possess any property, no member thereof could blend his separate property with joint family property.

The High Court has granted to the appellant a certificate under section 261 of the Income-tax Act, 1961, to file an appeal to this court on the ground that the case involves a substantial question of law as to the right of a female member of a joint Hindu family to impress her self-acquired property with the character of joint Hindu family property. The question, according to the High Court, is res integra.

This appeal had come up for hearing before a three-judges Bench earlier when it was felt that the question referred by the Tribunal for the opinion of the High Court was comprehensive enough to cover the point:

" Whether there was a gift of the appellant's capital investment and her share in the business of Nishat Talkies in favour of the Hindu undivided family?"

By a judgment dated September 24, 1976, Khanna J., on behalf of the Bench, directed the Tribunal to send a supplementary statement of the case on that question.

In pursuance of the direction, the Tribunal has forwarded to this court a supplementary statement of the case along with its finding on the question which it was directed to consider. By its order dated January 31, 1977, the Tribunal has taken the view that there was a gift by the appellant in favour of the joint family and that the latter had accepted that gift.

We are thus required to consider two questions in this appeal : one relating to the right of a Hindu female, who is a member of an undivided family, to impress her absolute, self-acquired property with the character of joint family property; and the other as to whether, if there has been no such blending, the transaction in the instant case can amount to a gift in favour of the undivided family. We will proceed to examine the first question.

The High Court is not quite correct in the unqualified statement it has made in its order granting a certificate to the appellant to appeal to this court that this question is res integra. The question, in our opinion, is fairly, if not fully, covered by a considered judgment of this court in Mallesappa Bandeppa Desai v. Desai Mallappa [1961] 3 SCR 779; AIR 1961 SC 1268. The appellants therein brought a suit against their uncle and another for partition of joint family properties, their case being that they and respondent No. 1 were each entitled to a half share in those properties. The trial court passed a decree in favour of the appellants, except in regard to certain items. That decree was challenged by respondent No. 1 in the Madras High Court, one of his contentions being that, in any case, the appellants were not entitled to a share in the properties at Jonnagiri, items Nos. 4 to 61. This contention was accepted by the High Court which modified to that extent the decree of the trial court.

In an appeal filed in this court by certificate granted by the High Court, one of the main contentions raised on behalf of the appellants was that the Jonnagiri properties were as much properties of the joint family as the other items and, therefore, the High Court had fallen into error in refusing to grant to the appellants a share in those properties. The Jonnagiri properties belonged originally to one Karnam Channappa, on whose death the properties devolved on his widow, Bassamma. Bassamma died in 1920, leaving behind her three daughters, one of whom was Channamma. Channamma married Ramappa, and the couple gave birth to four sons, including the appellants' father, Bandappa, and respondent No. 1, Mallappa. It was common ground between the parties that the Jonnagiri properties were obtained by Channamma by succession from her father and were held by her as a limited owner. Channamma was a member of the joint family consisting of herself, her husband, their sons and others. The appellants' case was that after the Jonnagiri properties had devolved on Channamma by succession, she allowed the said properties to be thrown into the common stock of the other properties belonging to the joint family and that, by virtue of such a blending, the Jonnagiri properties of Channamma had acquired the character of joint family property.

Gajendragadkar J., who spoke for the court, began an examination of the appellants' contention by posing the fundamental question whether the doctrine of blending can be invoked in such a case. After stating that the Privy Council in Shiba Prasad Singh v. Rani Prayag Kumari Debi [1932] LR 59 IA 331 ; AIR 1932 PC 216 was in error in observing that the doctrine of blending was based on the text of Yagnavalkya (Ch. 1, sect. 4, pl. 30) and the commentary made on it by Vijnyaneshwara (Mitakshara, Ch. I, sect. 4, pl. 31), the learned judge observed that it was unnecessary to investigate whether any other text can be treated as the foundation of the doctrine of blending since the doctrine, as evolved by judicial decisions, had received a wide recognition and had become a part of Hindu law. The court then proceeded to examine the question whether the principle of blending applied in regard to property held by a Hindu female as a limited owner and answered that question in the negative.

It is undoubtedly true, as contended by the appellant's learned counsel, that the question which the court posed for its consideration at page 785 of of the report ([1961] 3 SCR 779) speaks of properties held by a Hindu female as a limited owner. But the question was framed in that manner because the properties which had devolved on Channamma on her father's death were held by her as a limited owner and not as her absolute properties. The ultimate decision of the court that the Jonnagiri properties which had devolved on Channamma could not be treated as the properties of the joint family is not based upon or governed by the consideration that she had a limited estate in those properties. The decision of the court, as Gajendragadkar J., has stated at more than one place in the judgment, is :

" The rule of blending postulates that a coparcener who is interested in the coparcenary property and who owns separate property of his own may by deliberate and intentional conduct treat his separate property as forming part of the coparcenary property. If it appears that property which is separately acquired has been deliberately and voluntarily thrown by the owner into the joint stock with the clear intention of abandoning his claim on the said property and with the object of assimilating it to the joint family property, then the said property becomes a part of the joint family estate; in other words, the separate property of a coparcener loses its separate character by reason of the owner's conduct and gets thrown into the common stock of which it becomes a part. This doctrine therefore inevitably postulates that the owner of the separate property is a coparcener who has an interest in the coparcenary property and desires to blend his separate property with the coparcenary property."-See [1961] 3 SCR 779, 785-86 ; AIR 1961 SC 1268, 1271.

After stating the position thus, the court again adverts to the fact that Channamma held the Jonnagiri properties as a limited owner, but having done so, it re-states the position that a Hindu female, not being a coparcener has no interest in the coparcenary property and cannot blend her property with the joint family property. The frequent reference in the judgment in Mallesappa [1961] 3 SCR 779 ; AIR 1961 SC 1268 to the fact that Channamma held a limited estate and the further reference by the court to the Hindu law principle that a Hindu female owning a limited estate cannot circumvent the rules of surrender and allow the members of her husband's family to treat her limited estate as part of the joint family property belonging to the family is apt to confuse the true issue, but we have no doubt that the judgment rests squarely and principally on the consideration that Channamma was not a coparcener. While concluding the discussion on this topic, the court observed at page 787 that, on first principles, the result which was canvassed by the appellants was inconsistent both with "the basic notion of blending" and with "the basic character of a limited owner's title to the property held by her". The "basic notion of blending" which the court has highlighted at several places in its judgment is that it is the coparcener who alone can blend his separate property with joint family property and that the said right is not available to a female who, though a member of the joint family, is not a coparcener. We are clear that Mallesappa [1961] 3 SCR 779; AIR 1961 SC 1268 is an authority for the proposition that a Hindu female, not being a coparcener, cannot blend her separate property with joint family property. Whether that separate property is the female's absolute property or whether she has a limited estate in that property would make no difference to that position. We may mention that Mallesappa [1961] 3 SCR 779; AIR 1961 SC 1268 is quoted in Mulla's Hindu Law, 14th edition, page 277, as an authority for the proposition that the doctrine of blending cannot be applied to the case of a Hindu female who has acquired immovable property from her father, for she is not a coparcener.

The judgment of this court in Lakkireddi Chinna Venkata Reddi v. Lakkireddi Lakshmama [1964] 2 SCR 172; AIR 1963 SC 1601, that of the Privy Council in Rajanikanta Pal v. Jagamohan Pal [1923] LR 50 IA 173; AIR 1923 PC 57 and of the Delhi High Court in Commissioner of Gift-tax v. Munshi Lal [1972] 85 ITR 129 (Delhi) do not deal with the question whether a Hindu female, not being a coparcener, can blend her separate property with joint family property. The statement of law in Lakkireddi [1964] 2 SCR 172 ; AIR 1963 SC 1601 that property, separate or self-acquired, of a member of joint Hindu family may be impressed with the character of joint family property if it is voluntarily thrown by the owner into the common stock with the intention of abandoning his separate claim therein, is to be understood in the context that property devised under a will was alleged in the case to have been impressed with the character of joint family property by the male members of the family. In Rajanikanta Pal [1923] LR 50 IA 173 ; AIR 1923 PC 57 also, the blending was alleged to have been done by a male member of a joint family and the real controversy was whether the Mitakshara rule of blending applied in the case of brothers living together and forming a joint family governed by the Dayabhaga school of law. The Privy Council held that the rule of blending extended to Dayabhaga families also. In the case decided by the Delhi High Court in Munshi Lal [1972] 85 ITR 129 (Delhi) it is true that one of the assessees was a female member of a Hindu undivided family and the contention was that she had impressed her separate property with the character of joint family property. It is, however, clear from the judgment of the High Court that the question whether a female member of a joint Hindu family can blend her property with joint family property was not urged or considered in that case. The capacity or competency to blend was assumed both as regards the male and the female assessee who were members of a joint Hindu family. It was on that assumption that the question was referred to the High Court for its opinion under section 26(1) of the Gift-tax Act, 1958, whether the act of throwing the self-acquired property into the common hotchpot amounted to a gift as defined in the Gift-tax Act. Following the decision of this court in Goli Eswariah v. Commissioner of Gift-tax [1970] 76 ITR 675 (SC) the Delhi High Court held that the transaction did not amount to a gift and, therefore, the gift-tax was not attracted. Thus, in none of those three cases cited by the appellant was the competency of incorporation of separate property with joint family property in issue.

The decision of the Privy Council in Shiba Prasad Singh v. Rani Prayag Kumari Debi [1932] LR 59 IA 331; AIR 1932 PC 218 is also not to the point. It was held therein that unless the power is excluded by statute or custom, the holder of a customary impartible estate, by a declaration of his intention, can incorporate with the estate his self-acquired immovable property, and thereupon the property accrues to the estate and is impressed with all its incidents, including the custom of descent by primogeniture. The appellant argues that if the holder of an impartible estate can blend his separate property with the estate of an impartible estate, there is no reason why a Hindu female should not have the right to blend her separate property with joint family property. The analogy is misconceived because the true rule of blending, as we have explained above, is that the right to blend is limited to coparceners.

Having considered the decisions cited at the Bar, it may be useful to have a fresh look at the doctrine of blending. The theory of blending under the Hindu law involves the process of a wider sharing of one's own properties by permitting the members of one's joint family the privilege of common ownership and common enjoyment of such properties. But while introducing new shares in one's exclusive property, one does not by the process of blending efface oneself by renouncing one's own interest in favour of others. To blend is to share along with others and not to surrender one's interest in favour of others to the exclusion of oneself. If a Hindu female, who is a member of an undivided family, impresses her absolute, exclusive property with the character of joint family property, she creates new claimants to her property to the exclusion of herself because, not being a coparcener, she has no right to demand a share in the joint family property by asking for a partition. She has no right of survivorship and is entitled only to be maintained out of the joint family property. Her right to demand a share in the joint family property is contingent, inter alia, on a partition taking place between her husband and his sons (see Mulla's Hindu Law, 14th edition page 403, para. 315). Under section 3(2) and (3) of the Hindu Women's Rights to Property Act, 1937, her right to demand a partition in the joint family property of the Mitakshara joint family accrued on the death of her husband. Thus, the expression "blending" is inapposite in the case of a Hindu female who puts her separate property, be it her absolute property or limited estate, in the joint family stock.

It is well-settled that a Hindu coparcenary is a much narrower body than the joint family and it includes only those persons who acquire by birth an interest in the joint or coparcenary property. These are the three generations next to the holder in unbroken male descent (see Mulla's Hindu Law, 14th edition, page 262, para. 213). A Hindu female, therefore, is not a coparcener. Even the right to reunite is limited under the Hindu law to males (Mulla, page 450, para. 342). It does not, therefore, militate against the fundamental notions governing a Hindu joint family that a female member of the joint family cannot blend her separate property, even if she is an absolute owner thereof, with the joint family property.

In our opinion, therefore, the income of Rs. 21,544 from Nishat Talkies was not assessable in the hands of the Hindu undivided family on the basis that the appellant had blended it with the joint family property.

As regards the second question on which this court had called for a supplementary statement, there is no serious controversy that by the declaration dated September 1, 1961, the appellant must be deemed to have made a gift of the items mentioned therein to the undivided family of which she was a member. The Tribunal's finding to that effect must, therefore, be confirmed. The income of the property gifted to the Hindu undivided family will be liable to be brought to tax consistently with this finding and in accordance with law.

In the result, the appeal fails in regard to the first question but will succeed in regard to the second. There will be no order as to costs.

 

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