Commissioner of Wealth Tax v. Chander Sen (1986)

This is the case that dismantles the machinery of ancestral property at every intestacy after 1956.

Under the classical Mitakshara, the moment a son is born he gets a share in his father's property and becomes part of the coparcenary; his right accrues not on the father's death but by the fact of his birth. From that it followed that whenever the father got property from any source, separate or not, his son had a share in it and it became part of the joint family of the son, the grandson and the other members. Chander Sen holds that s. 8 has ended that consequence.

Rangi Lal and his son Chander Sen were members of a joint family carrying on business. In 1961 a partial partition was effected, and the business was thereafter carried on by a partnership of the father and the son, the immovable property remaining joint.

Rangi Lal died in 1965, leaving his son and the son's own sons. At his death a credit balance stood to his account in the books of the partnership.

The tax question that followed was simple to state and decisive in principle: when Chander Sen inherited that balance as a Class I heir under s. 8, did he take it in his individual capacity, so that it was his own wealth, or as karta of his own undivided family consisting of himself and his sons, so that it was the family's?

1. When a son, as a Class I heir under the Schedule, inherits property from his father, does he do so in his individual capacity or as karta of his own undivided family?
2. Is the classical rule — that property received by the father from any source becomes joint with his sons — displaced by s. 8?

He takes in his individual capacity. The property inherited under s. 8 is the heir's separate property, and his own sons take no interest in it by birth.

Section 8 must be given its express and literal effect. Property that devolves on a son as a Class I heir under s. 8 is his individual property and does not become the joint family property of the son and his own male issue.

The literal argument. The express words of s. 8 cannot be ignored and must prevail. Section 8 says that the property of a male dying intestate devolves upon the heirs specified in Class I of the Schedule. It says nothing about the capacity in which they take, and there is no warrant for reading into it a distinction that the classical law made but the Act does not.

The argument from the Schedule. The heirs in Class I are the son, the daughter, the widow, the mother, and the descendants of predeceased children. The Court draws attention to who is not there: the list includes the son of a predeceased son but does not specifically include the grandson who is the son of a living son. The living son's son is deliberately outside Class I. If the son took as karta of a family including that grandson, the grandson would take through the back door a share the Schedule refused him at the front.

The argument that decides it. To hold otherwise would create two classes among the Class I heirs — the male heirs, in whose hands the property would be joint Hindu family property as against their sons, and the female heirs, with respect to whom no such concept could apply or be contemplated. A widow, a daughter or a mother takes absolutely. If a son alone took in a representative capacity, heirs standing in the same rank of the same Schedule under the same section would hold on entirely different terms. Nothing in the Act supports that.

Ancestral property is made by survivorship and unobstructed heritage. Section 8 substitutes succession for both. So every intestate death after 1956 that is governed by s. 8 converts what passes into the heir's separate property, and the chain of ancestral property is broken at that death.

The proposition was carried further in Uttam v. Saubhag Singh, where the Court read ss. 4, 8 and 19 together and held that once joint family property has been distributed under s. 8 it ceases to be joint family property in the hands of the persons who succeed to it, because they hold as tenants in common and not as joint tenants. Bhanwar Singh v. Puran is to the same effect.

And it is the point on which Arshnoor Singh v. Harpal Kaur turns the other way, because there the succession opened in 1951, before the Act, so the old Mitakshara rule applied and the property was coparcenary in the heir's hands. The date of death is therefore the first question in every ancestral-property problem.

Frame the question as the Court framed it: when the son as heir of Class I inherits the property, does he do so in his individual capacity or as karta of his own undivided family? Half the marks are in asking it precisely.

Give the three reasons in order — the express words of s. 8; the deliberate exclusion of a living son's son from Class I; and the impossibility of applying a joint-family concept to the female heirs listed alongside him.

Then state the practical consequence, which is what a problem question tests. The heir's own son cannot demand partition of what the heir inherited; the heir may sell or will it away freely; and the property is his for tax and for succession alike.

Finally, put the boundary in. Chander Sen governs property that devolves under the Act. It does not touch property that was already coparcenary before 1956, nor the share a coparcener takes on partition, which remains coparcenary as against his own male issue.