JUDGMENT
1. These six connected income-tax appeals have been filed under Section 260A of the Income-tax Act, 1961, by which the appellant has challenged the judgment, dated February 27, 2004 of the Income-tax Appellate Tribunal, New Delhi. All these appeals have been decided by the impugned common judgment. Since they involve identical questions of law hence they are being decided by this common judgment.
2. We have heard Shri R.R. Agrawal, learned counsel for the appellant, and learned counsel for the Department.
3. The facts of the case are that on March 14, 1970, the agricultural land of Gayasen was compulsorily acquired under the U. P. Awas and Vikas Farishad Adhiniyam by the Meerut Unit of the U. P. Awas Evam Vikas Parishad. Gayasen died in the year 1977 intestate. After his death his assets devolved upon his sons, Giridhari Lal and Ramji Lal. No partition between Gayasen and his sons was done during the lifetime of Gayasen. On July 23, 1983, possession of the acquired land was taken over by the Meerut Unit of the U. P. Awas Evam Vikas Parishad. On August 23, 1990, Additional District Judge, Meerut, awarded enhanced compensation, solatium and interest to Giridharilal under Section 18 of the Land Acquisition Act. On October 11, 1991, Giridharilal received Rs. 4,90,091.02. On November 2, 1991, he received further interest of Rs. 4,82,593.35. Thus, the total interest received is Rs. 9,72,684.37. On February 25, 1992, Girdharilal died. On March 31, 1992, proceeding under Section 148 was initiated for the assessment years 1986-87 to 1991-92 by issuing notices to the legal heirs of the late Giridharilal and six assessment orders were passed under Section 143(3) read with Section 148 of the Act and the income-tax assessed was Rs. 1,33,924 in each assessment year in the status of an individual. The Assessing Officer denied the claim of the heirs of the late Giridharilal to be assessed in the status of a Hindu undivided family. On February 22, 1997, the Commissioner of Income-tax (Appeals), Meerut, allowed the appeals filed by the assessee and held the status of the late Giridharilal as a Hindu undivided family. He held that in the absence of a will the self-acquired property of a father dying intestate and the income thereon was in the status of a Hindu undivided family. Hence, he set aside the assessment orders.
4. On February 27, 2004, the Income-tax Appellate Tribunal set aside the aforesaid order of the Commissioner of Income-tax (Appeals), Meerut, dated February 22, 1997, and held the status of the late Giridharilal to be individual. The Tribunal further held that income by way of interest on the enhanced compensation was taxable in the hands of the late Giridharilal as individual.
5. Learned counsel for the appellant submitted that Gayasen having died in the year 1977 intestate, his property on his death became a Hindu undivided family property in the hands of his sons. Admittedly, there was no partition between Gayasen and his sons during the life time of Gayasen. We accept this submission of learned counsel for the appellant. It has been held by the Division Bench of this court in J.P. Verma v. CIT [1991] 187 ITR 465 that under the Hindu law on the death of a Hindu male his property devolves upon his heirs in accordance with Section 8 of the Hindu Succession Act. However, what has been overlooked by the Tribunal is that the nature of the property changes when a Hindu male dies. On his death even his self-acquired property becomes ancestral property in the hands of his sons. This is because under the Hindu law the property which a person inherits from his father, father's father and father's father's father is ancestral property. Hence even if the property in question was the self acquired property of Gayasen, it became Hindu undivided family property on his death in the hands of his sons. The Tribunal has held that after the death of Gayasen the self-acquired property devolved on his son, Giridharilal, in his individual capacity. This view is clearly incorrect. The property may have been the self-acquired property of Gayasen, but the moment Gayasen died the nature of his property changed and it came ancestral property in the hands of his sons and not their self-acquired property. In our opinion, the decision of the Supreme Court in the case of CWT v. Chander Sen [1986] 161 ITR 370 supports our view.
6. The basic fallacy of the Tribunal is that it was of the opinion that if the property is self-acquired property in the hands of a Hindu male it will remain self-acquired property even after his death. This is not correct as stated above. On the death it becomes ancestral property in the hands of his sons. "All property inherited by a male Hindu from his father, father's father or father's father's father, is ancestral property". (vide Mulla's Principles of Hindu Law).
7. For the reasons given above, these appeals are allowed and the impugned judgment of the Tribunal is set aside and the orders of the Commissioner of Income-tax (Appeals) dated February 22, 1997, is restored.