Sawai Man Singh was not holder of an impartible estate, He was absolute Ruler till merger and thereafter his status was of a HUF
ABCAUS Case Law Citation:
ABCAUS 2567 (2018) (10) HC
Important Case Laws Cited/relied upon by the parties:
Shiba Prasad Singh vs. Rani Prayag Kumari Debi & Ors. AIR 1932 PC 216
State of Uttar Pradesh vs. Rajkumar Rukmini Raman Brahma (1970) 2 SCR 355:
Nagesh Bisto Desai and Ors. vs. Khando Tirmal Desai and Ors (1982) 2 SCC 79
Revathinnal Balagopala Varma vs. Padmanabha Dasa Bala Rama Varma, 1993 Supp (1) SCC 233,
Calcutta Discount Co. Ltd. v. Income-Tax Officer, Companies (1961) 041 ITR 0191
Sawai Man Singh was an adopted son of Sawai Madho Singh II. Madho Singh II died on 7-9-1922 and was succeeded by Man Singh as Maharaja of Jaipur and head of the Kachwaha clan of Rajputs.
He ruled the Jaipur State as the Maharaja of Jaipur till 1947 when he acceded Jaipur to the Dominion of India and on 30-3-1949, he merged the princely state with the new state of Rajasthan.
Before his death, Sawai Man Singh filed his returns of income in the status of an individual. He passed away in 1970. Subsequently, a return was filed by Sawai Man Singh’s legal in the status of a HUF. The AO, keeping in view the ancestral history of the late Sawai Man Singh and that he was earlier the ruler of Jaipur State, the quality of the property and the manner of its treatment by him, held the return to be filed by the late assessee, as an individual.
The Appellate Authority held that after the merger, the assessee ceased to be the absolute ruler of the State and, therefore, the correct status was that of a HUF.
The ITAT examined the meaning and concept of an impartible estate and whether the erstwhile rulerheld one such estate, and whether the rule of primogeniture which applied to accession to the gaddi was in any manner determinative; if not, what was the rule of succession. The question for consideration was whether the Maharaja of Jaipur was a holder of the impartible estate.
The Tribunal opined that during days of his rulership, he being the King, no law including the personal law was applicable to Man Singh but with the lapse of Paramountancy in 1947 and the merger/covenants in 1948, the position changed. The rulers ceased to be the rulers, he was given all the trappings of the ruler but actually he was reduced to the position of an ordinary citizen. He become amenable to all the laws of India as it came to be called after independence including the Indian Penal Code and the Taxation laws.
According to the Tribunal , when the King became an ordinary citizen after the merger and ceased to exercise all the powers of the King, the King being a Hindu, lapsed into the bosom of the personal laws. The ruler, therefore, came to be governed by the provisions of the Hindu law. Therefore, our finding is that before the merger he being the absolute ruler was not governed by the Hindu law but after the merger as he laped into the bosom of the personal law being a Hindu, he constituted a HUF with his legal heirs. He did not have any self-acquired property but had only his ancestral property which had come to him through his ancestors.
The Tribunal clarified that an assessee may not be aware of his correct status in law but as and when he knows his correct status, he has the right to claim the correct status.
Ultimately, the matter reached the High Court. The common questions of law, which arise for consideration in all connected gift tax references, wealth tax references, income tax references and income tax appeals were as follows:
1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee was not the holder of an impartible estate?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee was the ·absolute Ruler, the King, the monarch, up to the merger and after the merger in 1949, he was reduced to the position of an ordinary citizen to whom the provisions of Personal Law applied, he being a Hindu, the Hindu Law?
3. Whether, on the facts, and in the circumstances of the case, the Tribunal was justified in holding that the filing of the returns in the status of an individual could not operate as Res judicata by conduct against the assessee from claiming his correct status as a Hindu Undivided Family (HUF) for income-tax purposes?
4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the status of the assessee was that of a H.U.F.?
The Hon’ble High Court observed that the most important question was whether Sawai Man Singh filed his income tax returns in his capacity as sole and exclusive owner of impartible properties, or he did so, for and on behalf of his joint family; if the latter is correct, the family can claim the status of HUF; if the former is correct, the properties were impartible and would have to devolve according to primogeniture- at least for income tax purposes and be treated as individual.
The contention of the Revenue was that since Sawai Man Singh was a ruler and succession to the gaddi was by application of the rule of primogeniture and given that during his life time, the late ruler had consistently filed his income and wealth tax returns claiming individual rather than joint family status, the estate was impartible; consequently, it was governed by lineal primogeniture; the impartibility characteristic did not change or alter upon his death.
The Hon’ble High Court observed that there is no material on record to show that the Kachwaha clans (which the Jaipur royal house belonged to) was governed by the rule of lineal primogeniture, where the eldest male member of the family became the exclusive owner of all properties which were impartible. Nor was such special custom proved in relation to the Jaipur royal house. What could be and was established was that succession to the gaddi (the throne) was by lineal primogeniture. Consistent with the law declared by the Privy Council and the principles of those decisions, applied by the Supreme Court in several judgments, the only conclusion that could be drawn therefore, was that though succession to the gaddi was through lineal primogeniture at a time when the monarchy was absolute – which meant that such practice overlaid the right of other members to claim a share in the HUF, upon accession of the princely state of Jaipur, only those properties and privileges which the late Sawai Man Singh retained to himself, were saved. No custom of law, of the kind visualized by Section 5 of the Hindu Succession Act, in relation to lineal primogeniture or impartible properties in relation to these assets were saved. All else became subject to laws of the country. Thus, the late Maharaja had to and did file tax returns, declaring his wealth and income, in accordance with the laws of the land. He was governed by the ordinary rules of inheritance applicable to members of HUF.
The Hon’ble High Court opined that there was nothing to suggest that the succession to the estate or his family (other than succession to the gaddi) was governed by the principle of primogeniture. In these circumstances, the law on the subject is clear: sans evidence of a preexistent custom with respect to primogeniture (as the overarching rule of succession, to the exclusion of all heirs) the general law of succession, i.e. the rules applicable to HUF, would apply.
The Hon’ble High Court opined that, it is established that regardless of what an assessee claims, if the correct position deducible from primary facts is otherwise, the AO has to adopt that correct position. Therefore, there was no legal impediment for the legal representatives of the assessee to claim that the succession was of the HUF, upon the death of Sawai Man Singh.
The Hon’ble High Court answered all the questions of law against the revenue.