JOINT FAMILY PROPERTY VS ANCESTRAL PROPERTY PRESENTATION FOR THE DEHRADUN BRANCH OF CIRC OF THE ICAI 20th July 2019

MISTAKES THAT WE COMMIT IN RESECT OF IMMOVABLE MOVABLE PROPERTY INHERITED FROM OUR ANCESTORS

WHAT WE DO WHEN WE SEE THAT A PERSON HAS RECEIVED PROPERTY ON DEATH OF A LINEAL ASCENDANT WE TEND TO TAKE IT AS A PROPERTY OF THE HUF SINCE IT HAS BEEN INHERITED FROM A LINEAL ASCENDANT AND IN CASE OF SALE OF IT AT A LATER DATE TREAT THE CAPITAL GAIN ARISING AS INCOME OF THE HUF.

DIFFERNTIATE BETWEEN JOINT FAMILY PROPERTY AND ANCESTRAL PROPERTY ALL ANCESTRAL PROPERTIES ARE NOT JOINT FAMILY PROPERTIES AND ALL JOINT FAMILY PROPERTIES ARE NOT ANCESTRAL PROPERTIES

WHAT IS AN ANCESTRAL PROPERTY A PROPERTY THAT HAS BEEN INHERITED BY A PERSON FROM HIS ANCESTOR WHO HAS DIED INTE STATE( that is died without a will) OR BY AN INDIVIDUAL AS PER WILL OR GIFT DEED OF THE DECEASED PERSON

WHAT IS A JOINT FAMILY PROPERTY ANY ANCESTRAL PROPERTY INHERITED BY A PERSON UNDER A WILL OR DEED OF GIFT. No ancestral property received on death of an ancestor who dies inte state can be taken as joint family property

SECTION 8 OF HINDU SUCCESSION ACT,1956 AS AMENDED BY AMENDMENT ACT 2005 8.General rules of succession in the case of males.―The property of a male Hindu dying intestate shall devolve according to the provisions of this Chapter:―(a) firstly, upon the heirs, being the relatives specified in class I of the Schedule;(b) secondly, if there is no heir of class I, then upon the heirs, being the relatives specified in class II of the Schedule;(c) thirdly, if there is no heir of any of the two classes, then upon the agnates of the deceased; and(d) lastly, if there is no agnate, then upon the cognates of the deceased.

SCHEDULE TO SECTION 8 OF HINDU SUCCESSION ACT 1956 HEIRS IN CLASS I AND CLASS II Class I-Son; daughter; widow; mother; son of a pre-deceased son;daughter of a pre-deceased son;son of a pre-deceased daughter; daughter of a pre-deceased daughter; widow of a pre-deceased son; son of a pre-deceased son of a pre-deceased son; daughter of a pre-deceased son of a pre-deceased son; widow of a pre-deceased son of a pre-deceased son 1[son of a predeceased daughter of a pre-deceased daughter; daughter of a pre-deceased daughter of a pre-deceased daughter; daughter of a pre-deceased son of a pre-deceased daughter; daughter of a pre-deceased daughter of a pre-deceased son].

SCHEDULE TO SECTION 8 OF HINDU SUCCESSION ACT 1956 Class II. Father.II. (1) Son’s daughter’s son, (2)son’s daughter’s daughter, (3) brother, (4) sister.III. (1) Daughter’s son’s son, (2) daughter’s son’s daughter, (3) daughter’sdaughter’sson, (4) daughter’s daughter’s daughter.IV. (1) Brother’s son, (2) sister’s son, (3) brother’s daughter,(4) sister’s daughter.V. Father’s father; father’s mother. VI. Father’s widow; brother’s widow.VII. Father’s brother; father’s sister. VIII. Mother’s father; mother’s mother.IX. Mother’s brother; mother’s sister. Explanation.―In this Schedule,references to a brother or sister do not include references to a brother or sister by uterine blood.

MEANING OF COGNATE AND AGNATE Agnate means a person related to wholly through males either by blood or by adoption. The agnatic relation may be a male or a female. Cognate means a person related not wholly through males. Where a person is related to the deceased through one or more females, he or she is called a cognate. Thus son’s daughter’s son or daughter, sister’s son or daughter, mother’s brother’s son, etc. are cognates, whereas one’s father’s brother, or father’s brother’s son or father’s son’s son or father’s son’s daughter are agnates.

CHART EXPLAINING AGNATE AND COGNATE In the above illustration, F, FF, FM, FFF and FFM are the agnates of A in ascending line. MF is not the agnate. F stands for father and M for mother.

CHART EXPLAINING AGNATE AND COGNATE In the above illustration MF, MFF and MMF are cognates of A. M stand for mother, MM stands for mother’s mother and MF stands for mother’s father.

CHART EXPLAINING AGNATE AND COGNATE In the above illustration S, D, SS and SD are the agnates of A in descending line. DD and DS are cognates of A in descending line. Here S stands for son and D stands for daughter

SUPREME COURT ON THE ISSUE-CWT ETC VS CHANDER SEN 161 ITR 370(1986) It is necessary to bear in mind the preamble to the Hindu Succession Act, 1956. The preamble states that it was an Act to amend and codify the law relating to intestate succession among Hindus. The express words of s. 8 of the Hindu Succession Act, 1956, cannot be ignored and must prevail. The preamble to the Act reiterates that the Act is, inter alia, to "amend" the law. With that background, the express language which excludes son's son but included son of a predeceased son cannot be ignored.

QUESTIONS BEFORE SUPREME COURT ON THE ISSUE-CWT ETC VS CHANDER SEN 161 ITR 370(1986) The question here is whether the income or asset which a son inherits from his father when separated by partition should be assessed as income of the HUF of the son or his individual income. There is no dispute among the commentators on Hindu law nor in the decisions of the Courts that, under the Hindu law, as it is the son would inherit the same as Karta of his own family. But the question is, what is the effect of s. 8 of the Hindu Succession Act, 1956 ? The Hindu Succession Act, 1956, lays down the general rules of succession in the case of males. The first rule is that the property of a male Hindu dying intestate shall devolve according to the provisions of Chapter II and Class I of the Schedule provides that if there is a male heir of Class I, then upon the heirs mentioned in Class I of the Schedule. Class I of the Schedule