1. This case raises a somewhat interesting question of law. At the instance of the assessee, the Income-tax Appellate Tribunal (Madras Bench) has referred to this court under section 66(1) of the Indian Income-tax Act, 1922, to be referred to hereinafter as the Act, the following question of law.
2. They are :
'(i) Whether a sole male surviving coparcener of the Hindu joint family, his widowed mother and sisters constitute a Hindu undivided family within the meaning of the Income-tax Act
(ii) Whether the assessment of the income in the hands of the Hindu undivided family was correct
(iii) Whether the Appellate Assistant Commissioner was entitled to correct the status ?'
3. Sri K. Srinivasan, learned counsel for the assessee, did not press question No. 3 and, therefore, it is not necessary for us to pronounce on the same.
4. The material facts as set out in the statement of the case submitted by the Tribunal are as follows :
One Gowli Buddappa and his brother's son, Gowli Buddanna (subsequently adopted as son of the former) were the coparceners of a Hindu undivided family. Till the death of Buddappa, their undivided Hindu family was assessed to income-tax. Gowli Buddappa died on July 9, 1952, leaving behind him his wife, three daughters, his adopted son and his daughter-in-law (wife of Buddanna). The Income-tax Officer, Raichur, assessed the assessee for the assessment year 1951-52 (accounting year ended on November 8, 1960) 'as the successor to Buddappa with the status of a Hindu undivided family.' The assessee appealed to the Appellate Assistant Commissioner of Income-tax who repelled the contention of the assessee as regards his status. The Appellate Assistant Commissioner also held that the Income-tax Officer had committed a mistake in treating Buddanna as the successor of Buddappa. The assessee being dissatisfied with the order of the Appellate Assistant Commissioner appealed to the Income-tax Tribunal. The Tribunal also rejected his contention but accepted his prayer to refer the afore-mentioned questions of law to this court for its opinion.
5. Under section 3 of the Indian Income-tax Act, the liability to pay tax is charged not only on the income of Hindu undivided families. The expression 'Hindu undivided family' is not defined in the Income-tax Act. Therefore, in order to understand that expression, we must fall back on the customary Hindu law. According to Sri Srinivasan, Buddanna being the sole surviving coparcener in his family and he having become the absolute owner of the quondam family properties, he should have been assessed as an individual and not as the karta of a Hindu undivided family. In other words, the contention of Sri Srinivasan is that unless the family consists of more than one coparcener, there cannot be an assessment on a Hindi undivided family. This view appears to have commended itself to the Calcutta High Court in In re Moolji Sicka. Speaking for the Bench Lort-Williams J. observed thus at page 136 :
'The necessity for making Hindu undivided families liable as such for income-tax was, that the income and property of Hindu undivided family is undivided. The members have no separate income or property and cannot, therefore, be taxed as individuals. According to Mitakshara, until partition it cannot be said of any member that he has any definite share in the joint property. But an Income-tax Act obviously is concerned only with income available for taxation and the owners of such income, and if there is no property or no income, an Income-tax Act has no application. It follows that the Act has no application to a Hindu undivided family in the wider sense to which I have referred. Its provisions are attracted only where there exits property or income, that is to say, where there is joint family property or joint family income or, in other words where there exists a Hindu coparcenery.'
6. The above case went up in appeal to the Judicial Committee. We shall presently refer to the judgment of the Judicial Committee on the point in controversy. But before doing so, we would like to refer to a decision of the Bombay High Court in Commissioner of Income-tax v. Gomedalli Lakshminarayan. Dealing with the point under consideration, Beaumont C.J. observed at page 368 thus :
'The facts are that there was a joint Hindu family consisting of a father and his wife and a son and his wife, the son being the present assessee. The father died in 1929, before the year of assessment, so the joint Hindu family then consisted of the son, his mother and his wife and the question raised by the Commissioner appears to me to admit the existence of a joint Hindu family. Of such existence, I think there can be no question. It is clear law that you may have a joint Hindu family consisting of one male member and female members who are entitled to maintenance, although that does not mean that every Hindu who possesses a wife and a mother is necessarily a member of a joint Hindu family as Lort-Williams J. seems to think in the Calcutta case referred to below. The question raised is whether the assessee is to be assessed as an individual or as a member of the joint Hindu family, and the importance of the question lies in this, that for the purposes of super-tax he will be allowed a large exemption if he is taxed as the manager of a joint Hindu family than if he is taxed as an individual.'
7. A little lower down in the judgment, the learned judge proceeded to observe as follows :
'The nature of a Hindu undivided family was perfectly well known to the legislature when the Income-tax Act was drafted, and it was well known that the expression 'Hindu undivided family' includes females, and is much wider than the expression 'coparcenery' which includes only the males in whom the joint family property is vested. It is argued by the Advocate-General that the Act, dealing as it does with property, when it refers to a Hindu undivided family, really means to denote the coparceners, that is to say, male members of the family in whom the family property is vested. I see no ground for arriving at that conclusion, since the meaning of the two expressions was well known when the Act was drafted, and the legislature has thought fit to use the wider expression rather than the narrower one. I have no doubt that this was deliberate. The more liberal allowance to a joint family in respect of super-tax was presumably given because the whole income of the family would not go to one individual. If there were a large number of male members, each member would get only a small portion of the income, and it would be hard to charge the family with super-tax merely because the joint income was over the limit at which super-tax commences for an individual. But the same principle would apply, though perhaps to a less extent, to the case of a Hindu joint family consisting of one male member and several female members entitled to maintenance, where maintenance might absorb a large share of the family income.'
8. The view expressed by Beaumont C.J. was fully shared by Rangnekar J., the other judge who constituted the Bench. Both the judges differed from the decision of the Calcutta High Court referred to above. In our opinion, if we may say so with respect, this decision lays down the law correctly. It accords with the principles of Hindu law.
9. We had earlier mentioned that the decision of the Calcutta High Court in In re Moolji Sicka had been taken to the Judicial Committee in appeal. The decision of the Judicial Committee is reported as Kalyanji Vithaldas v. Commissioner of Income-tax. The Judicial Committee disagreed with the view of the Calcutta High Court as regards the meaning to be given to the expression 'Hindu undivided family' found in section 3 of the Indian Income-tax Act, 1922. Sir Goerge Rankin, speaking for the Judicial Committee, observed 'The phrase 'Hindu undivided family' is used in the statute with reference, not to one school only of Hindu law, but to all schools; and it is a mistake in method to begin by pasting over the wider phrase of the Act the words 'Hindu coparcenery'. All the more it is not possible to say on the face of the Act that no female can be a member. Where, therefore, the income belongs, not to the assessee himself but to the assessee, his wife and daughter jointly, the association of such individuals can be described as 'Hindu undivided family'.' But unfortunately, the Judicial Committee did not stop at that. It proceeded to observe :
'It would not be in consonance with ordinary notions or with a correct interpretation of the law of the Mitakshara, to hold that property which a man has obtained from his father belongs to a Hindu undivided family by reason of his having a wife and daughters.'
10. In the instant case, it is unnecessary for us to find out the effect of these observations. As seen from the statement of facts referred to above, the assessee had not only his wife but also had an adoptive mother. He also had a sister. Hence this case does not fall within the exception pointed out by the Judicial Committee even if it is thought that any exception was really contemplated by the Judicial Committee.
11. Sri Srinivasan next placed reliance on the decision of the Madras High Court in Commissioner of Income-tax v. Lakshmanan Chettiar. That decision undoubtedly helps him in a way. The learned judges who decided that case opined that the Judicial Committee in Kalyanji's case had decided that the existence of a step-mother to a sole surviving coparcener is not sufficient to convert the income of the ancestral property into an income of a Hindu undivided family. We really fail to see how this conclusion follows from the decision of the Judicial Committee in Kalyanji's case. Obviously, the learned judges in the Madras case proceeded on the basis that though the family of the assessee in that case is a Hindu undivided family, the assessee being solely entitled to the income of the family property, he must be considered to be the sole owner of that income. This view, if accepted as sound, would amount to accepting the correctness of the view of the Calcutta High Court in Moolj's Sicka's case. as regards the meaning of the expression 'Hindu undivided family'. Once we come to the conclusion that there is a Hindu undivided family and the assessable income is the income of the properties belonging to that family, we must necessarily hold that for the purpose of the Income-tax Act, the Hindu undivided family is the owner of that income also. Inter se, the rights of the members of the family is governed by Hindu law. In other words, though the female members are entitled to only maintenance from the income of the family, the income as such must be considered to be the income of the family and not of any individual thereof.
12. It was next contended by Sri Srinivasan that in view of certain provisions found in the Finance act of 1949 and in the subsequent Finance Acts, we must hold that the legislature had clearly expressed its intention as regards the meaning of the expression 'Hindu undivided family'. According to him Clause A of Part I of the Third Schedule to that Act clearly indicates that when the legislature used the expression 'Hindu undivided family' it merely meant 'Hindu coparcenery'. For this argument of his, he relies on a portion of the proviso to that clause which reads as follows :
'The limit referred to in the above proviso shall be -
(i) Rs. 5,000 in the case of every Hindu undivided family which satisfies as at the end of the previous year either of the following conditions, namely :
(a) that it has at least two members entitled to claim partition who are not less than 18 years of age; or
(b) that it has at least two members entitled to claim partition neither of whom is a lineal descendant of the other and both of whom are not lineally descended from any other living member of the family; and
(ii) Rs. 3,000 in every other case.'
13. We do not think that this clause in any manner helps the contention of Sri Srinivasan. The legislature must be presumed to have known the view expressed by the Judicial Committee as well as by the Bombay High Court as regards the scope of the expression 'Hindu undivided family'. Still, it did not think it necessary to define that expression, which means it accepted the view expressed by the Judicial Committee. It is not the case of Sri Srinivasan that the clause referred to above expressly purports to bear on the point in question. His case is that it is a pointer. In our opinion that clause merely sets the limit for exemption under Clause A and it has no other purpose.
14. For the reasons mentioned above, none of the contentions advanced on behalf of the assessee has commended itself to us. Therefore, we have to answer the question referred to us in favour of the department and against the assessee. In other words, our answer to question No. (i) is : the sole male surviving coparcener of the Hindu joint family, his widowed mother and sisters constitute a Hindu undivided family within the meaning of that expression in the Act. Our answer to question No. (ii) is that the assessment of the income in the hands of the Hindu undivided family is correct. Our answer to the last question is that the Appellate Assistant Commissioner was entitled to correct the status. The assessee shall pay the costs of the revenue. Advocate's fee Rs. 250.