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Devchand C. Shah Vs. Commissioner of Expenditure-tax, Mysore - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberT.R.C. No. 35 of 1965
Judge
Reported in[1970]78ITR534(KAR); [1970]78ITR534(Karn)
ActsExpenditure-tax Act - Sections 4, 25 and 25(1); Hindu Adoption and Maintenance Act, 1956 - Sections 3 and 20; Hindu law
AppellantDevchand C. Shah
RespondentCommissioner of Expenditure-tax, Mysore
Excerpt:
.....having been incurred by hindu undivided family (huf) - whether such expenditure incurred by d.c. shah and anasuya bal could be assessed in hands of huf as per section 4 (1) - responsibility of parents has been statutorily recognized by section 20 - as such both parents of snehalata and huf were under legal obligation to meet legitimate expenses of marriage - expenditure in connection with marriage was met out of presents and not out of joint family funds - as such expenditure of 1,00,795 cannot be treated as having been incurred by huf which was assessee by application of section 4 (1). - indian penal code, 1890. sections 498-a & 306 r/w section 34 :[v.jagannathan,j] suicide by married woman by setting herself ablaze conviction of husband and mother-in-law of deceased for..........authority. accepting the position upon facts, namely, that the presents had been received by d. c. shah and anasuya bai, he held that there is no evidence to regard receipts of these presents as having been on account of the family. while he agreed that under the ordinary hindu law, the obligation of meeting expenses of marriage of a daughter of the family was that of the family, he though that the provisions of the hindu adoption and maintenance act of 1956 imposing such a liability upon the parents would supersede the old hindu law obligations resting on a joint family. ultimately, he set aside the order of the assessing authority. 5. the department then appealed to the appellate tribunal. the tribunal, after getting a further report from the assessing authority upon various point for.....
Judgment:

Narayana Pai, J.

1. This is a reference under section 25(1) of the Expenditure-tax Act made to this court under the following circumstances :

The assessee is a Hindu undivided family consisting of one D. C. Shah as the karta and his son, Kiran D. Shah. The other relatives in the family are females, viz., Anasuya Bai, wife of the karta, and three daughters of theirs called Snehalata, Swarnalata, Ujwalalata. The eldest daughter was married on 24th December, 1959. A sum of Rs. 1,00,795 was spent for the marriage. When this amount was taken into computation for the purpose of expenditure-tax, the assessee objected to the inclusion pleading that the expenditure had not been incurred by the Hindu undivided family which is the assessee, but by D. C. Shah and his wife, Anasuya Bai, in their individual capacity out of the cash presents received by them from various persons in connection with the marriage. The receipt of these presents from various persons and the items of expenditure in connection with the marriage met out of them were all recorded in separately maintained books of account referred to in the reference as marriage khata book, marriage khird book and memorandum books, etc. Analysing the figures on the basis of the said accounts the result is stated as follows : Devchand, that is, D. C. Shah received a total sum of Rs. 70,233 as presents, his wife, Anasuya Bai, received Rs. 30,778 and the daughter (bride), Shehalata, received Rs. 77,774. It is common ground and undisputed that amounts presented to Snehalata were retained by her. The expenditure in connection with the marriage was, therefore, met, according to D. C. Shah and his wife, Anasuya Bai, out of the cash presents received by them as stated above.

2. The original assessing authority rejected that contention. He took the view that the presents were not, or cannot be said to have been, received by D. C. Shah and his wife, Anasuya Bai, in their individual capacity, but must be regarded as amounts received by them for, and on account of, the undivided family itself. He observed :

'The marriage was performed according to joint family traditions, and the receipts incidental to the marriage should also, therefore, be taken as receipts of the Hindu undivided family, although they might have been actually presented to Mr. D. C. Shah and Mrs. D. C. Shah. After all, the Hindu undivided family is constituted by the members and whatever the members receive by virtue of such membership should also be taken as receipts of the Hindu undivided family.'

3. He also thought that even otherwise, the expenditure can be regarded as that of the family itself for purposes of taxation by virtue of either or both sub-sections (i) and (ii) of section 4 of the Expenditure-tax Act.

4. The assessee appealed to the Appellate Commissioner. He differed from the view taken by the assessing authority. Accepting the position upon facts, namely, that the presents had been received by D. C. Shah and Anasuya Bai, he held that there is no evidence to regard receipts of these presents as having been on account of the family. While he agreed that under the ordinary Hindu law, the obligation of meeting expenses of marriage of a daughter of the family was that of the family, he though that the provisions of the Hindu Adoption and Maintenance Act of 1956 imposing such a liability upon the parents would supersede the old Hindu law obligations resting on a joint family. Ultimately, he set aside the order of the assessing authority.

5. The department then appealed to the Appellate Tribunal. The Tribunal, after getting a further report from the assessing authority upon various point for investigation communicated by them in a remand order, disposed of the appeal finally by their order dated 1st August, 1964, allowing the appeal. Thereupon, the assessee moved the Tribunal under section 25 to refer certain questions of law arising out of their appellate order to this court under the said section. Agreeing with the contention that certain questions of law did arise out of the order, the Tribunal has formulated those questions as follows and referred them to this court :

'1. Whether, on the facts and in the circumstances of the case, there way any legal liability on the part of the assessee family to perform the marriage of Snehalata

2. Whether, on the facts and in the circumstances of the case, the expenditure of Rs. 1,00,795 was properly treated as having been incurred by the Hindu undivided family

3. In the event of question No. 2 being answered in favour of the assessee, whether the incurring of the expenditure by Shri D. C. Shah and Smt. Anasuya Bai could be assessed in the hands of the Hindu undivided family by reference to the provisions of section 4(i) of the Act ?'

6. It appears to us that the first question was not a question which could have been properly made the subject of reference to the High Court under section 25 of the Expenditure-tax Act. It is a proposition of Hindu law and in ordinary circumstances would only have been a step in the course of the argument leading to the legality to tax. The probable reason for formulating a question of Hindu law as a distinct question for a reference under the Expenditure-tax Act appears to be the peculiar circumstances in this case in the Appellate Assistant Commissioner and the Tribunal taking different views on the question of the liability or obligation of the family or father in relation to the expenses in connection with the marriage of the daughter, Snehalata.

7. So long as a family continues to be an undivided family, there never has been any doubt that the expenses of the marriage of a daughter of the family is a legitimate charge on the family estate. Indeed, it is regarded as one of the compulsory smackers constituting a sufficient ground to support even an alienation of joint family property.

8. At the same time there never has been any doubt that under the Hindu law a father is bound to meet the expenses of his daughter's marriage. Indeed, an expenditure by him either out of ancestral property or his own self-acquired property has never been held to be open to attack by anybody including his sons who may, in certain circumstances, acquire a right or interest in respect of properties held by the father.

9. The responsibility of the father has now been statutorily recognised by section 20 of the Hindu Adoption and Maintenance Act read with the definition of 'maintenance' contained in clause (b) of section 3 of the said Act. We should add that the Act for the first time declared that the obligation to maintain rests also on the mother.

10. We are not persuaded that there is any basis for the opinion that the provisions of the Act have superseded the pre-existing liability of the joint family and its properties under the ordinary Hindu law. The overriding effect of the statute set out in section 4 operates only against such rules of Hindu law as are inconsistent with the provisions of the statute. There is not, in our opinion, any inconsistency between the liability of the parents and the liability of the joint family. The only effect is that the pre-existing Hindu law rule cannot be pleaded by the parents as an answer to their responsibility under the statute or be availed of by them to absolve themselves of the obligation which is placed on them by the statute.

11. The ultimate position, therefore, is that both the undivided family on the one hand as well as the parents of the bride on the other must be held to have been under a legal obligation to meet the legitimate expenses of the marriage of Snehalata in this case.

12. This answers the first question.

13. The other two questions are inter-related. Although, as framed by the Tribunal, the third question is said to arise only if the answer to the first question is in favour of the assessee, for the reasons we shall presently point out it is not possible to dissociate one question from the other.

14. In paragraph 12 of the statement of the case, the Tribunal has set out its findings in the following terms :-

'After receipt of the remand report, the parties were heard again and in the final order passed by the Tribunal on August 1, 1964, the material findings of the Tribunal were as follows :

1. Having regard to the financial position and status of the family and in the absence of any impediment to the family spending on the marriage by way of any kind of objection from any member of the family, the family is under a legal liability to perform the marriage and the expenses have been incurred by the family even though for this purpose it utilised the gifts received.

2. As the marriage of an unmarried daughter is one of the liabilities and such obligations of the Hindu undivided family and as such an obligation had been discharged by Shri D. C. Shah and Smt. Anasuya Bai, section 4(i) would apply and the amount of expenditure is liable to be included in the family's taxable expenditure.'

15. Both the findings are composite findings both of fact as well as of law. The first finding includes a finding of fact that the expenditure in connection with the marriage of Snehalata was met out of the presents received and the finding of law that nevertheless the expenditure must be regarded as having been met by the family.

16. The second finding comprises a finding of law that the obligation was that of the family and a finding of fact that the said obligation was in fact discharged by D. C. Shah and Anasuya Bai.

17. It, therefore, follows that the finding of fact recorded by the Tribunal is that D. C. Shah and his wife, Anasuya Bai, received certain gifts and that the expenses of marriage of Snehalata were met out of those gifts. Nevertheless, the Tribunal holds that the expenditure should be included in the assessment of the undivided family for the reason that the law places the obligation of meeting those expenses on the joint family and sub-section (i) of section 4 of the Expenditure-tax Act makes it necessary to regard the actual incurring of expenditure by D. C. Shah and Anasuya Bai as an expenditure incurred by the undivided family.

18. It is, however, strenuously contended on behalf of the department before us that there is no clear finding by the Tribunal of the simple fact whether the expenditure was met out of the presents or not. It has been possible for the learned counsel to press this argument because the Tribunal has, in the course of its discussion of material, permitted itself expressions of opinion upon certain subsidiary matters which appear to some extent to conflict with similar opinions or statements made in another part of its order. Another reason why such an argument has become possible is that while the Tribunal ultimately agreed to accept the finding of the original authority after further investigation made pursuant to the direction of the Tribunal that presents were actually received by Shah and his wife and spent by them for the marriage of their daughter, the Tribunal expressed a strong suspicion about the veracity of the evidence tendered by Shah and his wife and its disinclination to place any reliance on it. Nevertheless, the Tribunal did not record any clear finding that the expenditure in connection with the marriage had actually been met out of the funds of the family. Apparently, such a finding was impossible for the reason that the documentary evidence in the shape of separate books of account maintained in connection with the marriage and the absence of the any such detailed account in other books of account which could be clearly and exclusively related to the joint family made it impossible to record any such finding. The Tribunal, therefore, had to content itself by expression strong suspicions and stating that perhaps this entire process of receiving gifts and spending money out of them was what they called a facade.

19. There is another reason why we must hold that the positive finding given by the Tribunal is that the expenditure in connection with the marriage was met out of the presents and not out of the joint family funds. It will be remembered that the original assessing authority had regarded the expenditure met out of the presents received by Anasuya Bai as expenditure covered or governed by sub-section (ii) of section 4 of the Expenditure-tax Act, according to which, expenditure incurred by a dependant of the family in the position of Anasuya Bai can be regarded as having been incurred by the family itself if the same had arisen out of assets directly or indirectly transferred by the family to the dependant. Dealing with this question, the Tribunal in paragraph 14 of its appellate order expressly states as follows :

'It was stated that these gifts being to the family it must be deemed that there was a transfer by the family to the lady from which the expenditure has been met. This in our opinion is far-fetched and we have also not accepted the position that these are gifts to the family as such. Therefore, there is no direct or indirect transfer of any property by the family to Smt. Anasuya Bai from which the expenditure has been met. We, therefore, rule out application of section 4(ii).'

20. These observations proceed, in our opinion, on the basis of a definite finding of fact that the gifts had been received by Anasuya Bai in her individual capacity and the expenditure or part of the expenditure was met by her out of the cash so received by way of gifts.

21. Such being the position upon facts, the only question that remains is whether the expenditure actually met by D. C. Shah and his wife, Anasuya Bai, can under sub-section (i) of section 4 of the Act be regarded as having been incurred by the undivided family which is the assessee. That sub-section reads as follows :

'4. Amount to be included in taxable expenditure. - Unless otherwise provided in section 5, the following amounts shall be included in computing the expenditure of an assessee liable to tax under this Act, namely :- (i) any expenditure incurred, whether directly or indirectly by any person other than the assessee in respect of any obligation or personal requirement of the assessee or any of his dependants to the extent to which the amount of all such expenditure in the aggregate exceeds Rs. 5,000 in any year.'

22. The position envisaged by the section is that the obligation to incur expenditure rests upon the assessee but the actual expenditure is incurred by another person to meet the assessee's obligation. Prima facie, the position must be that the person who actually incurs the expenditure is not under any obligation to incur that expenditure. The position is the same in the case of an expenditure in connection with the personal requirement of the assessee and the other person who incurs the expenditure must also incur that expenditure only to meet the personal requirements of the assessee and not the personal requirements of the person who spends.

23. Dealing with the second type of case, the Gujarat High Court has held in Darshan Surendra Parekh v. Commissioner of Expenditure-tax, that when a member of the undivided family spends for his own personal requirements out of the proceeds of his own separate property, such expenditure cannot be added to the assessable expenditure of the joint family.

24. The same principle, in our opinion, should be applied to the case of expenditure incurred for the purpose of meeting a legal obligation. Now in the present case, as already pointed out by us, both the joint family as well as D.C. Shah and his wife, Anasuya Bai, were under an obligation to meet the expenses of Snehalata's marriage. When, therefore, either Shah or his wife, Anasuya Bai, incurred any portion of that expenditure such incurring should naturally be referred to their own personal obligation in that regard, and not necessarily to the obligation of the family. Of course, by evidence it might be shown that although there was their personal obligation to meet it, the expenditure was met in such a way as to be related to the obligation of the joint family. For example, a karta of the family who is in possession of both joint family funds as well as his own private funds may legitimately utilise the joint family funds for meeting an expenditure of his daughter's marriage and debit it to joint family funds but such a debit must be proved as a fact. In the present case, no such direct utilisation or actual utilisation of joint family funds has been made out. On the contrary, the finding is that the expenditure was met by D. C. Shah and his wife, Ansuya Bai, out of the presents received by them. Therefore, the only legal inference could be that when Shah and Anasuya Bai spent out of the money belonging to themselves for the marriage of their daughter, they must be regarded as having incurred that expenditure in discharge of their own obligation.

25. There is, therefore, no scope for the application of sub-section (i) of section 4 to the facts of this case.

26. Our answers to the three questions referred are, therefore, as follows :

1. The legal liability or obligation to meet the expenses of the marriage of Snehalata rests not merely on the Hindu undivided family but also on her parents, D. C. Shah and Anasuya Bai.

2. On the facts and in the circumstances of this case, the expenditure of Rs. 1,00,795 in connection with the marriage of Snehalata cannot properly be treated as having been incurred by the Hindu undivided family which is the assessee.

3. The expenditure actually incurred by D. C. Shah and Anasuya Bai cannot be treated as expenditure incurred by the Hindu undivided family by the application of sub-section (i) of section 4 of the Expenditure-tax Act.

27. The assessee will have the costs of this reference. Advocate's fee Rs. 250.


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