Chandrasekhara Sastry, J.
1. In this petition the petitioner prayed for the issue of a writ of prohibition or any other appropriate writ or direction restraining the respondent, the Income-tax and Expenditure-tax Officer, Income-tax cum Wealth tax circle No. 1 Hyderabad, from making the levy of expenditure-tax for the assessment year 1960-61 and pass such other order or orders as this court may deem fit.
2. Pending the writ petition, the sole petitioner died and one of the executors appointed under his will is brought on record as the 2nd petitioner. On 6-3-62 the respondent issued a notice under Section 15 of the Expenditure Tax Act (hereinafter referred to as the Act) calling upon the petitioner to furnish statements of expenditure in respect of the Joint family of which the petitioner is said to he the karta as also the statements of expenditure incurred by his two sons. It is alleged in the affidavit or the petitioner filed in support of this writ petition that his two sons are divided in status from him and us between themselves. In his reply dated 15-3-62, the petitioner stated that there was division between him and his two sons, who represented their respective branches and that in respect of one item known as Bharatkhand Cotton Mills property, though there was no physical division by metes and bounds, there had been a complete and final division of the said property also into separate and distinct shares and that the petitioner and his two sons had become the exclusive owners of a defined portion or share.
It WAS also alleged in the alternative that, even if the said division is deemed to be a partial partition, the expenditure incurred by the petitioners two sons and their respective branches from out of the income realised by them from out of their separate shares cannot be included in the expenditure of the notional joint family. The stand taken on behalf of the petitioner before the respondent was that there was a complete partition of all the properties of the joint family. Though the Bharatkhand Cotton Mills properly was not subjected at that stage to a physical division, there was nevertheless a final and conclusive division into separate portions. It is further alleged that there was consequently a partition which attracts the operation of Section 19 of the Act. Again, it is claimed that, even assuming that there was only a partial partition, each member had become absolutely entitled to a separate share and the income thereof and the income realised by each member or each branch is exclusively his or theirs and the expenditure from out of the said separate income is, therefore, not the expenditure of the undivided family though it may be said that there was by legal fiction an undivided family in existence for the purpose of levy of tax.
In reply to the petitioners letter dated 15-3-62 the respondent intimated by his letter dated 16-3-62 his view that, in view of the specific provision embodied in Section 4(ii) of the Expenditure Tax Act, he was unable to subscribe to the petitioner's view that the expenditure incurred by the member of the joint family on partial partition cannot be brought within the ambit of Section 4(ii) of the Act. The respondent, therefore, requested the petitioner to file all the necessary statements in support of the expenditure tax returns filed by the petitioner for the assessment years 1959-80, 1960-61 and 1961-62 showing the expenditure incurred by all the members of the family out of the income or property transferred in partial partition. In that letter, the respondent stated that, if the petitioner feels aggrieved after the completion of the assessments he is entitled to seek recourse to appeals against them. The petitioner was, therefore, asked to attend the office on 24-3-62 at 11 A. M. with all the necessary information so as to enable the respondent to finalise the expenditure assessments without fail.
3. Next, the petitioner received a notice on 11-1-83 calling upon him to furnish the particulars on 16-1-63 of the expenditure incurred by the divided sons of the petitioner. In reply, the petitioner stated that his sons are living separately and one of them is at Bangalore and while asking for time, confirmed once again his objections to the procedure and to the legality and jurisdiction of the proposed law. In paragraph 6 of the affidavit, it is alleged that the action of the respondent in seeking to levy an assessment on the basis of the computation of the expenditure of the divided branches also as taxable expenditure is wholly ultra vires, without jurisdiction and is besides, productive of harassment and hardship. It is alleged that the respondent is acting in excess of his jurisdiction and is assuming a jurisdiction not vested in him on the basis of a misconstruction of the provisions of Section 4(ii) of the Act. According to the petitioner, the expression 'transferred directly or indirectly to the dependent by the assessee' cannot be construed, on a proper understanding, to include property allotted at a partition among the members of the family though the division is not by metes and bounds. It is submitted that the requirements for the application of Section 4(ii) are, firstly, that there should be a transfer and secondly, that the transfer should be in favour of a dependent of the family and that, in the present ease, there is no transfer and the divided sons are not dependents of the family.
4. It is also alleged that the petitioner's representative had been told by me respondent that he would not allow an allowance of Rupees 3,000 each for every additional coparcener in addition to the allowance pertaining to the two sons under Sections 5 and 6 of the Act.
5. The respondent filed a counter. He stated therein that the assessee petitioner is a Hindu undivided family, consisting of himself as kartha and his two sons. For the assessment year 1960-61, the previous year ended with 30-9-59. For the income-tax assessment for the year 1960-61, the previous year was taken as the same year ended with 30-9-59 and the income of the family derived from the Bharatkhand Cotton Mills, Ahmedabad, was subjected to income-tax. There was partial partition in the family prior to 30-9-1959 and for the purpose of expenditure tax, the family still continued to be joint, as there was no partition as a whole amongst the members of the family within the meaning of Section 19 of the Act. It is further stated that it is an admitted fact that one of the important properties, the Bharatkhand Cotton Mills Ahmedabad, belonged to the joint family in the relevant previous year for the assessment year 1960-61 and hence, the status of the assesses under the Expenditure-tax Act could only be the Hindu undivided family, but not as an individual. It is true that the family was disrupted later and complete partition under Section 25-A of the Income-tax Act. 1922, was recognised with effect from 28-3-60 by an order passed by the Income-tax Officer on 22-2-62 in the course of the income-tax assessment proceedings for the assessment year 1957-58.
6. A notice under Section 13(2) of the Expenditure Tax Act was issued on 22-7-60 for the assessment year 1960-61 in the name of Sri P. Venkatarama Reddy, who filed a nil return in the status of Hindu undivided family on 15-3-62. On 11-1-63, he was asked to furnish full details of receipts and payments for the assessment years 1959-60 to 1961-62 separately. He was also asked to furnish statements showing particulars of expenditure incurred by all the members of the Hindu undivided family out of the income or property transferred in partial partition. These details were furnished on 7-2-63. After that, the writ petition was filed.
7. In paragraph 5 of the counter-affidavit, it is stated that the respondent had not considered the objections raised by the assessee. The respondent had not come to any definite conclusion as the matter has to be considered at the time of the completion of the assessment proceedings. He stated that it is not correct to state that he had already taken the view that the expenditure incurred by the coparceners of the joint family from and out of the income of the assets which were already subjected to partial partition has to be included in the assessment of the Hindu undivided family. This objection has to be considered by the respondent, before the final assessment order is to be passed; but the respondent has not come to any definite conclusion. However, it is admitted that the respondent's predecessor, in his letter dated 16-3-62, addressed to the assessee petitioner, pointed out that he was unable to subscribe to the view of the assessee petitioner that the expenditure incurred by the members of the joint family on partial partition could not be brought within the ambit of Section 4(ii) of the Act. But this respondent has not finally come to any definite conclusion as the matter requires consideration of the entire legal position as well as the factual position on the date of the assessment. It is further submitted that this respondent would certainly consider all the objections raised by the assessee in the assessment proceedings and no definite conclusion has been arrived at so far and the points raised in the writ petition will have to Be decided by the assessing officer in the assessment proceedings. Further, it is stated that the Expenditure Tax Act is a code by itself and it has provided for appropriate and adequate remedies and the writ petition at this stage is premature and inappropriate. Therefore, the writ petition is not maintainable.
8. The petitioner filed a reply affidavit in which he stated that there was no basis for the averment that it is admitted fact that one of the important properties, the Bharakhand Cotton Mills, Ahmedabad, belonged to the joint family it is stated that on the other hand, the contention of the assessee has been that there had been a division in status among the members of the family and a partial partition at an earlier stage and that, subsequently the Bharatkhand Cotton Mills properly had been divided among the sharers in definite portions in the year 1955. It is pointed out that objections on his behalf were raised by his representative in connection with the assessments for both the years 1959-60 and 1960-61 which were being concurrently dealt with by the Expenditure-tax Officer. But, by his order dated 18-1-63 the officer negatived the contentions urged on behalf of the assessee. The said order related to the assessment year 1959-60 though, as per that order the officer ultimately held that the expenditure of the assessee did not exceed the basic exemption limit of Rs. 30,000. However, on the material question of the construction of Section 4(ii) which was germane to the assessment for both the years, the officer held against the assessee. Thus, there was a clear and categorical decision on this point against the assessee.
In view of the assessment order dated 18-1-63 relating to the year 1959-60 applying the provisions of Section 4(ii) in the manner opposed to and overruling of the objections of the petitioner, the petitioner is constrained to file this writ petition. In his reply affidavit it is pointed out that the counter affidavit was sworn to on 19-11-65 and was filed in this court only on 20-1 i-65.
9. Mr. V. Parthasarathi, the learned counsel for the petitioner, pointed out that the petitioner was constrained to file this writ petition in view of the stand taken by the respondent in his letter dated 16-3-62 and his assessment order dated 18-1-63 for the assessment year 1959-60 about scope of Section 4(ii) of the Act. For a clear understanding of the stand taken by the then officer, it is necessary to quote his letter dated 16-3-62, which is as follows:
G.I.R. No. 26-v/E.T. Office of the Ex-
cum wealth tax
circle I, Hydera-
bad dt. 16-3-62.
Sri Pingle Venkatrama Reddy, High cliff, Begumpet, Hyderabad, Dn. Sir,
Sub: Expenditure tax assessments 1959-60 and onwards filing of necessary statements in support of returns filed your letter dated 14th March 1962.
With reference to your above letter, I am to state that I have gone through your explanation in respect of Section 4(ii) of the Expenditure Tax Act which envisages the expenditure incurred by any dependent of a Hindu undivided family from or out of any income or property, transferred directly or indirectly to tax. You are aware that this amendment has been brought about in the Finance Act of 1959. The intention of the Legislature by this amendment is also clear when you kindly refer to Section 19 of the Expenditure Tax Act which specifically contemplates the partition of the joint family as a whole among the various members or groups of members in definite portions. Thus, in the case of undivided family expenditure incurred by every member thereof from out of the income or property transferred to him by the family will be treated is expenditure of the family. Therefore, the expenditure by a member of the family from out of the assets allotted to him on partial partition has to be included in the total expenditure of the family. In view of the specific provision embodied in Section 4(ii) of the E. T. Act, I am sorry I am unable to subscribe to your view that the expenditure incurred by the members of the joint family on partial partition cannot be brought within the ambit of Section 4(ii) of the E T. Act.
2. I, therefore, request to kindly file all the necessary statements in support of the expenditure tax returns filed by you for the assessment years 1959-60, 60-61 and 61-62 showing the expenditure incurred from all the members of the family out of the income or property transferred in partial partition. If you feel aggrieved after the completion of the assessments, you are entitled to seek recourse in appeals against them which will be the correct procedure in such cases. Please therefore attend the office on 24-8-62 at 11 A. M. with all the necessary information so as to enable me to finalise the expenditure assessments without fail.
Sd/D. B. Ramachandra Rao,Expenditure Tax Officer, Income
Tax cum Wealth Tax Circle I,Hyderabad.
This view is again affirmed by the officer in his order of assessment dated 18-1-83 relating to the assessment year 1959-60, the relevant portions of which are as follows:
'The crucial point for consideration here is whether on the partial partition of the familyin 1918, the expenditure incurred by the members of the family out of assets received by themunder the partition is to be considered for thepurposes of the levy of expenditure tax. Asper Section 4(ii), amended in 1959, which is applicablefor 1959-60 assessment onwards whether theassessee is a Hindu undivided family, any expenditure incurred by any dependent from orout of any income or property transferred directly or indirectly to the dependent by the assesseehas to be included in computing the taxable expenditure of the assessee. The burden of the argument on behalf of the assessee is that any transfer of assets on the partition of the joint Hindufamily partial or complete cannot be consideredto be a transfer as contemplated under this subSection. xx xx xxxxxxxxx xxxxx xxxxI am unable to agree with the contentions of theassessee. It is clear from the wording of thesection that so long as the joint Hindu familyhas not completely been disrupted it continuesto exist though the assets held by the family mayhave undergone reduction by way of partial partition. What is to be considered is whether the joint family was in exercise during the year and whether the members had received any income or property from the family. The fact that such transfer was the result of a partial partition cannot change the main position that the family did exist and it did make a transfer of assets to some of the members. It is worth mentioning here that there is a difference between Income-tax and the Expenditure Tax Acts in relation to the partition of a Hindu undivided family. The income from partitioned properties is not assessable in the hands of the Hindu undivided family but under the Expenditure-tax Act any partial partition of the joint family property is of little consequence for purposes of assessment. Every coparcener or other member is deemed to be a dependent of the Hindu undivided family, the expenditure incurred by him there from will have to be included by in the total expenditure of the family. In view of these facts, I am unable to accept the assessee 's contention and so, the expenditure incurred by the members of the family will also have to be taken into consideration for purposes of levy of expenditure tax.'
10. These questions are argued by Mr. V. Parthasaratbi the learned counsel for the petitioner.
(1) When the property is allotted to different members of a joint family, who became divided in status in a partial partition it cannot be said that there is transfer of the said property by the Hindu undivided family to the members divided in status within the meaning of Section 4(ii) of the Act.
(2) Once there is a division in status between the members of the family, the said members cannot be said to be dependants as defined in Section 2(g) of the Act, as they cease to be coparceners consequent on the division in status; and
(3) The officer has to allow an allowance of Rs. 3,000 not merely for the two sons but also for every member of the family, who would be a coparcener.
11. I shall now consider the first point. Section 8 of the Act provides;
'8. Charge of Expenditure-tax (1) subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the first day of April 1958, a tax (hereinafter referred to as expenditure tax) at the rate or rates specified in the schedule in respect of the expenditure incurred by any individual or Hindu undivided family in the previous year;
Provided that no expenditure tax shall befay able by an assessee for any assessment year the income from all sources derived by the assessee and his dependents during the previous year as reduced by the amount of taxes to which such income may be liable under any law for the time being in force does not exceed rupees thirty six thousand.'
The decision on the point under consideration turns upon the true construction of Clause (11) of Section 4 which reads:
'4. Amount to he 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) xx xx xx
(ii) Where the assessee is an individual,any expenditure incurred by any dependent ofthe assessee, and where the assessee is a Hinduundivided family any expenditure incurred byany dependant from or out of any income orproperty transferred directly or indirectly to thedependant by the assessee'.
It is not necessary to refer to Clause (i) of this section and the Explanation. The assessee, in this case, is a Hindu undivided family. Though it was not admitted by the Department that there was a complete partition of all the properties belonging to the family by metes and bounds in specific portions, it is admitted that there was a division in status between the petitioner and his two sons inter se and that there was also a partial partition of the properties belonging to the family. Thus, specific items of the property were allotted to each of the three members of the family. Under Section 4(ii) of the Act, the Department wanted to include the expenditure incurred by the two sons from or out of the income or property allotted to each of them under the partial partition, the stand taken by the Department apparently being that the property allotted to each of the sons at the partial partition comes within the ambit of property transferred directly or indirectly to the dependant by the assessee (Hindu undivided family). But, it is argued by Mr. V. Parthasarathi, the learned counsel for the petitioner that, when under a complete or partial partition in Hindu undivided family the property is allotted to each of the coparceners, such allotment does not amount to a 'transfer within the meaning of Section 4(ii).
It is argued that a partition is really a process in and by which a joint enjoyment is transformed into an enjoyment in severally and that there is no transfer at all either directly or Indirectly by the Hindu undivided family of this property to members of the family, when alone Clause (ii) of Section 4 would be attracted. In support of this, reliance is placed upon the decision in Radhakrishnayya v. Sarasamma, : AIR1951Mad213 . The learned Judges In their judgment, referred to the definition or 'Transfer of Properly' in Section 5 of the Transfer of Property Act as 'An act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and one or more other living persons: and 'to transfer properly', is to perform such act: It was held:
'Partition, there tore, is really a process in and by which a joint enjoyment is transformed into an enjoyment in severally. Each one of the sharers had an antecedent title and therefore no conveyance is involved in the process and a conferment of new title is not necessary.'
This decision is referred to with approval by the Supreme Court in Commissioner of Income-tax v. Keshavlal Lallubhai Patel, : 55ITR637(SC) .
12. It is interesting to note the stand taken by the learned counsel for the Department in Prince Azam Jah v. Expenditure Tax Officer, Hyderabad, : 55ITR230(AP) of the report, Jaganmohan Reddy, J., who decided that case noticed the argument of the learned counsel for the Department as follows:
'It is the contention of Mr. Kondaiah, the learned advocate for the department, firstly that wherever there is a partial partition, the assessee who obtained on allotment an asset on such partition comes in as an individual and is caught by the first part of the amended Section 4(ii) and, secondly since the definition of dependent of a Hindu undivided family also lakes in other persons who are entitled to maintenance under any law, order or decree of a court, any expenditure incurred from and out of the assets transferred directly or indirectly to such persons is includible in the expenditure of the Hindu undivided family as an assessee which was also more or less the position before the amendment of Section 4(ii)'.
Again at p. 250 of the same report, it is noted that:
'Mr. Kondaiah contends that in so far as the coparcener who has been allotted property on partial partition is concerned, he would be treated as an individual,'
When the property is allotted to a sharer on partial partition in the Hindu undivided family it cannot be held that the income or the properly of the Hindu undivided family is transferred directly or indirectly to the said sharer so as to enable the Expenditure-tax Officer to include any expenditure incurred by the said sharer from or out of the income or property allotted to him on such partial partition.
13. Though, on the above question, the stand taken by the then Expenditure Tax Officer on behalf of the Department is clear and definite its expressed in his letter dated 16-3-62 and his order of assessment dated 18-1-63 for the assessment year 1959-60, the officer now in charge merely stated in his counter that he has not finally come to any definite conclusion and that he would consider all the objections raised by the assessee in the assessment proceedings. This point was raised by the assessee in the writ petition, which was filed on 28th August 1963. Even at the time of filing the counter affidavit which was sworn to on 19th November, 65 the officer states that he has still (o consider the question and come to a definite conclusion. I invited Mr. Kondiah, the learned counsel for the Department to argue this question and whether or not he would support the stand taken by the then Expenditure tax officer in his letter dated 16-3-62 and his assessment order dated 18-1-63.
But, Mr. Kondaiali declined. But since I find that the then Expenditure-tax Officer rejected the assessee's contention on this point in his assessment order relating to the assessment year 1959-60 and since also in the letter dated 16-3-62 he expressed the same view and called upon the assessee to file all necessary statements in support of the expenditure tax returns for the assessment year 1959-60, 1960-61 and 1961-62 showing the expenditure incurred by all the members of the family from or out of the income or properly allotted under the partial partition, I consider that this is a fit case where I shall express my view on the point in spite of the stand taken in the counter affidavit that this objection would be duly considered and decided by the officer at the time of the final assessment.
14. The second point argued by Mr. Parthasarathi is based upon the definition of 'dependent' in Section 2 Clause (g) of the Act. Dependent means (i) where the assessee is an individual, his or her spouse or minor child, and includes any pet son wholly or mainly dependant on the assessee for support and maintananee; (ii) where the assessee is a Hindu undivided family:
(a) every coparcener other than the karta; and
(b) any other member of the family who under any law or order or decree of a court, is entitled to maintenance from the joint family property
The argument is that once I here is a division in status between the several members of the family, they cease to be coparceners and, therefore, do not come under the definition of 'dependant', I do not wish fo consider this question and express my view thereon as there is nothing in record to show that the Department had expressed any view on this question. It will be open to the respondent to consider this at the time of the assessment.
15. With regard to the third point also, except allegations in the affidavit that the respondent had given an indication to the petitioner's representative in the course of discussion that, in regard to the expenditure incurred by the petitioner's sons and their sons from or out of the income or property allotted to them, the deductions permissible under law as per Sections 5 and 6 would not be applicable there is nothing tangible to indicate what view the respondent will take on this point. Therefore, I do not express my view on this point also.
16. Mr. Kondaiah, the learned counsel for the respondent, pointed out that, in his letter dated 27-8-68, the petitioner's representative requested the respondent to decide the questions raised in this writ petition and, therefore, this writ petition is not maintainable. He pointed out that the view taken by the then Expenditure tax officer during the assessment proceedings for the assessment year 1959-60 is not res Judicata. It is further urged that the Expenditure Tax Act is a code by itself and it has provided appropriate and adequate remedies and the writ petition at this stage is premature and inappropriate. Reliance is placed upon the following observations of the Supreme Court in Shivram Poddar v. Income-tax Officer Central Circle II Calcutta, : 51ITR823(SC) which were followed by this court in W. A. Nos. 117 to 128 of 1964 (AP):
'We may observe that we have proceeded to decide this case on the footing that the business of the firm was discontinued on the dissolution of the firm. It is however necessary once more to observe, as we did in C. A Abraham's case, : 41ITR425(SC) that the Income-tax Act provides a complete machinery for assessment of tax, and for relief in respect of improper or erroneous orders made by the revenue authorities. It is for the revenue authorities to ascertain the facts applicable to a particular situation and to grant appropriate relief in the matter of assessment of tax. Resort to the High Court in exercise of its extraordinary jurisdiction conferred or recognised by the Constitution in matters relating to assessment, levy and collection of income-tax may be permitted only when questions of infringement or fundamental rights arise or where on undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess. In attempting to bypass the provisions of the Income-tax Act by inviting the High Court to decide questions which are primarily within the jurisdiction of the revenue authorities, the party approaching the court has often to ask the court to make assumptions of facts which remain to be investigated by the revenue authorities.'
17. It is stated in paragraph 12 of the affidavit filed in support or the writ petition that if the assessments were to go on in the manner intended by the respondent, it would result in great hardship and harassment as the petitioner would be called upon to pay a large sum without any proportionate resources being left with him, as the separate branches are in the enjoyment of their respective properties. No doubt, as the Supreme Court has pointed out, ordinarily, this court will not interfere at this stage when the assessee has other remedies under the Act to question the legality of the order of assessment as and when it will be finally passed. But it has to be noted that the Supreme Court, in the above passage, stated that resort to the High Court may be permitted where, on undisputed facts, the taxing authorities are shown to have assumed jurisdiction, which they do not possess. As the then Expenditure-tax Officer expressed the definite view during the proceedings for the assessment year 1959-60 with regard to the Interpretation of Section 4(ii) of the Act and I am satisfied that the assessee would suffer great hardship, if the same view is taken of Section 4(ii) in the assessment proceedings for the year 1960-61, I hold that a case is made out for interference under Article 226 of the Constitution of India.
18. In the result, the writ petition is allowed in part and a direction will issue to the respondent to assess the petitioner to expenditure tax for the year 1960-61 only on the basis of the view expressed by me in this judgment of Section 4(ii) of the Act. The other questions raised in this writ petition are left-open.
19. There will be no order as to costs inthis writ petition.