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Commissioner of Income-tax Vs. H.H. Birad Kanwarji - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtRajasthan High Court
Decided On
Case NumberD.B. Income-tax Case Nos. 52, 53 and 54 of 1977
Judge
Reported in[1979]119ITR96(Raj)
ActsIncome Tax Act, 1961 - Sections 10(2), 10(19), 66(1) and 256(2)
AppellantCommissioner of Income-tax
RespondentH.H. Birad Kanwarji
Appellant Advocate S.K. Mal Lodha, Adv.
Respondent Advocate N.M. Ranka, Adv.
Excerpt:
.....received by the rulers for themselves as well as the members of their family and, therefore, the hath kharch amount paid by the maharana of udaipur for the expenditure of his mother, i. 4. on further appeal, the appellate tribunal upheld the contentions of the assessee and held that the hath kharch allowance was exempt both under section 10(19) as well as under section 10(2) of the i. it would have been a different matter if the revenue would have challenged the findings of the tribunal on both the grounds but as the revenue has not disputed the alternative ground no good purpose would be served by referring the question proposed by the revenue as the decision on this issue would be purely of academic nature. '7. having heard the learned counsel for the parties, we are satisfied that..........received by the rulers for themselves as well as the members of their family and, therefore, the hath kharch amount paid by the maharana of udaipur for the expenditure of his mother, i.e., the assessee, is a receipt by the mother as a member of the family and as such it is exempt under the provisions of section 10(2) of the i.t. act, 1961. the aac, however, did not accept any of the contentions of the assessee and upheld the order of the ito that the hath kharch amount of rs. 60,000 received by the assessee was taxable in her hands for all the years in question.4. on further appeal, the appellate tribunal upheld the contentions of the assessee and held that the hath kharch allowance was exempt both under section 10(19) as well as under section 10(2) of the i.t. act, 1961. according to.....
Judgment:

A.P. Sen, Actg. C.J.

1. These are three applications under Section 256(2) of the I.T. Act, 1961, by the CIT, Jodhpur at Jaipur, for requiring the Income-tax Appellate Tribunal, Bombay Bench ' A ', to refer certain question of law said to arise out of its consolidated order dated January 1, 1975, in Income-tax Appeals Nos. 522 of 1972-73, 949 and 950 of 1971-72pertaining to the assessment years 1967-68, 1968-69 and 1969-70, to the High Court for its opinion.

2. The facts giving rise to these reference applications, in brief, are as follows :

The assessee is the senior Rajmata of Maharana Bhagwatsinghji of Udaipur and was in receipt of monthly allowance of Rs. 5,000 paid to her by the Maharana of Udaipur out of the privy purse received by him. The assessee claimed before the ITO that the amount of Rs. 60,000 received by her as hat kharch allowance is exempt from income-tax, as under Section 10(19) of the I.T. Act, 1961, any amount received by the ruler of an Indian State as privy purse under art. 291 of the Constitution was exempt from income-tax. The ITO, however, did not accept the contention of the assessee and assessed the amount during the relevant years, as an income in the hands of the assessee from other sources under Section 56 of the Act. In his view, the amount was not received by or on behalf of the ruler as privy purse. Hence, exemption under Section 10(19) of the I.T. Act, read with art. 291(b) of the Constitution, does not attach to such an allowance. Accordingly, the ITO held that the sum of Rs. 60,000 received by her is taxable in the hands of the assessee for the years in question.

3. In appeal, the assessee put forward a contention in the alternative that the assessee was a member of the joint family and the privy purse amount was received by the rulers for themselves as well as the members of their family and, therefore, the hath kharch amount paid by the Maharana of Udaipur for the expenditure of his mother, i.e., the assessee, is a receipt by the mother as a member of the family and as such it is exempt under the provisions of Section 10(2) of the I.T. Act, 1961. The AAC, however, did not accept any of the contentions of the assessee and upheld the order of the ITO that the hath kharch amount of Rs. 60,000 received by the assessee was taxable in her hands for all the years in question.

4. On further appeal, the Appellate Tribunal upheld the contentions of the assessee and held that the hath kharch allowance was exempt both under Section 10(19) as well as under Section 10(2) of the I.T. Act, 1961. According to the Tribunal, the hath kharch amount was exempt under Section 10(19) of the Act. A reference was made to the speech of the Home Minister in the Constituent Assembly for holding that the privy purse was granted to the rulers not only to make their own expenditure, but also for the expenditure of their family members and that it was free from tax liability. Accordingly, the Tribunal held that the amount was exempt even in the hands of the assessee under Section 10(19) of the Act, since all the members of the family were entitled to a share of the privy purse. The Tribunal was also of the view that the assessee was entitled to an exemption under Section 10(2) of the Act, inasmuch as the hath kharch allowance had been paid outof the income of the family. The Tribunal observed that the joint family of Maharana Bhagwatsinghji consisted of himself, his two mothers, wife, two sons and one daughter during the relevant assessment years. As the privy purse was received by the ruler as head of the family, the same was received by him for and on behalf of the joint family, and, therefore, the hath kharch allowance was eligible for exemption under Section 10(2) of the Act. In that connection, the Tribunal referred to the provisions of the Hindu Adoptions and Maintenance Act, 1956, and held that the assessee being a dependant within the meaning of Section 21, a Hindu is bound, during his or her lifetime, to maintain his or her aged or infirm parents. Accordingly, the Tribunal upheld the contention of the assessee that the hath kharch allowance received by her is also eligible for exemption under Section 10(2) of the Act. In that view, the Tribunal allowed the appeals filed by the assessee for the years in question.

5. Feeling aggrieved, the CIT sought to raise the following question of law said to arise out of the aforesaid order of the Appellate Tribunal, viz.:

' Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the hath kharch allowance of Rs. 60,000 received by the assessee from her son, H. H. Maharana Bhagwat Singhji of Udaipur, out of the privy purse was not liable to income-tax under Section 10(19) of the Income-tax Act, 1961 ?'

6. In declining to make a reference, the Appellate Tribunal observed :

''In our view, the question sought to be raised by the CIT is certainly a question of law but as the CIT has not challenged the alternative ground that the allowance received by the assessee would be allowable under Section 10(2) of the Income-tax Act, 1961, the question sought to be raised by the revenue becomes of an academic nature. It would have been a different matter if the revenue would have challenged the findings of the Tribunal on both the grounds but as the revenue has not disputed the alternative ground no good purpose would be served by referring the question proposed by the revenue as the decision on this issue would be purely of academic nature. Accordingly, we do not deem it proper to refer the same for the opinion of their Lordships. '

7. Having heard the learned counsel for the parties, we are satisfied that the order of the Appellate Tribunal, does, in our opinion, give rise to a question of law. Indeed, the Appellate Tribunal commences its order by observing that the appeals raise a very important question as to whether the monthly allowance paid to the assessee by the Maharana of Udaipur out of the privy purse received by him was exempt from payment of income-lax, when the privy purse received by the ruler of an Indian State is exempt under Section 10(19) of the I.T. Act, 1961. That was the maincontention before the Appellate Tribunal. The Appellate Tribunal in its order upheld the contention of the assessee mainly on the ground that the hath kharch allowance was exempt under Section 10(19) of the Act. The Appellate Tribunal then went on to grant relief to the assessee even on the alternative ground under Section 10(2) of the Act.

8. The short question before the Appellate Tribunal was whether the hath kharch allowance was Rs. 60,000 per annum received by the assessee from the Maharana of Udaipur out of the privy purse received by him was liable to income-tax or was it exempt In declining to make a reference, the Appellate Tribunal conceded that the question sought to be raised by the revenue was undoubtedly a question of law. Merely because, the question as framed was whether or not the hath kharch allowance was liable to income-tax under Section 10(19), it did not prevent the Appellate Tribunal from reframing the question, viz., whether it was so exempt on the alternative ground under Section 10(2) of the I.T. Act, 1961. These were two aspects of the same question. In our opinion, the Appellate Tribunal was unduly technical in throwing out the application for reference under Section 256(1) of the Act. It could have framed the question in general terms so as to cover both the aspects.

9. A large number of authorities have been cited by the learned counsel for the parties. We need not refer to these decisions in detail as the principles are well settled. In CIT v. Scindia Steam Navigation Co. Ltd. : [1961]42ITR589(SC) which is the leading case on the subject, Venkata-tama Iyer J., speaking for their Lordships, observed (p. 612):

' Now a question of law might be a simple one, having its impact at one point, or it may be a complex one, trenching over an area with approaches leading to different points therein. Such a question might involve more than one aspect, requiring to be tackled from different standpoints. All that Section 66(1) requires is that the question of law which is referred to the court for decision and which the court is to decide must be the question which was in issue before the Tribunal. Where the question itself was under issue, there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal. It will be an over-refinement of the position to hold that each aspect of a question, is itself a distinct question for the purpose of Section 66(1) of the Act. That was the view taken by this court in CIT v. Ogale Glass Works Ltd. : [1954]25ITR529(SC) and in Zoraster & Co, v. CIT : [1960]40ITR552(SC) and we agree with it. '

10. That test, in our view, is clearly fulfilled in the present case. There is no doubt that if a question of law is framed in general terms and in dealing with it several aspects fall to be considered, they have to be consideredby the High Court even though the Tribunal may not have considered them. Here, both the aspects, viz , whether the hath kharch allowance was exempt under Section 10(19) or under Section 10(2) of the Act, were before the Appellate Tribunal. Even if one of the aspects was not considered by the Tribunal it could be raised before the High Court, The question as to whether the hath kharch allowance was exigible for exemption was very much in issue before the Tribunal. Where the question itself was an issue before the Tribunal, there was no further limitation imposed by Section 256(1) that the reference should be limited to those aspects of the question which have been argued before the Tribunal. That would, in their Lordships' opinion, be an over-refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of Section 256(2) of the Act: Keshav Mills Co. Ltd. v. CIT : [1965]56ITR365(SC) Sundaram & Co. (P.) Ltd. v. CIT : [1967]66ITR604(SC) Bhanji Bagawandas v. CIT : [1968]67ITR18(SC) and CIT v. Indian Molasses Co. P. Ltd. : [1970]78ITR474(SC) .

11. The applications for reference under Section 256(2) of the I.T. Act, 1961, are accordingly allowed and the Appellate Tribunal is directed to draw up the statement of the case and refer to the High Court for its opinion on the following question, namely :

' Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the hath kharch allowance of Rs. 60,000 received by the assessee from her son, H. H. Maharana Bhagwat Singhji of Udaipur, out of the privy purse was not liable to income-tax under the Income-tax Act, 1961 ?'

12. There shall be no order as to costs.


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