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T.S. Srinivasan Vs. Commissioner of Expenditure-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 274 of 1966 (Reference No. 63 of 1966)
Judge
Reported in[1974]93ITR146(Mad)
ActsExpenditure Tax Act, 1957 - Sections 2, 4, 6(2) and 16
AppellantT.S. Srinivasan
RespondentCommissioner of Expenditure-tax
Appellant AdvocateS. Swaminathan and ;K. Ramagopal, Advs.
Respondent AdvocateV. Balasubrahmanyan and ;J. Jayaraman, Advs.
Cases ReferredSubbayya v. Ananda Ramayya.
Excerpt:
(i) direct taxation - assessment - section 16 (b) of expenditure tax act, 1957 - whether reopening of original assessments for 1959-60 and 1960-61 by expenditure-tax officer under section 16 was legal - expenditure-tax officer cannot revise his own view purporting to exercise power under section 16 (b) - as such re-opening of original assessment not legal - question answered in negative. (ii) expenditure - whether inclusion of expenditure incurred by hindu undivided family (huf) for benefit of assessee's wife and minor children was properly includible in individual assessments for 1959-60 and 1960-61 - such expenditure taken to be in respect of huf own obligation to assessee's wife and children who are members of huf and not in respect of personal obligation of karta in his individual.....ramanujam, j.1. the assessee in this case was the karta of a hindu undivided family consisting of himself, his wife, and his four minor children. during the assessment years 1959-60 and 1960-61, the assessee, in his capacity as karta of the said family, spent rs. 9,529 and rs. 21,643, respectively, for the benefit of his wife and minor children. the hindu undivided family became disrupted on december 21, 1959, and in the family partition certain properties were allotted to the wife and minor children of the assessee. after the said partition, in the assessment year 1961-62, a sum of rs. 13,923 was spent by the wife and children from out of the properties allotted to them.2. the assessee filed separate returns for the assessment years 1959-60 and 1960-61, one in each year in his individual.....
Judgment:

Ramanujam, J.

1. The assessee in this case was the karta of a Hindu undivided family consisting of himself, his wife, and his four minor children. During the assessment years 1959-60 and 1960-61, the assessee, in his capacity as karta of the said family, spent Rs. 9,529 and Rs. 21,643, respectively, for the benefit of his wife and minor children. The Hindu undivided family became disrupted on December 21, 1959, and in the family partition certain properties were allotted to the wife and minor children of the assessee. After the said partition, in the assessment year 1961-62, a sum of Rs. 13,923 was spent by the wife and children from out of the properties allotted to them.

2. The assessee filed separate returns for the assessment years 1959-60 and 1960-61, one in each year in his individual capacity and another in his capacity as the karta of the Hindu undivided family. In his individual returns he did not include the expenditure incurred by him as karta of the family for the benefit of his wife and minor children. The said expenditure had, however, been included in the returns filed by him as karta of the Hindu undivided family. The original individual assessments for 1959-60 and 1960-61 were completed on December 31, 1959, and December 31, 1960, on a taxable expenditure of Rs. 3,749 and Rs. 1,724, respectively. The expenditure incurred by the assessee as karta for his wife and children was not included in his individual assessments, but the said expenditure had, however, been included in the assessments of the Hindu undivided family which was, however, declared not liable to expenditure-tax for those years.

3. Subsequent to the completion of the original individual assessments for the said two years, the assessee wrote on January 12, 1961, to the department claiming the benefit of recomputation of expenditure under Section 6(2) of the Expenditure-tax Act as amended by the Finance Act of 1959. In that letter the assessee wanted that for the purpose of calculating the average expenditure for the three years before the year 1959-60 the expenditure incurred for his wife and minor children should be taken into account. The Expenditure-tax Officer while accepting the claim of the assessee and recomputing the expenditure under Section 6(2) of the Act, reopened the individual assessments of the assessee for the two years in question under Section 16 of the Act on the ground that the expenditure incurred by the assessee as karta during the assessment years 1959-60 and 1960-61 for the benefit of his wife and minor children was omitted to be included in the taxable expenditure of the assessee in his individual assessments. The Expenditure-tax Officer included the sums of Rs. 9,578 and Rs. 21,634 in the taxable expenditure of the assessee for the years 1959-60 and 1960-61.

4. For the assessment year 1961-62, the assessee filed his individual returns showing a taxable expenditure of Rs. 3,407. This amount did not include the expenditure of Rs. 13,923 incurred by the assessee's wife and children from and out of the properties allotted to them in the family partition. The Expenditure-tax Officer, however, included this amount also in the taxable expenditure of the assessee on the ground that after the amendment made in 1959 the assessee's wife and minor children came within the definition of the word 'dependant' under Section 2(g) of the Act.

5. The assessee preferred appeals to the Appellate Assistant Commissioner against the above orders of the Expenditure-tax Officer in respect of all the three assessment years contending, (1) that the reopening of the original assessments for the years 1959-60 and 1960-61 under Section 16 of the Act was illegal, (2) that the inclusion of the expenditure incurred by the Hindu undivided family on the assessee's wife and minor children in the individual assessments of the assessee was illegal, and (3) that the inclusion of the expenditure incurred by the wife and minor children after the disruption of the Hindu undivided family in the individual assessment of the assessee was illegal. The Appellate Assistant Commissioner rejected all the said contentions and confirmed the assessment for all the three years.

6. The assessee preferred further appeals to the Appellate Tribunal reiterating the same contentions as had been urged before the Appellate Assistant Commissioner. As regards the first contention the assessee contended before the Tribunal that the expenditure incurred by the Hindu undivided family on the assessee's wife and children had been shown in the returns of the Hindu undivided family for the two years and that the Expenditure-tax Officer who was aware of the said expenditure was not justified in reopening the assessments on the basis of the letter of the assessee dated January 12, 1961, as there was no omission or failure on the part of the assessee nor was there any fresh information as contemplated in Section 16 of the Act. The Tribunal rejected this contention holding that the information contained in the returns filed by the Hindu undivided family could not he considered as information contained in the returns of the assessee himself and that, therefore, as the original returns filed by the assessee as an individual did not contain the information regarding the expenditure in question, the Expenditure-tax Officer should be taken to have become aware of the same only on the receipt of the letter after the completion of the original assessments on the assessee. The Tribunal also held that the information about the correct position of law would also amount to information within the meaning of Section 16 of the Act relying on the decision oi the Andhra Pradesh High Court in His Highness Prince Azam Jah v. Expenditure-tax Officer : [1965]55ITR230(AP) (A.P.).

7. With regard to the inclusion of the expenditure incurred by the Hindu undivided family on the assessee's wife and minor children in his individual assessment, the assessee had contended that the Hindu undivided family had an obligation to maintain his wife and children, that it was in discharge of that obligation that the Hindu undivided family had incurred the expenditure in question, that he himself was not under an obligation to maintain his wife and children so long as the Hindu undivided family was in existence and that, therefore, the expenditure in question should not be included in his individual assessments. The Tribunal rejected this contention also holding that even if the Hindu undivided family had an obligation to maintain the wife and minor children of the assessee, still, he, as an individual, was not absolved from his own personal obligation to maintain his wife and children and that, therefore, it should be taken that the expenditure incurred by the Hindu undivided family on the assessee's wife and children was in respect of an obligation of the assessee himself.

8. On the third question as to whether the expenditure incurred by the assessee's wife and children after the partition from and out of the properties allotted to them in the year 1961-62 is includible in the individual assessment of the assessee, the Tribunal held that under Section 2(g)(i) of the Act, as amended by the Finance Act of 1959, the word 'dependant' included the spouse or minor child of an individual irrespective of their dependence on the individual for support or maintenance and that the expenditure in question having been incurred by a person other than the assessee on the personal requirements of the assessee's dependants was liable to be included under Section 4(i) of the Act in the individual assessment of the assessee.

9. Aggrieved against the decision of the Tribunal in respect of all the assessment years the assessee sought a reference and, consequently, the following questions have been referred to this court for decision :

'(1) Whether, on the facts and in the circumstances of the case, the reopening of the original assessments for 1959-60 and 1960-61 by the Expenditure-tax Officer under Section 16 of the Expenditure-tax Act, 1957, was legal ?

(2) Whether, on the facts and in the circumstances of the case, the inclusion of the expenditure incurred by the Hindu undivided family for the benefit of the assessee's wife and minor children was properly includible in the individual assessments of the assessee for the years 1959-60 and 1960-61?

(3) Whether, on the facts and in the circumstances of the case, the expenditure incurred by the assessee's wife and minor children after the disruption of the Hindu undivided family was properly includible in the individual assessment of the assessee for the year 1961-62 ?'

10. The last question can easily be answered in view of the subsequent decision of the Supreme Court in H. H. Prince Azam Jha Bahadur v. Expenditure-tax Officer. In that case the Supreme Court, while considering the scope of Section 2(g)(i) and (ii), 3 and 4(ii), as amended by the Finance Act, 1959, expressed the view that where the assessee is an individual, the spouse or the minor child of the assessee, irrespective of whether the latter is dependent or independent of the assessee for support and maintenance would fall within the definition of 'dependant' and that the spouse or minor child simpliciter has to be treated as a dependant and it is not necessary that the spouse or the minor child should be wholly or mainly dependent on the assessee for support and maintenance. According to their Lordships of the Supreme Court the assessee in that case was liable to pay expenditure-tax after the Finance Act of 1959 on the expenditure incurred by his wife even though she had her own properties and assets and had substantial income therefrom from which the expenditure was met. Contrasting Section 2(g)(i) as it stood before the amendment and the said Section as it was substituted by the Finance Act of 1959, the Supreme Court expressed thus :

'If Section 2(g)(i) as it stood before the amendment is contrasted with the Section as it was substituted by the amendment, the intention of the legislature becomes obvious. Before the amendment 'dependant' meant, where the assessee was an individual, his or her spouse or child wholly or mainly dependent on the assessee for support and maintenance. After the amendment, Section 2(g)(i) underwent a complete change. The legislature stopped short of making the spouse or the minor child dependent on the assessee for support and maintenance and employed those words only for the new category of persons who came to be included, namely, any one who was neither the spouse nor the minor child of the assessee but was otherwise wholly or mainly dependent on him for support and maintenance. Thus, in the concluding part even major children of the assessee came to be included so long as they satisfied the conditions that they were wholly or mainly dependent on him. The argument that the amended definition is only intended to enlarge the categories of 'dependant' by adding another category cannot be sustained.'

11. When it was urged that it would be anomalous to take in wife and minor children who are not depending on the individual for their support and maintenance as coming within the definition of 'dependant' in Section 2(g)(i), that was met by the Supreme Court by saying :

'It does look somewhat anomalous and illogical that where the expenditure has been incurred by the wife and minor children who are altogether independent of the assessee and which has no connection with their being dependent on him or with any property transferred to them should be included in the expenditure of the assessee. The position would be similar where the wife is the assessee and the expenditure incurred by the husband comes to be included in computation of her liability to tax because the word used is 'spouse' in Section 2(g)(i). But it must be remembered that logic or reason cannot be of much avail in interpreting a taxing statute.'

12. Applying the principle laid down in the above decision, the wife and minor children of the assessee continued to be his dependants even after partition as per the definition under Section 2(g)(i) notwithstanding the fact that they are not factually depending on the assessee for support and maintenance. Therefore, the expenditure incurred by them from and out of the properties allotted to them at the partition has to be treated as an expenditure incurred by persons other than the assessee on the personal requirements of his dependants. We are, therefore, of the view that such expenditure has rightly been included under Section 4(i) of the Act in the individual assessment of the assessee. Therefore, the last question is answered in the affirmative and in favour of the revenue.

13. The first question deals with the scope of the powers of the Expenditure-tax Officer to bring to tax an expenditure which has escaped assessment under Section 16(b) of the Act. As stated earlier the assessee had shown in the returns filed by him as the karta of the joint Hindu family the expenditures in question as having been incurred by the family.

14. The Expenditure-tax Officer considered that return and took the said expenditure as that of the joint Hindu family, but left it unassessed as it was well within the exemption limit in the assessment years 1959-60 and 1960-61. The assessee did not include the said items of expenditure for the two years in his individual returns, as he had included the same in the returns filed by the Hindu undivided family. It is seen that the assessment on the Hindu undivided family and on the assessee as an individual were made on the same day, December 31, 1959, for the year 1959-60 and on different dates for the assessment years 1960-61. It is, therefore, clear that the items of expenditure in respect of the two years were before the assessing authority in the returns filed by the Hindu joint family though it was not shown in the feturns filed by the assessee in his individual capacity. The Expenditure-tax Officer had, in fact, considered the said two items and treated them as the expenditure of the Hindu undivided family. He has, however, chosen to invoke his powers under Section 16(b), after the assessee brought to his notice that he is entitled to the benefit of Section 6(2) by his letter dated January 12, 1961, on the basis that the items of expenditure in question have escaped assessment during the relevant years. The question is whether on these facts he is entitled to invoke his powers under Section 16(b).

15. The learned counsel for the assessee contends that the said items of expenditure having been the subject of consideration before the assessing authority and having been treated as the expenditure of the Hindu joint family, the same authority cannot treat it as an escaped expenditure based on a change of opinion on his part and that it cannot be said that the authority became aware of this expenditure only later on the receipt of the said letter from the assessee, as a consequence of which the escapement was found out.

16. The revenue, however, contends that though the Expenditure-tax Officer was aware of the two items of expenditure in question while dealing with the assessments relating to the Hindu undivided family, the same were not before him in connection with the individual assessments of the assessee as they were not shown in his relative returns and that, therefore, the Expenditure-tax Officer should be deemed to have no knowledge of the said items of expenditure so far as the individual assessments are concerned. It was also contended on behalf of the revenue that the subsequent knowledge about the correct legal position as to the taxability of the expenditure in question will amount to information within the meaning of Section 16(b) of the Act.

17. The scope of Section 34(1)(b) of the Indian Income-tax Act, 1922, which corresponds to Section 16(b) of the Expenditure-tax Act came up for consideration recently before the Supreme Court in Bankipur Club Ltd. v. Commissioner of Income-tax, . In that case the assessee, a members' club, filed 'nil' returns claiming that it was not liable to pay income-tax. In that return it had shown certain receipts as guests charges from its members. After considering the return the Income-tax Officer came to the conclusion that the assessee was not liable to pay any tax in respect of the amount realised by it from its members. Subsequently, the Income-tax Officer issued notices to the assessee under Section 34(1)(b) proposing to reassess and bring to tax the amounts received by the assessee from its members as guests charges on the ground that these amounts are liable to be taxed in its hands. The said reassessment proceedings were challenged. Their Lordships of the Supreme Court held that since it was not the case of the Income-tax Officer that he did not come to know of all the relevant facts when he made the original assessments or that at the time he made those orders he was not aware of the true legal position, he was incompetent to initiate proceedings under Section 34(1)(b). According to their Lordships the information contemplated by Section 34(1)(b) of the Indian Income-tax Act, 1922, must be information which the Income-tax Officer receives after he makes the original order of assessment sought to be reopened. In Salem Provident Fund Society Ltd. v. Commissioner of Income-tax : [1971]82ITR831(SC) (S.C.), this court expressed the view that 'information' for the purpose of Section 34(1)(b) need not be wholly extraneous to the record of the original assessment and that a mistake apparent on the face of the order of assessment would constitute 'information' and that whether someone else gave that information to the Income-tax Officer or he informed himself from the records was immaterial.

18. Applying the above decisions to the facts of this case, the Expenditure-tax Officer cannot be said to have come across these items of expenditure subsequent to the original individual assessments on the assessee. Admittedly the items of expenditure were before him and he considered them as expenditure of the Hindu undivided family though it is in a different proceeding. The Tribunal's view that as the original returns filed by the assessee as an individual did not contain the information regarding the expenditure in question and as the return filed by the Hindu undivided family could not be considered as information contained in the return of the assessee himself, the Expenditure-tax Officer was justified in reopening the assessments on the basis of the assessee's letter dated January 12, 1961, which specifically brought to his notice the expenditure in question with reference to his individual assessments does not appear to be correct. The material question is whether the Expenditure-tax Officer was aware of the items of expenditure in question at the time of the original assessment, and, if he was so aware, the source from which that information came is immaterial. Admittedly, the Expenditure-tax Officer, in this case, was aware of the said two items of expenditure and he considered them to be the expenditure of the Hindu undivided family. The mere fact that the assesses did not show it in his individual returns but showed it in the returns filed as the karta of the Hindu undivided family cannot make the contents of the assessee's letter dated January 12, 1961, fresh information in relation to his individual assessments. It is not in dispute that it is the same officer who made the assessments on the assessee both in his individual capacity and in his capacity as the karta of the Hindu undivided family. The fact that the Expenditure-tax Officer, considered the expenditure as an expenditure of the family will amount to a finding that the same is not his individual expenditure,. In our view the letter in question cannot constitute a fresh information.

19. The Tribunal has also given an additional reason to sustain the power of the Expenditure-tax Officer to reassess under Section 16(b). It has stated that the decision in His Highness Prince Azam Jah v. Expenditure-tax Officer : [1972]83ITR92(SC) will constitute a fresh information. That case held that after the amendment of 1959, the term 'dependant' includes in the case of an individual the spouse and minor child even if they were not dependent on him or her and that, therefore, even if the expenditure in question was incurred out of the income from the individual properties of such persons, the expenditure has to be included in the assessment of the husband or wife, as the case may be, under Section 4(i), The Tribunal appears to be of the view that the Expenditure-tax Officer, became aware of the true legal position only as a result, of that decision. But a perusal of the reassessment orders does not show that the occasion for the reassessment is the above decision. Reassessment orders solely proceed on the basis that Section 2(g) as amended has widened the scope of the definition of the word 'dependant' and that the expenditure incurred by the Hindu undivided family on the assessee's wife and minor children will have to be treated as one incurred by a person other than the assessee on the personal requirement of his dependants so as to attract Section 4(i). It is to be seen that the amendment of Section 2(g) came into force under the Finance Act of 1959 long before the original assessments sought to be revised were made and the Expenditure-tax Officer should be deemed to have applied the provisions of the Act as amended when he considered the expenditure incurred for the assessee's wife and minor children as the expenditure of The Hindu undivided family. The reassessment orders show that the Expenditure-tax Officer has changed only his opinion as to the assessability of the expenditure in the hands of the assessee as an individual. When he accepted the returns filed by the assessee showing the expenditure as that of the Hindu undivided family, it can only be on the basis that the assessee's wife and minor children are his dependants but that the expenditure had not been incurred in respect of his obligation to them. In the reassessment proceedings also he has chosen to treat them as dependants. Therefore, it is not a case of the Expenditure-tax Officer becoming aware of the true legal position after the original assessment orders as to who are the dependants, but it is a case where he has come to a different opinion on the taxability of the expenditure on the same set of facts. In our view, the Expenditure-tax Officer cannot seek to revise his own view purporting to exercise the power under Section 16(b) and the reopening of the original assessments by him under that Section is not legal. The first question is, therefore, answered in the negative and against the revenue.

20. The second question involves the true scope and effect of Section 4 read with the definition of 'dependant' in Section 2(g). Section 4 and Section 2(g) as they originally stood and as amended by the Finance Act of 1959 are as follows:

Section as it stood prior to amendment. Section as it stands after the amendment by the Finance Act, 1959.

' 2(g) ' dependant ' means -2(g) ' dependant ' means - (i)where the assesseeis an individual, his orher spouse or child whollyor mainly dependent onthe assesseefor supportand maintenance ;

(i)where theassessee isan-individual, hisor her spouse or minor child, and includes any person wholly or mainlydependent on the assessee for support and maintenance ;

(ii)where theassessee isa Hindu undivided family -

(ii) wherethe assesseeis a Hinduundivided family -

(a)every coparcenerother than the karta ; and

(a)everycoparcener otherthan the karta ; and

(b)any other member of the family whounder any law or order or decree of a court, is entitled to maintenancefrom the joint family property.

(b)any other member of the family who under any lawor order or decree of a court, isentitled to maintenance from the joint family property.

4.Unless otherwiseprovided in section 5, the following amounts shall be included incomputing the expendiure of an assessee liable to tax under this Act,namely : -

4.Unless otherwise provided in section5, thefollowing amountsshall be included in computingthe expenditure of an assessee liable to tax under this Act, namely :-

(i)any expenditure incurred,whether directly or indirectlyby any person other than the assessee in respect of any obligation or per- sonal requirement of the assessee or any of his dependants which, but for the expenditure having been incurred by that other person, would have been incurred by the assessee, to the extent to which the amount of all such expenditure in the aggregate exceeds Rs. 5,000 in any year

(i)any expenditureincurred, whether directly or indirectly by any person other thanthe 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 ;

(ii)any expenditure incurred by any dependant of the assessee for the benefit of the assessee or of any of his dependants out of any gift, donation or settlement on trust or out of any other source made or created by the assessee, whether directly or indirectly.

(ii)where the assessee is an individual, any expenditure in- curred by any dependant of the assessee, and where the assessee is a Hindu undivided family, any expenditure incurred by any depen- dant from or out of any income or property transferred directly or indirectly to the dependant by the assessee.

Explanation. - For the removal of doubts it is hereby declared that nothing contained in this section shall be deemed to require the in- clusion in the expenditure of the assessee of any expenditure incur- red by any other person for or on behalf of the assessee by way of customary hospitality or which is of a trivial or inconsequential nature.

Explanation. - For the removal of doubts it is hereby declared that nothing contained in this section shall be deemed to require the in elusion in the expenditure of the assessee of any expenditure incur red by any other person for or on behalf of the assessee by way of customary hospitality or which is of a trivial or inconsequential nature. '

21. On behalf of the revenue it is urged that the two items of expenditure incurred by the family for 1959-60 and 1960-61 for the wife and minor children of the assessee was in respect of a legal obligation of the assessee to maintain his wife and minor children which but for the expenditure having been incurred by the Hindu undivided family would have been incurred by the assessee and that, therefore, the said amounts spent by the Hindu undivided family should be included in computing the expenditure of the assessee in the assessment years in question. It is also urged by the revenue that in any event the incurring of an expenditure by the Hindu undivided family for the benefit of the wife and minor children of the assessee will have the effect of discharging at the same time two obligations, one of the Hindu undivided family and another of the assessee, and as such Section 4(i) will stand attracted in this case.

22. The assessee, however, contends that the expenditure has been incurred by the Hindu undivided family in discharge of its own obligation to maintain the wife and minor children of the assessee who are members of the family, and that such an expenditure cannot be said to have been incurred in respect of any obligation of the asscssee, even though he may also be under an obligation to maintain his wife and minor children in default of the Hindu undivided family maintaining them. According to the assessee, the prime motive in incurring the expenditure should be the relevant consideration, and if the expenditure has been incurred by the Hindu undivided family in respect of its own obligation, the same expenditure cannot be treated to have been incurred in respect of an obligation by the assessee in respect of the same individuals. It is also contended by the assessee that the incurring of an expenditure by the Hindu undivided family in respect of its obligation to its members will have to be assessed in the hands of the Hindu undivided family under Section 3 and that the same expenditure cannot be brought in under Section 4{i) as an expenditure incurred in respect of an obligation of the assessee, and that it is not open to the revenue to tax the same expenditure in the hands of both the individual and the Hindu undivided family. Therefore, the main question is to nnd out whether the expenditure by the family for meeting the expenses of its members can be taken to be that of the karta or the individual member who may also be under an obligation to maintain the members.

23. In Commissioner of Expenditure-tax v. Darshan Surendra Parekh : [1968]69ITR683(SC) the converse position was considered. In that case a karta of the Hindu undivided family incurred certain expenditure out of his separate assets for his own purposes. The question was whether such an expenditure fell either under Section 4(i) or under Section 4{ii), The Supreme Court took the view that the expenditure not being related to any obligation of the dependants in their capacity as dependants did not fall within the terms of Section 4(i) before it was amended. It was also held in that case that where a trust is created out of joint family assets for the benefit of the children of the karta, if the trustees incurred expenditure out of the income from the assets for their education, maintenance, etc., the case would clearly^fall within the terms of Section 4(i), for, in such a case, the expenditure would be deemed to be incurred by a person other than the Hindu undivided family for the dependants to discharge an obligation of the family. The relevant observations are these:

'Expenditure incurred out of the family estate by the karta for and on behalf of the family is undoubtedly expenditure by the Hindu undivided family and taxable accordingly. Expenditure incurred by a coparcener or other member of the family out of his separate property is liable to be included in the taxable expenditure of the family, only if it is incurred in respect of the obligations of the family, or for the personal requirements of the coparceners or other members of the family, which if not incurred would have been incurred by the family. But every item of expenditure incurred by a coparcener or other member of the Hindu undivided family for his own purposes out of his separate property is not expenditure in respect of an obligation of the Hindu undivided family ; nor is it expenditure to meet the personal requirements of the coparceners or other members of the family. For an item to be included under Section 4(i) within the taxable expenditure of a Hindu undivided family, it must be incurred for the collective obligation of the family or for the separate personal requirements of the coparceners or other members of the family in their capacity as members of the family. The karta of a Hindu undivided family assessed to tax under the Expenditure-tax Act is by the express words of Section 2(g)(ii)(b) not a dependant; and when expenditure is incurred by a karta out of his separate estate for his own purposes, even though the family would have been liable to meet that expenditure if the expenditure were not incurred, the expenditure will, prima facie, not be liable to be included in the taxable expenditure of the family.'

24. To find out whether the expenditure in question has been incurred in respect of an obligation of the Hindu undivided family or in respect of the assessee's personal obligation we have to see what are their respective obligations, In Subbayya v. Ananda Ramayya, I.L.R. [1930] Mad. 84 : A.I.R. 1929 Mad. 586 it was held that the right of a daughter to her marriage expenses and maintenance was based on her right to interest in the joint family property and not based on the natural obligation of the father to maintain his children, and that so far as the joint family property is concerned, the obligation is that of all the members of the family, and it is not that it was originally the obligation of the father and through him it was extended to the whole family. In Cherutty v. Nangamparambil Ravu : AIR1939Mad513 a Division Bench of this court considered the question as to whether a daughter of a coparcener is entitled to maintain a suit for maintenance against the joint family irrespective of the father's personal obligation. After reviewing the case law the Bench expressed the view that an unmarried daughter is entitled to maintain a suit for her maintenance against all the members of her family, that the liability of the joint family to maintain an unmarried daughter was not based on the father's personal obligation to maintain her, that the obligation fell upon the joint family independently of the father's obligation and that the statement that a daughter cannot sue the family but must proceed against her own father is unsupported by any authority. The learned judges have purported to follow the decision of the Full Bench in Subbayya v. Ananda Ramayya.

25. The above decisions indicate that the joint family has an independent obligation to maintain the members of the family. It is true that there is a personal obligation on the assessee to maintain his wife and minor children arising from the very existence of the relationship and quite independently of the possession of any property, ancestral or acquired. It cannot be disputed that the maintenance of a wife by her husband or of minor children by their father is a matter of personal obligation which attaches from the moment of marriage or birth, as the case may be. It has, therefore, to be taken that both the Hindu undivided family as well as the assessee are under an obligation to maintain the wife and minor children of the assessee, the obligation of the family being dependent on the existence of joint property and the personal obligation of the assessee being independent of his possession of any property. It can, therefore, be said that when the Hindu undivided family incurred the expenditure for the wife and minor children of the assessee it had the effect of discharging two obligations, one of the Hindu undivided family and another of the assessee. The question is whether for that reason both the Hindu undivided family as well as the assessee could be taxed on the same expenditure, the former under Section 3 and the latter under Section 4 of the Act. In our view when the expenditure in question was incurred by the Hindu undivided family it was primarily for discharging its own obligations, though it may have the indirect effect of discharging the assessee from his personal obligation. When the Hindu undivided family expended the said two items it should be taken to be in respect of its own obligation to the assessee's wife and children who are the members of the Hindu undivided family, and not in respect of a personal obligation of the karta in his individual capacity.

26. The learned counsel for the revenue, however, refers to certain observations of the Supreme Court in Commissioner of Expenditure-tax v. Darshan Surendra Parekh at page 690, as supporting his stand. In that case while considering the taxability of an expenditure of Rs. 10,321 incurred by the trustees out of the trust estate of the children, the Supreme Court stated thus:

'The Tribunal has in the statement of the case stated that in accordance with the terms of the trust settlement, the 'trustees had paid, spent, or applied the income in the account year 1957.' That finding of the Tribunal is vague. But the position in law in any one of the three alternatives is plain. If the trustees incurred the expenditure for the education, maintenance, advancement in life, or for religious ceremonies, the case would clearly fall within the terms of Section 4(i), for there can be no doubt that the expenditure would be deemed to be incurred by a person other than the assessee--the Hindu undivided family, for the dependants to discharge the obligation which the family was bound to discharge. If it be held that the expenditure was incurred by or on behalf of the children after it was received from the trustees, the case, in our judgment, would even if it be assumed that it does not fall within Clause (i), fall within the terms of Clause (ii). The trusts were created by Surendra out of the family fund ; the children were dependants within the meaning of Section 2(g); and the expenditure was incurred for the benefit of the dependants of the family. We are unable to agree with the High Court that the dependant who incurs expenditure, to bring the case within the terms of Section 4(ii), must be other than the dependant who obtains the benefit of that expenditure.'

27. We are not able to say that this passage in any way supports the revenue. In the case before the Supreme Court the main question was whether the expenditure incurred by the trustees of the estate of the children would fall under Section 4(ii) and that cannot be construed as an exposition of the true scope and effect of Section 4(i). The learned counsel for the revenue points out that the Supreme Court considered the expenditure incurred by the trustees of the estate of the children as one incurred by a person other than the Hindu undivided family though the expenditure was incurred in respect of an obligation cast on the trustees by the trust deed, and that the observations referred to above will support his proposition that the expenditure incurred by a person in respect of his obligation can be treated as one incurred by another if it has got the effect of discharging the latter's obligation as well. But, in.our view, the above observations cannot be construed in that light. In the case before the Supreme Court when the expenditure was incurred by the trustees of the children they cannot be taken to have incurred the same in discharge of an obligation on their part, but they should be deemed to have incurred the expenditure as agents or on behalf of the children. In such an event the expenditure should be deemed to have been incurred by the children for their own benefit, and there is no question of the expenditure being incurred in respect of any obligation on the part of the children to maintain themselves. We are, therefore, of the view that the observations set out above do not support the stand taken by the revenue.

28. In the view we have taken of the true scope of Section 4(i), the further point as to whether the same expenditure can be taxed both in the hands of the Hindu undivided family and in the hands of the karta will not arise.

29. The result is that the second question is also answered in the negative and against the revenue. There will, however, be no order as to costs.


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