The question before us is :
'Whether in respect of the following three sums, viz., Rs. 8,434 being income assessable under the head property, Rs. 998 under business and Rs. 3,755 under other sources (quarries and fisheries), the petitioner was rightly taxed as an individual or whether he should have been taxed as the representative of a Hindu undivided family.'
The assessee, the Raja of Bobbili is the present holder of the impartible estate of Bobbili. During the previous year (April 1, 1934 to March 31, 1935) he was also the Chief Minister to the Government of Madras. He is, besides, the managing member of a Hindu undivided family of which he and his brother are the senior coparceners. For the assessment year 1935-36 his total income from all sources liable to income-tax was ascertained to be Rs. 64,083 made up of the following items :-
2. Interest on securities
4. Business money-lending (Rs. 998) and Kerosene oil Agency (Rs. 525)
5. Other sources: Dividends (Rs. 540) and quarries and fisheries (Rs. 3,755)
He was assessed both to income-tax and super-tax, super-tax being levied as on an individual. With the exception of certain amounts it was admitted that the Raja was rightly assessed as an individual. The sums about which there is dispute are Rs. 8,436 from property, Rs. 998 from money-lending business and Rs. 3,755 from other sources (fisheries and quarries). These sums are income derived from the impartible estate. The assessees contention is that they are income of the joint family and therefore the joint family should have been assessed as such in respect of them and not the Raja as an individual.
The point for consideration is whether for purposes of income-tax the income from the impartible estate is income of the joint family of which the Raja is the manager; and in this connection certain principles with regard to impartible estates must be stated : and they are that from the very nature of the estate there can be no right of partition and that except in Madras no coparcener can restrain alienations by the head of the family though the right to maintenance and of survivorship may exist. The distinction between an impartible estate and a joint family estate has now been made clear in a number of decisions. What has now to be considered is the income from such an estate, the Income Tax Commissioners claim being that this income must be regarded for the purposes of income-tax as the income of an individual and in support of his claim a number of cases have been cited. Amongst those cases which in our opinion lend considerable support to the Income Tax Commissioners contention is Shibaprasad Singh v. Prayag Kumari Debee I.L.R. 59 Cal. 1399, a decision of the Privy Council. The litigation in that case related to the succession to the estate of one Raja Durga Prasad who died childless survived by three widows who were the plaintiffs in the suit and the respondents in the first appeal. The defendant Shibaprasad Singh was a collateral relative of the deceased Raja. The parties were governed by the Mitakshara Law. The chief item of property was the impartible estate but the Raja died possessed of considerable other immovable property, also of cash deposits in banks, jewellery and other movable property. Upon the Rajas death the defendant took possession of the impartible estate and also other property of the Raja claiming that it passed to him by survivorship. The plaintiffs alleged that the family had ceased to be joint, and claimed the estate under Hindu Law, claiming the other immovable and movable property as self-acquisitions. Among the questions of law dealt with was whether the holder of an impartible estate can incorporate with it property either moveable or immoveable so as to make the property descend according to the law of primogeniture governing the estate. It was held that the blending of income from self-acquired property with income from an impartible estate raises no presumption of an intention to incorporate but that intention can be indicated in other modes and that moveable property cannot form an accretion to an ancestral impartible estate and even the income of an estate of that nature is not an accretion to it. In the course of the judgment of their Lordships Board a large number of cases touching the question are referred to and examined; and in drawing a distinction between an impartible estate and the ordinary joint family estate on page 1413 it is stated :
'Impartibility is essentially a creature of custom. In the case of ordinary joint family property, the members of the family have (1) the right of partition (2) the right to restrain alienations by the head of the family except for necessary (3) the right of maintenance and (4) the right of survivorship. The first of these rights cannot exist in the case of an impartible estate, though ancestral, from the very nature of the estate. The second is incompatible with the custom of impartibility as laid down in Sartaj Kuaris case I.L.R. 10 All. 272 and the First Pittapur case I.L.R. 22 Mad. 283 and so also the third as held in the Second Pittapur case I.L.R. 47 Mad. 778. To this extent the general law of the Mithakshara has been superseded by custom, and the impartible estate, though ancestral, is clothed with the incidents of self-acquired and separate property. But the right of survivorship is not inconsistent with the custom of impartibility. This right therefore still remains, and this is what was held in Baijnaths case I.L.R. 43 All. 228. To this extent the estate still retains its character of joint family property, and its devolution is governed by the general Mitakshara law applicable to such property.'
The important words affecting the question here are those which state that 'impartible estate, though ancestral, is clothed with the incidents of self-acquired and separate property.' After dealing with the question of whether the family had ceased to be joint their Lordships consider on page 1414, the second question namely whether it is competent to the holder of an ancestral impartible estate to incorporate with the estate other properties belonging to him, and a number of decisions are referred to, the first of them being Parbati Kumari Debi v. Jagadish Chunder Debal I.L.R. 29 Cal. 433 which was a case relating to succession to an ancestral impartible estate where some property had been purchased on behalf of the last holder out of the saving of the estate. It was contended that this property had been incorporated with the estate and therefore passed with it. The evidence was that the rents of the estate were collected by the same servant and the collection papers were kept with the papers of the estate and it was held that these facts were not adequate for holding that the Raja intended to incorporate the property with the ancestral estate for the purposes of his succession and that the property must therefore follow the rule of Mitakshara as to self-acquired property. Next Janaki Prasad Singh v. Dwaraka Prasad Singh I.L.R. 35 All. 391 is cited. That also relates to immovable property and referring to the previously cited case, it was held that the question whether properties acquired by an owner become part of the ancestral estate for the purpose of his succession depends on his intention to incorporate the acquisitions with the original estate. Another case referred to is Jagadamba Kumari v. Wazir Narain Singh I.L.R. 2 Patna 319 which was a case relied upon by Mr. Patanjali Sastri in support of his argument and to which a further reference will be made in this judgment. The actual point of the decision in that case was that where the estate is impartible no such presumption as to an intention to incorporate can be drawn from the blending of the income of self-acquired property with the income of the estate as in the case of ordinary joint family estate. The case does not decide that, if the estate is impartible, there can be no incorporation at all. On the contrary, there is an implication, and that too a strong one, that there can be an incorporation at least as regards immovable property. Several other cases are also referred to. On page 1418 the distinction between the blending of income in the case of a member of a joint family and a member of it who is the holder of an ancestral impartible estate is stated as follows :
'If a member of a joint family blends the income of his self-acquired property with the income of the joint family property, it raises a presumption of an intention to incorporate the self-acquired property with the joint family property : Rajani Kanta Pal v. Jagan Mohan Pal I.L.R. 50 Cal. 439. But no such presumption can arise if a member of a joint family, who is the holder of an ancestral impartible estate mixes the income of his self-acquired property with the income of the estate.'
Having dealt with the question of the incorporation of immovable property purchased out of the income of an impartible estate and having held that it can form an accretion to the joint family estate provided the intention on the part of the holder of the impartible estate is clearly proved, their Lordships proceed to deal on page 1422, with movable property as distinguished from immovable property and there say : 'None of these considerations, however, apply to movable property. Such property, their Lordships think, cannot form an accretion to an ancestral impartible estate.'
And here follow the very important words :
'The income even of such an estate is not an accretion to the estate. As was said by the Board in Jagadamba Kumari v. Wazir Narain Singh I.L.R. 2 Pat. 319 'the income when received is the absolute property of the owner of the impartible estate'. It does not attach to the estate as does the income of an ordinary ancestral estate attach to that estate. The conclusion to which their Lordships have come on this part of the case is that while immovable property can be incorporated with an impartible estate, movable property cannot.'
It will be convenient now to examine the case reported in I.L.R. 2 Pat. 319, namely, Rani Jagadamba Kumari v. Wazir Narain Singh, another decision of the Privy Council. There it was held that the income of an impartible joint estate is not so affected by its source that it should be assumed to form an accretion to the estate and further as the holder is entitled to the whole of the income, the principle applicable to an ordinary joint family that self-acquired moneys are to be regarded as joint family property if mixed with the moneys of the joint family, does not necessarily apply to property acquired by the holder of an impartible estate out of the income.
In that case, the deceased holder of an impartible estate had applied savings out of the income to purchasing immovable properties and making loans, the rents and interest being received by the manager of the estate and treated in his books as part of the income of the estate and it was held that the property so acquited had not become part of the impartible eatate but remained the separate it was held that the property so acquired had not become part of the importible estate but remained the separate property of the deceased holder. One question raised, namely, whether movable property can ever be treated as an accretion to immovable property, about which their Lordships expressed considerable doubt has since been set at rest by the decision of their Lordships in Shibaprasad Singh v. Prayag Kumari Debee I.L. R. 59 Cal. 1399 already referred to,
Lord BUCKMASTER in delivering the judgment of their Lordships Board on page 325 states as follows :
'Originally the estate was in debt, and as there is no evidence of any acquisition of property from other sources, it follows that all the estate possessed by the Raja, other than the impartible raj was derived from the income of the raj itself.'
In the end this income produced very considerable property. There were certain villages, certain mortgages, usufructuary and otherwise, sums due on bonds and decrees, Government Promissory notes to the extent of two lakhs, and other movable and immovable properties. With the exception of the Government Promissory notes the whole of these have been awarded to the plaintiff upon the ground that they represented an accretion to the estate and descended with it. Their Lordships think that this conclusion is wrong and that its error is due to the idea that the produce of the impartible estate naturally belongs to and forms an accretion to the original property. In fact when the true position is considered there is no accretion at all. The income when received is the absolute property of the owner of the impartible estate. It differs in no way from property that he might have gained by his own effort or that had come to him in circumstances entirely dissociated from the ownership of the raj. It is a strong assumption to make that the income of property of this nature is so affected by the source from which it came that it still retains its original character.
It is possible that this confusion is due to the consideration of the position with regard to an ordinary joint family estate. In such a case, the income, equally with the corpus, forms part of the family property, and if the owner mixes his own moneys with the moneys of the family as for example by putting the whole into one account at the Bank, or by treating them in his accounts as indistinguishable, his own earnings share with the property with which they are mingled, his own earnings share with the property with which they are mingled, the character of joint family property : but no such considerations necessarily apply to the income from impartible property.'
These two cases and Parbati Kumari Debi v. Jagadish Chunder Debal 29 Cal. 433 are the only three Privy Council decisions where this question of income from impartible estate has been considered. It appears clearly from these decisions that such income is in no respect different from the income derived the personal exertions of the holder of the impartible estate or his other self-acquisition and this income comes to him because he is the holder of the impartible estate. Why should this income be treated for the purposes of income-tax differently to his income arising from his salary as a Minister in respect of which he is assessed under Section 3 as an individual. In addition to these three Privy Council decisions, there is a decision of the Patna High Court which is directly in point, viz., Sri Sri Raja Shiva Prasad Singh v. The Crown 4 Pat. 73. There it was held that the Finance Act of 1922, which, for the purpose of assessing super-tax, allows a larger deduction from income in the case of a Hindu joint family than in the case of an individual, contemplates that that larger deduction shall be made only in a case of income of an undivided family in which all the coparceners are interested, and not in the case of an impartible estate where the income is the sole property of the holder for the time being. On page 88 DAWSON MILLER, C.J., says :-
'The income of the estate is that of the incumbent for the time being, nor does the fact that he is bound to maintain his sons entitle him to treat the income as that of the undivided family. It is essentially his income and I so hold. The Finance Act contemplates the larger deduction for purposes of super-tax only in a case where the income is that of the undivided family in which they are all jointly interested and not in the case of an impartible estate where the income is the sole property of the holder for the time being'.
The latest decision of the Privy Council in Collector of Gorakhpur v. Ram Sunder Mal (56 All. 468) does not touch this question and what was decided there was that the right of the junior members of the family to maintenance out of an ancestral impartible estate is based upon their joint ownership and not custom. It does not say that the income of an impartible estate is not the income of the holder for the time being or that the latter is bound in law to apply the income or any portion thereof towards maintenance of the junior members. The contention of the assessee that this income falls to be assessed as that of a Hindu undivided family is founded upon the words of Section 14 of the Income Tax Act which reads as follows :
'The tax shall not be payable by an assessee in respect of any sum which he receives as a member of a Hindu undivided family'.
The object of this exemption is to save double taxation and therefore where the Hindu undivided family has been assessed under Section 3 in respect of its income a member of it is not to be assessed again individually. It is argued that the assesses here, who is admittedly a member of a Hindu undivided family, has received the income in question as such member, that he is therefore exempt from an individual assessment and that the words of the section themselves therefore negative the income-tax authorities contention, and further assistance is sought by reference to decisions both of this High Court and other High Courts. Taking this High Court first, there is Commissioner of Income Tax v. Zamindar of Chemudu 57 Mad. 1023 where it was held that a sum received as maintenance by an assessee as the brother of the last holder of an ancestral impartible estate entitled under the law to receive maintenance out such estate is a sum received by him as a member of a Hindu undivided family within the meaning of Cl. (1) of S. 14 of the Indian Income-tax Act and that the right to maintenance which the son of a zamindar still possesses is not the creature of custom but it is an incident to the ordinary joint family property which has been left untouched by custom despite its encroachment on the other incidents, i.e., he receives the maintenance by reason of his status. As RAMESAM, J., who delivered the judgment of the Full Bench on page 1027 says :-
'The question is whether the assessee received his payment as a member of a Hindu undivided family. Undoubtedly he does receive this payment of Rs. 6,000 because he is a member of the undivided Hindu family.'
It is different in the case of the assessee here. It is true that he is a member of a Hindu undivided family but he receives nothing from the family. The income is received by him as the holder of the impartible estate and it cannot be said that he receives it as a member of a Hindu undivided family. The income is his and the junior members have no right therein. Kishen Kishore v. Commissioner of Income-tax 14 Lah. 255 was also cited for the assessee. What was decided in that case was that there is no legal sanction for the proposition that an estate which is governed by the rule of primogeniture cannot belong to an undivided Hindu family but must be the sole property of the person who has succeeded to it by the rule of primogeniture. This decision, however, does not touch the question in point here. It is not disputed that the corpus belongs to the undivided family. The question is as regards the income; and if in this case it is assumed that the income from an impartible estate means the joint family income, then that is clearly contrary to what was decided in Jagadamba Kumari v. Wazir Narain Singh, Parbati Kumari Debi v. Prayagkumari Debee and to none of these cases is any reference made; and we must respectfully dissent from that view. In Commissioner of Income-tax, Bihar and Orissa v. Maharaja Visheswar Singh 14 Pat. 785 it was held that S. 14(1) of the Income-tax Act applies only to sums received by a member of a Hindu undivided family out of income to a share in which he has a vested right, that is to say, sums which he receives from the joint income of the family and that a sum which he receives from the joint income of the family and that a sum received by an assessee because he is a member of an undivided family does not stand on the same footing as a sum received by him as a member of the family within the meaning of S. 14(1) of the Act. It is contended that this cast assists the assessee because it shows that the income is still the joint income of the family. But the assertion of the assessee that the allowance was paid out of joint family property was not controverted in that case and as stated in the leading judgment the court had not to consider the nature of the income from the impartible estate in the hands of the holder. In our view, the junior member receives maintenance because he is entitled to share in the corpus and the holder of the impartible estate is bound to maintain the junior members of the family and no useful purpose will be served by a reference to other cases as none of the cases cited on behalf of the assessee, in our opinion, destroy the force of those relied upon by the Commissioner of Income Tax. We hold, therefore, that the assessee was rightly assessed in respect of his income as an individual. The question propounded is answered accordingly. The assessee will pay Rs. 250 costs to the Commissioner of Income Tax.
Reference answered accordingly.