TMI Blog1968 (11) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... s?" The assessee, Rajah of Challapalli, was assessed to expenditure-tax for the years 1958-59 to 1961-62, for which the relevant accounting years were the financial years immediately preceding those years. While so assessing him, the Expenditure-tax Officer included sums of Rs. 15,439, Rs. 18,080, Rs. 14,930 and Rs. 14,750, respectively, in the four accounting years in question, being expenses incurred by one of his sons, Sri Mallikarjuna Prasad, as expenditure of the assessee's family for the said years. The assessee contended that his son had his own sources of income and that, though the money was defrayed in the first instance by the assessee, it was subsequently debited to the son's account, and, as such, the inclusion was not justified. It was found that the karta of the family, Sri Sivarama Prasad, the assessee, was the holder of the estate of Challapalli, an impartible estate, within the meaning of the Madras Impartible Estates Act, 1904, that the said estate vested in the Government of Madras under the Estates (Abolition and Conversion into Ryotwari) Act, 1948, as from September 7, 1949, and as a result of such vesting, the Government of Madras was under a liability to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the years 1960-61 and 1961-62, pointed out that under section 4(ii) read with section 19 of the Act, the expenditure would be taxable in the hands of the family, even if met by the individual member out of the assets allotted to him at a partial partition. The Appellate Assistant Commissioner in appeal, however, set aside the order of the Expenditure tax Officer including these amounts, on the ground that section 4(ii) is inapplicable, and, in that view, deleted the expenditure incurred on foreign education. The Appellate Tribunal confirmed the order of the Appellate Assistant Commissioner. Before us, the arguments which have been advanced by the learned advocate for the department, Sri Anantha Babu, proceeded on similar lines as those addressed before the Appellate Assistant Commissioner and the Appellate Tribunal. Reliance, however, was placed on the provisions of section 4(i) of the Act apart from section 4(ii) which alone was considered by the income-tax authorities. He also cited a decision of their Lordships of the Supreme Court in Commissioner of Expenditure-tax v. Darshan Surendra Parekh. But before we refer to the relevant provisions of the Act, it is necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dents of joint family property, which still sticks on to the joint family impartible estate is the right of survivorship which, of course, is not inconsistent with the custom of impartibility. For the purpose of devolution of the property, the property is assumed to be joint family property and the only right which a member of the joint family acquires by birth is to take the property by survivorship but he does not acquire any interest in the property itself. " From this statement of law, it is apparent that no member of the joint family has any right in praesenti in an impartible estate, except the holder thereof; thus the estate is considered to be joint family property only for the purpose of devolution, but no member of the joint family acquires any right by birth. Almost every incident of a joint Hindu family is non-existent either in respect of commensality, acquisition of right by birth, right to partition or joint possession or enjoyment, except, as we have said, the right of survivorship in respect of devolution of property. This concept as established by the case law has been recognised by the Estates Abolition Act in section 45(1) while making certain provisions relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore a Bench of the Madras High Court in Subramania Iyer v. Kutty Raja, namely, that the share that was given to the sons under section 45(6) was compensation of their chance of succession to the estate and not as a share in any joint family asset, and that, therefore, it could not be held that by reason of section 45(6) there had been a partition between the holder of the impartible estate and his sons, and that even if by reason of that provision there is partition, it is only a statutory partition without in any way affecting joint family or the rights in joint family property. This argument was repelled by Ramachandra Iyer J. who, after pointing out that the impartible estate is recognised as joint family property only for ascertaining who should succeed on the death of the holder, observed at page 107 " Section 45 regulates the rights of various members of the family on the taking over of an impartible estate. Section 45(6) creates a right to the compensation amount in the sharers, namely, the principal landholder, his legitimate sons, grandsons, etc. No other person barring the maintenance holders has any right to the compensation amount. In Ranga Rao v. State of Madras, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y character, the provision envisaging transfer of that compensation by the sharer who is entitled to it or the devolution of that share on his legal heirs would be inconsistent with that contention. On the other hand, that provision would only be consistent with an absolute interest in respect of his share of the compensation which he could, before receiving it, bequeath, make a gift or dispose it of in any way he liked, and where he did not so deal with it, that share would devolve under law to his legal heirs and not vest in the other coparceners by survivorship. In the view we have taken on this aspect of the matter, the share of the compensation is the separate property of the son, Mallikarjuna Prasad, and he is entitled to spend from that amount the expenses towards his education, which cannot be said to have been incurred by the joint family. The question which now remains to be considered is whether it is expenditure which the assessee-joint family had to incur in discharge of any obligation which the family has towards the coparceners; if so, whether it is an expenditure incurred by the joint family from out of what is transferred directly or indirectly to the dependant b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asad, being the son of the holder of the impartible zamindari, is entitled to maintenance by custom, though the said son has no right in the property as such. In Commissioner of Income-tax v. Krishna Kishore, the Privy Council had elaborately considered the several questions relating to the nature and incidents of an impartible zamindari, and while holding that the income of an impartible estate is not income of the undivided family, but is the income of the holder, notwithstanding that he may have sons from whom he is not divided and the income which consists of interest can hence be assessed to income-tax as that of an "individual" under sections 8 and 12 of the Income-tax Act, 1922, observed: "Their Lordships will in the present case assume that the sons of the assessee have a right to be maintained by him, that this right arises from the fact that he is the present holder of the impartible estate, and that the right is a right to be maintained out of the current income thereof in such sense that it could be enforced against the assessee in default by the courts in India, giving them a charge upon the property or a sufficient part of it. Even so, it is not true in fact or in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. But, since in respect of the other properties held jointly with the father, to which the ordinary Hindu law applies, he is a coparcener and would be a dependant within the meaning of section 2(g)(ii)(b). The question now would be whether the provisions of section 4(i) or 4(ii) of the Act apply to the case. In so far as section 4(ii) is concerned, the expenditure that is incurred by a dependant can only be included in computing the expenditure of the Hindu undivided family if that expenditure has been incurred out of income or property transferred directly or indirectly to the dependant by the assessee. The contention of Sri Anantha Babu that the provision of section 45(6) of the Abolition Act should be deemed to be a statutory transfer is, in our view, untenable, for the simple reason, as we have said earlier, that section 45(6) vests an absolute interest in the sort in lieu of his right to maintenance and treats it as if it was allotted to him in a partition of the family property. Now it is a well established proposition that property allotted on partition, whether partially or otherwise, is not property which can be said to have been transferred directly or indirec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But, as observed by Shah J. in Commissioner of Expenditure-tax v. Darshan Surendra Parekh, 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. In so far as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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