1977 (1) TMI 4 - SC - Income Tax

Where an order apportioning the liability to the tax on the basis of partition has not been passed in respect of a Hindu family hitherto assessed as undivided or joint such family shall be deemed for the purposes of the Act to continue to be a Hindu undivided or joint family - State Government had powers to make rule. It is not unconstitutional for the legislature to lead it to the executive to determine details relating to the working of taxation laws - Assessee s appeal dismissed

Summary

Issues Involved:
1. Validity and scope of Rule 23 of the Assam Agricultural Income-tax Rules, 1939.
2. Assessment of a Hindu undivided family after its alleged partition.
3. Competence of the State Government to frame Rule 23 under the Assam Agricultural Income-tax Act.

Issue-wise Detailed Analysis:

1. Validity and Scope of Rule 23:

The primary issue in these appeals is the validity and scope of Rule 23 of the Assam Agricultural Income-tax Rules, 1939, which states: "Where an order apportioning the liability to the tax on the basis of partition has not been passed in respect of a Hindu family hitherto assessed as undivided or joint, such family shall be deemed for the purposes of the Act, to continue to be a Hindu undivided or joint family."

The High Court upheld the validity of Rule 23 and its applicability to the facts of the case. The appellant contended that after the disruption of the Hindu undivided family on January 1, 1945, it could not be assessed under the Act. However, the Supreme Court found that Rule 23 clearly mandates that in the absence of an order apportioning the tax liability on the basis of partition, the family shall be deemed to continue as a Hindu undivided family for tax purposes. The Court rejected the appellant's argument that Rule 23 applies only to cases where the family has already been assessed and the only remaining issue is tax recovery, noting that the language of Rule 23 is clear and unambiguous.

2. Assessment of a Hindu Undivided Family After Partition:

The appellant argued that no assessment could be made on the Hindu undivided family after its alleged partition. The Supreme Court noted that the appellant failed to mention the partition in any communications to the Agricultural Income-tax Officer. The Court emphasized that under Rule 23, the family shall continue to be treated as a Hindu undivided family unless an order apportioning the tax liability on the basis of partition is passed. As no such order was passed, the assessment of the family as a Hindu undivided family was valid.

3. Competence of the State Government to Frame Rule 23:

The appellant challenged the State Government's power to frame Rule 23, arguing that it exceeded the powers conferred by the Act. The Supreme Court examined Section 50 of the Assam Agricultural Income-tax Act, which empowers the State Government to make rules for carrying out the purposes of the Act. The Court found that Rule 23 was validly made under this section, as it relates to the working of the Act and ensures that tax liability is properly assessed in the absence of an order apportioning liability on the basis of partition.

The Court also referenced similar provisions in other tax laws, such as Section 171 of the Income-tax Act, 1961, which treats a Hindu undivided family as continuing until an order of partition is made. The Court held that the rule-making power includes determining details related to tax assessment and collection, and upheld the validity of Rule 23.

Conclusion:

The Supreme Court upheld the judgment of the High Court, affirming the validity and applicability of Rule 23 of the Assam Agricultural Income-tax Rules, 1939. The appeals were dismissed with costs, and the Court concluded that the State Government was within its competence to frame Rule 23, ensuring that Hindu undivided families continue to be assessed as such unless an order of partition is made.