TMI Blog1935 (10) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... e made on him, leaving his son J. Kesava Rao, the petitioner, as the sole surviving member. After the death of his father, the petitioner continued to carry on the money- lending business which had been carried on by his father as the manager of the Hindu undivided family. Notices under Sections 22 (4) and 23 (2) of the Act were therefore issued to the petitioner on 7th December, 1932 for the production of accounts, documents, etc. The petitioner complied with the notices and was assessed finally to income tax on the total and taxable income of ₹ 50,550. The Income Tax Officer did not levy super tax on the excess over ₹ 30,000 of the total income on the mistaken assumption that the petitioner, like his father, represented a Hindu undivided family. 4. The petitioner appealed to the Assistant Commissioner objecting to the amount of the assessment on various grounds which are not relevant for the purposes of this reference. In the course of the appeal proceedings the Assistant Commissioner learnt that the petitioner had no children and that he did not represent any Hindu undivided family. The Assistant Commissioner therefore considered that the petitioner should have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness, profession or vocation has been succeeded in such capacity by another person, the assessment shall be made on such person succeeding, as if he had been carrying on the business, profession or vocation throughout the previous year, and as if he had received the whole of the profits for that year . That there can be a succession within the meaning of this sub-section by operation of law (inheriting a business, profession or vocation) as well as by act of parties (transfer inter vivos of a business, profession or vocation) has been laid down in Maharajadhiraja of Darbhanga v. Commissioner of Income Tax, Bihar and Orissa. The petitioner's contention appears to be that he having got the entire business by survivorship under Hindu Law, his case would not fall under Section 26 (2). In other words, there cannot be a succession by a person to something of which he was in part the owner already. I am not aware of any authority for this principle. It appears to me that the petitioner, considered as an individual, (which he now unquestionably is) is a person distinct from the undivided family of which, before the death of his father, he was a member and therefore that the terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. In the course of the appeal he learnt that the petitioner had no children or brothers. In the circumstances he considered that the assessment should have been made on the petitioner as an individual and not as a Hindu undivided family, since in his opinion after the death of the petitioner's father in July, 1932, the Hindu undivided family ceased to exist and the petitioner became the sole surviving member of the original Hindu undivided family. He therefore issued a notice to the petitioner under Section 31 (3) proposing to treat him as an individual and levy super tax accordingly. The petitioner contended that himself and his wife constituted a Hindu undivided family and that therefore the assessment made on him as a Hindu undivided family was correct. The objection was overruled and the super tax was levied accordingly. The question arising for decision is whether in these circumstances the petitioner is liable to be assessed under Section 26 (2) of the Indian Income Tax Act. Sub-Section (2) of Section 26 of the Income Tax Act is as follows: Where, at the time of making an assessment under Section 23, it is found that the person carrying on any business, pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of ownership and the person who succeeds another must have by such succession become the owner of the business which his predecessor was carrying on and which he after the succession carries on in such capacity, that is, the capacity as owner. If this view is correct, as we think it is then it seems fairly clear that the undivided Hindu family which was carrying on business has not been 'succeeded' in such capacity by the petitioner as the petitioner was himself in part the owner of the property already and as such there has been no transfer of ownership in the business as he has become entitled to it by survivorship. No authority relevant for deciding the point has been cited by either side. The decision relied on by the Commissioner in V.R.S.A.R. Arunachalam Chettiar v. Commissioner of Income Tax, Madras in which it was held that in cases where there has been a partition of an undivided Hindu trading family, Section 26 applies, does not help him, for those are not cases where one party gets the property of another by survivorship. It would therefore follow that the petitioner has not 'succeeded' to the business of his father within the meaning of Section 26 (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintenance received by a widow of a member of a joint undivided Hindu family is not exempt from taxation under Section 14 (1) and other sections of the Act. In deciding that point the learned Judge expressed the view that the contention that even where the family is reduced to a single male member there is still a joint family at any rate where there are a number of widows and other persons entitled to maintenance, is not untenable. This question did not directly arise for decision before the learned Judge. After the arguments were over Mr. Sastri on behalf of the Income Tax Commissioner brought to our notice a judgment of the Calcutta High Court in the Income Tax Reports, Vol. III, at page 123 which seems to support the view that he has been contending for, namely, that the undivided Hindu family contemplated in the Income Tax Act is an undivided Hindu co-parcenery. In the present case it is not necessary to decide which of the above contentions should be accepted, as we have decided the first point raised by the petitioner in his favour and that is enough to dispose of the case. We should accordingly answer that in the circumstances of this case the petitioner is not liable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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