TMI Blog1965 (11) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... diture, the total expenditure not having exceeded the prescribed limit of exemption. But the appellant, by exhibit P-1 dated the 21st March, 1962, included the aggregate of the expenditure incurred by four other members, and a unit, called the Kalari Unit, of the family, in the total expenditure of the assessee, and made an assessment. O. P. No. 820 of 1962 was by the respondent to quash exhibit P-1. O. P. No. 1752 of 1962, also by the respondent, was to quash the preliminary notices referred to and for a writ of prohibition against the appellant, from enforcing the Act, on the ground that section 3, the charging section of the Act, is discriminatory against the Hindu undivided family ; the contention of the respondent has been repelled by the Full Bench which heard these writ appeals along with O. P. No. 674 of 1958 and O. P. No. 684 of 1959. The learned single judge having, as stated, quashed the assessment and the notices, these writ appeals have now come before the Division Bench for final disposal. The appellant's learned counsel supported the assessment for the year 1958-59, relying on the provisions of section 4(i) and section 4(ii) of the Act, as they were before their am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it P-6 of the year 1943. Generally speaking, by exhibit P-5, a Kalari Unit composed of some of the female members of the family and their descendants was constituted, which was to enjoy the properties more or less as a tavazhi, and under exhibits P-5 and P-6 separate allotments of properties were made to some of the junior members for meeting their expenses, by way of maintenance, education, etc. The appellant made the assessment for the year in question by including in the taxable expenditure of the assessee, the Hindu undivided family, the expenses incurred by them, subject to certain minor exclusions. The question to decide is whether such items fall within the scope of section 4(i) or section 4(ii) of the Act. The conditions to be fulfilled under section 4(i) so far as relevant are that, (i) the expenditure was incurred by any person other than the assessee, (ii) the expenditure was incurred in respect of any obligation or personal requirement of the assessee, and (iii) the expenditure was such that but for its having been incurred by that other person, would have been incurred by the assessee. Of the three conditions to be fulfilled for section 4(i) to apply, condition (i) p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hindu undivided family-assessee, be read as " its ", the term has reference to some other dependant than he who incurs the expenditure. The same term occurs in section 4(i); but then the distinction between " any of his dependants " and the person incurring the expenditure is more clearly drawn, by referring to the latter as " that other person ". Dealing with the interpretation and meaning of the term as it finds a place in section 4(i), the Gujarat High Court observed thus, in Darshan Surendra Parekh v. Commissioner of Expenditure-tax : " Clause (i) of section 4 contemplates an expenditure incurred by a person other than an assessee and that expenditure has to be in respect of an obligation or personal requirement of an assessee or any of his dependants. In other words, the clause contemplates that the person expending is a different person from the one for whom he spends, i.e., an assessee or any of his dependants. It would, therefore, appear that the expenditure incurred by a person other than an assessee as his expenditure for his personal requirement and not as an expenditure for the benefit of an assessee or any of his dependants is not includible under this clause in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 4(ii) and, in a larger sense, that the expenditure incurred has resulted in a saving of expenses for the assessee, and not in a narrow or pedantic way. The term is not to be limited to such a benefit as would generate a right to reimbursement by the assessee, say under sections 69 and 70 of the Contract Act. Being an expenditure-tax, a saving of expenditure for the assessee may be deemed to be a benefit of the assessee. The test is, whether by expenditure being incurred by a dependant out of a source created by the assessee, there has been a saving of expenditure for the assessee as such. A familiar case is where the ordinary expenses of maintenance of a member, which his joint family has to bear, are met by him out of the income of properties allotted to him by the joint family ; this of course is an obvious case. The purchase of an aeroplane or of a motor car by the allottee out of the income of the properties allotted may not be held to result in a saving of expenses or benefit to the joint family, unless such a venture was within the scope and intendment of the allotment. In the case before the Gujarat High Court, one of the questions was, as noticed, whether a sum of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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