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TMI Blog1970 (11) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ndivided properties were concerned, the assessee-Hindu undivided family continued to subsist with Hiralal as the karta. In the course of assessment of the assessee-Hindu undivided family to expenditure-tax for the assessment year 1959-60, for which the corresponding account year was Samvat year 2014, the Expenditure-tax Officer included in the taxable expenditure of the assessee-Hindu undivided family, the expenditure incurred by the smaller undivided families of Hiralal, Haridas and Devidas on the ground that such expenditure being expenditure incurred by the coparceners of the assessee-Hindu undivided family was liable to be included in computing the taxable expenditure of the assessee-Hindu undivided family by reason of section 4(ii) of the Expenditure-tax Act, 1957. The assessee-Hindu undivided family carried the matter in appeal to the Appellate Assistant Commissioner but the Appellate Assistant Commissioner agreed with the view taken by the Expenditure-tax Officer that the expenditure incurred by the three smaller Hindu undivided families of Hiralal, Haridas and Devidas was includible in the taxable expenditure of the assessee-Hindu undivided family under section 4(ii). This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee-Hindu undivided family in view of the definition of 'dependant' in section 2(g)(ii) of the Expenditure-tax Act ?" and referred it to this court for its opinion along with the main question referred at the instance of the revenue. The main controversy between the parties turns on the true interpretation of section 4(i) but, in order to appreciate its true scope and ambit, it is necessary to refer to a few relevant provisions of the Expenditure-tax Act, 1957. Section 2(c) defines "assessee" to mean an individual or a Hindu undivided family by whom expenditure-tax or any other sum of money is payable under the Act and there is an inclusive part of the definition which says that the assessee shall include every individual or Hindu undivided family against whom any proceeding under the Act has been taken for the assessment of his expenditure. It would thus be seen that the assessee under the Act may be either an individual or a Hindu undivided family. Section 2(g) then defines who is a "dependent" within the meaning of the Act. It says that : " 'Dependant' means- (i) where the assessee is an individual, his or her spouse or minor child, and includes any person who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Hindu undivided families of Hiralal, Haridas and Devidas, be said to be properties transferred directly or indirectly to the coparceners by the assessee-Hindu undivided family. The revenue has staked its claim to include the expenditure incurred by the three smaller Hindu undivided families only on section 4(i) and it is to that provision that we must, therefore, turn for determining the validity of that claim. Section 4(i), as it stood at the material time, provided : " Unless otherwise provided in section 5, the following amounts shall be included in computing the expenditure of an assessee liable to tax under this Act, namely :- (i) any expenditure incurred, whether directly or indirectly by any person other than the assessee in respect of any obligation or personal requirement of the assessee or any of his dependants to the extent to which the amount of all such expenditure in the aggregate exceeds Rs. 5,000 in any year." We may point out at this stage that, prior to its amendment by Central Act 12 of 1959, se ction 4(i) contained the following words, namely, "which, but for the expenditure having been incurred by that other person, would have been incurred by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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......Section 4(i) is intended to include expenditure incurred directly or indirectly by a person other than the assessee for discharging any obligation or for personal requirement of the assessee or dependant of the assessee. The clause applies in the computation of the expenditure of an individual as well as a Hindu undivided family ...... Expenditure incurrred by Surendra out of his separate property cannot, therefore, be taken into account in computing the taxable expenditure of the Hindu undivided family, in the absence of a finding that expenditure was incurred either for the obligation of the family, or for the personal requirements of the other coparceners or members of the family, which would have been incurred by the family ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee-Hindu undivided family. Now, there can be no doubt that the three smaller Hindu undivided families of Hiralal, Haridas and Devidas satisfied the description of "any person other than the assessee." But, the question would still remain whether the expenditure incurred by them was expenditure in respect of any obligation or personal requirement of the Hindu undivided family or any of its dependents in their capacity as dependents. The revenue did not contend that the expenditure had anything to do with the obligation or personal requirement of the assessee Hindu undivided family but the argument of the revenue was that the expenditure was certainly relatable to some obligation or personal requirement of the coparceners of the assessee-Hindu undivided family in their capacity as such coparceners and it was, therefore, covered by the latter part of section 4(i). The assessee of course could not dispute that the coparceners of the three smaller Hindu undivided families of Hiralal, Haridas and Devidas were also coparceners of the assessee-Hindu undivided family and were, therefore, dependents of the assessee Hindu undivided family barring of course Hiralal who as the karta could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lute and invariable proposition of law. It would always be a question of fact and it would be open to the revenue to show that the expenditure was incurred by the smaller Hindu undivided family for the coparcener not in his capacity as coparcener of the smaller Hindu undivided family but in his capacity as coparcener of the bigger Hindu undivided family, though from a practical point of view such a task may be extremely difficult, if not impossible. Here, in the present case, the only finding of fact before us is that the expenditure was incurred by the three smaller Hindu undivided families of Hiralal, Haridas and Devidas. We do not know whether the expenditure was in respect of any obligation or personal requirement of the coparceners other than Hiralal or even if it was in respect of any obligation or personal requirement of the coparceners, whether it was for them in their capacity as coparceners of the smaller Hindu undivided families of Hiralal, Haridas and Devidas or in their capacity as coparceners of the assessee-Hindu undivided family. The revenue cannot succeed in bringing the expenditure incurred by the three smaller Hindu undivided families of Hiralal, Haridas and Devi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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