TMI Blog1999 (5) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the annual charge of Rs. 2,10,000 under section 24(1)(iv) of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in following the order passed by the Assessing Officer earlier which is patently wrong as per section 171 read with the Explanation(s) on the ground that to reopen the issue of partition without altering the order under section 171 of the Act is outside the jurisdiction of the Assessing Officer ?" For the assessment year 1988-89, the assessee submitted his return of income as an individual. Prior to the partition that took place on June 30, 1986, the property belonged to a Hindu undivided family (HUF in short) in which the assessee was the karta. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anarayan Sikaria, it shall be shared and owned equally by the other parties and during the subsistence of life interest, Shri Satyanarayan Sikaria, shall pay a sum of Rs. 30,000 as annual charges to each of the 7 (seven) members which included his six sons and his wife. The covenant also comprehended that Shri Satyanarayan Sikaria would take over all the assets and liabilities existing as on June 30, 1986. The Income-tax Officer disallowed the deduction under section 24(1)(iv) of the Act on the ground that the annual charge was created voluntarily by the act of the parties with a view to reduce the tax liability through artificial and sham devices. The Commissioner of Income-tax (Appeals), upheld the decision and turned down the appeal th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which are chargeable to income-tax, are chargeable to tax under the head "Income from house property". The annual value is taxable subject to deduction or allowances set out in sub-section (1) of section 24. The catalogue of deductions is comprehensive. We are here concerned with clause (iv) of sub-section (1) as set out earlier. Prior, to the amendment of this clause by the Finance Act of 1968, allowance from house property income was admissible for an annual charge on house property without any exception even in cases where the charge was created by the assessee himself voluntarily in favour of another person. Section 24(1)(iv) was amended with effect from April 1, 1969, to exclude the annual charge created by the assessee voluntarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s said to be voluntary (adjective) when it is deliberate, discretionary, effected by choice. It is a free, intended, self-willed, volitional act of the maker ; a wilful, unprompted act done without any compulsion. From the narration of facts, it is apparent that the annual charge was created by the assessee of his own accord willingly, purposefully and without any compulsion. An annual charge which is created by the assessee of his own volition, will not be entitled for deduction as provided under section 24(1)(iv) of the Act of 1961. The factum of partition of the Hindu undivided family under section 171 of the Income-tax Act, will not turn the transaction as an act not being voluntary. Section 171 of the Act is a machinery section which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not to be interpreted to blunt the edge of the legislative device. An interpretation which makes the law workable and enforceable is to be preferred instead of reducing it to become a dead letter. A construction is to adhere to the maxim "ut res magis valeat quam pereat" (that the thing may rather have effect than destroy). In these premises, we answer question No. 1 in the negative, against the assessee and in favour of the Revenue. In view of our answer to question No. 1, question No. 2 has become academic, the answer to which would have no right or liability on the taxpayer, we are of the view that the answer is unnecessary and will have no bearing on the actual right or liability of the taxpayer. We, therefore, refrain from embarking ..... X X X X Extracts X X X X X X X X Extracts X X X X
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