TMI Blog1957 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... BHAGWATI, J.--These two appeals with certificates under section 66A(2) of the Indian Income-tax Act (hereinafter referred to as the Act) raise a common question of law and will be governed by this common judgment. The facts leading up to these appeals may be shortly stated as under. Prior to October 18, 1944, one Rai Bahadur Narsingdas Daga (since deceased), his wife Shrimati Sodradevi (the assessee), and his three major and three minor sons constituted a joint and undivided Hindu family. There was a severance of joint status between the erstwhile members of the said joint family on October 18, 1944, and the joint family properties were accordingly partitioned. On such partition, the business of the Spinning and Weaving Mills and agency shop at Hinganghat fell to the share of the assessee and her three major and three minor sons. A partnership was entered into between the assessee and her three major sons for the purpose of carrying on the business of the Spinning and Weaving Mills and the agency firm at Hinganghat. The three minor sons of the assessee were admitted to the benefits of the partnership. The genuineness of the partnership was not disputed. The only question w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal referred to the High Court of Punjab at Simla the question of law arising out of its order under section 66(1) of the Act together with a statement of case. The referred question was : "Whether the word 'individual' in section 16(3)(a)(ii) of the Income-tax Act, 1922, includes also a female and whether the shares of the two minor sons of Shrimati Damayanti Sahni in the profits of the reconstituted firm of Messrs. Ishwardas Sahni and Brothers should be included in the income of Shrimati Damayanti Sahni in assessing her income, profits and gains." The High Court heard the reference and, following the decision given by the High Court of Allahabad in Chanda Devi v. Commissioner of Income-tax, answered the referred question in the affirmative. The assessee obtained the requisite certificate under section 66A(2) of the Act from the High Court and that is how Civil Appeal No. 25 of 1955 is before us. The common question of law which we have to determine in these appeals is whether the word "individual" in section 16(3)(a)(ii) of the Act includes also a female and the income of the minor sons derived from a partnership to the benefits of which they have been admitted is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in the Act and there is authority for the proposition that the word "individual" does not mean only a human being but is wide enough to include a group of persons forming a unit. It has been held that the word "individual" includes a corporation created by a statute, e.g., a university or a bar council, or the trustees of a baronetcy trust incorporated by a Baronetcy Act. It would also include a minor or a person of unsound mind. If this is the connotation of the word "individual" it follows that when section 16(3) talks of an "individual" it is only in a restricted sense that the word has been used. The section only talks of "individual" capable of having a wife or minor child or both. It therefore necessarily excludes from its purview a group of persons forming a unit or a corporation created by a statute and is confined only to human beings who in the context would be comprised within that category. The revenue urges before us that the word "individual" as used qua human beings is capable of including within its connotation a male as well as a female of the species and having regard to the context in which the word has been used in section 16(3), it should be construed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uous that they would stand to be examined and construed in the light of surrounding circumstances and constitutional principle and practice (Per Lord Ashbourne in Nairn v. University of St. Andrews). In the latter event the following observations of Lord Lindley, M. R., in Thomson v. Lord Clanmorris would be apposite : "In construing any......statutory enactment, regard must be had not only to the words used, but to the history of the Act, and the reasons which led to its being passed. You must look at the mischief which had to be cured as well as at the cure provided." [See also the observations of Goddard, C.J., in R. v. Paddington and St. Marylebone Rent Tribunal]. The position in law has been thus enunciated in the judgment of Das, Ag. C.J. (as he then was) in Bengal Immunity Co. Ltd. v. State of Bihar : "It is a sound rule of construction of a statute firmly established in England as far back as 1584 when Heydon's case was decided that '.......for the sure and true interpretation of all statutes in general (be they penal or beneficial, restrictive or enlarging of the common law) four things are to be discerned and considered :-- 1st. what was the common law befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be made for the inclusion of the income of a wife or minor child or both in the total income of a male of the species the word "or" was absolutely necessary to be interposed between the word "wife" and the words "minor child". To construe the word "or" as disjunctive between the word "wife" and the words "minor child" does not necessarily lead to the conclusion that the words "such individual" were used for both a male and a female of the species and were necessarily inconsistent with the user of those words for the male of the species if the context otherwise lead to that conclusion. The reasoning adopted by the learned Judges of the High Court of Punjab, therefore, does not clinch the matter. We have, therefore, got to examine whether the use of the word "individual" in section 16(3)(a) of the Act is in any manner ambiguous. The opening words of section 16(3) talk of "any individual" whose total income has got to be computed for the purpose of assessment and the words "such individual" used in section 16(3)(a) have reference only to that individual. That individual must be an assessee and it is in the computation of his total income for the purpose of assessment that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (iii) in any different sense from the same words "such individual" as used in sub-clauses (ii) and (iv). The crux of the question, therefore, is whether the words "such individual" used in the opening part of section 16(3)(a) are used to mean a male of the species when they are read in juxtaposition with the words "a wife" and are used to mean both a male as well as a female of the species, as the case may be, when used in juxtaposition with the words "minor child". If that was the intention of the Legislature there was nothing to prevent it from dividing clause (a) into two sub-clauses whether they were numbered (a) and (ai) or (a) and (b) respectively. The Legislature could as well have enacted the provisions in the manner following : (a) : so much of the income of a wife of such individual as arises directly or indirectly : (i) from the membership of the wife in a firm of which her husband (or such individual) is a partner ; or (ii) from assets transferred directly or indirectly to the wife by the husband (or such individual) otherwise than for adequate consideration or in connection with an agreement to live apart ; (ai) or (b) : so much of the income of a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the same section but at one place only. If one turns to section 16(3)(b) the words used therein are "transferred...............by 'such individual' for the benefit of his wife or a minor child or both". There is the indefinite article "a" used before the words "'minor child". If that indefinite article "a" had not been used, the expression would have run "for the benefit of his wife or minor child or both" thus leaving no doubt at all that in clause (b) at least the words "such individual" meant only a male of the species. It is urged, however, that the use of the indefinite article "a" shows that the words "his wife" and "minor child" and "both" have been used disjunctively and should be read in the same manner as in section 16(3)(a) of the Act. The words "his wife" would appropriately go with a male of the species but the words "a minor child" would appropriately go with a male as well as a female of the species, though the word "both" could only be appropriate in relation to a male of the species and not a female who can have a minor child but not both a wife and a minor child. The same want of elegance or propriety can be predicated of this expression also and the use of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usband in computing the total income of the husband for the purpose of assessment. Similar was the position in the case of income derived by a minor child from the admission of the minor to the benefits of partnership in a firm of which "such individual" was a partner or from assets transferred directly or indirectly to the minor child, not being a married daughter, by "such individual" otherwise than for adequate consideration. The income derived by such minor child could not be added to the income of the father for the purpose of assessment. The income derived by the wife or minor child could only be included in computing his or its total income for the purposes of assessment and neither the husband nor the father could be made liable for income-tax in respect of such income, whatever may be the reason which actuated them in providing such income for the wife or the minor child. This position was pregnant with difficulties for the revenue. There were no doubt genuine cases where a wife or the minor child, as the case may be, was provided with such income on bona fide severance of joint status between the erstwhile members of a joint and undivided Hindu family and where afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed directly or indirectly to the minor by his or her father or mother, (iii) if it is derived from assets apportioned to him in the partition of a Hindu undivided family." It may be noted that the recommendations of the Enquiry Committee even in the cases hereinbefore mentioned went to the length of including the income of the wife or the minor child as the case may be in the income of the husband or the father in the computation of his total income for the purpose of assessment. The mischief which the Enquiry Report sought to remedy by its recommendations was one which was the result of husbands entering into nominal partnerships between themselves and their wives and fathers admitting their minor children to the benefits of such partnerships. The mischief, if any, resulting from the mothers admitting their minor children to the benefits of partnerships in which they were members was farthest from the thoughts of the Enquiry Committee and was nowhere sought to be remedied. Having regard to the circumstances which prevailed at the time when the Enquiry Committee made its report, the only mischief which they sought to remedy by their recommendations was the one resulting from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne resulting from the widespread practice of husbands entering into nominal partnerships with their wives and fathers admitting their minor children to the benefits of the partnerships of which they were members. This evil was sought to be remedied by the enactment of section 16(3) in the Act. If this background of the enactment of section 16(3) is borne in mind, there is no room for any doubt that howsoever that mischief was sought to be remedied by the amending Act, the only intention of the Legislature in doing so was to include the income derived by the wife or a minor child, in the computation of the total income of the male assessee, the husband or the father, as the case may be, for the purpose of assessment. If that was the position, howsoever wide the words "any individual" or "such individual" as used in section 16(3) and section 16(3)(a) may appear to be so as to include within their connotation the male as well as the female of the species taken by themselves, these words in the context could only have been meant as restricted to the male and not including the female of the species. If these words are used as referring only to the male of the species the whole of the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place of the words "her husband" or "the husband" when the intention of the Legislature would have been equally carried out by the use of those words. It may be that the draftsman considered the use of the words "her husband" or "the husband" when he used the same in juxtaposition with the words "a wife" as appropriate or more elegant and therefore ignored the obvious user of the words "such individual" which would have been equally appropriate in that context. It would have been better expressive of the intention of the Legislature, as we have already divined above (viz., to use the words "any individual" and "such individual" in section 16(3) and section 16(3)(a) respectively in the restricted meaning of the male of the species), to have used the words "the father" in place of the words "such individual" in sub-clauses (ii) and (iv) of section 16(3)(a). It is however difficult to fathom the mind of the draftsman when he used one particular expression in preference to the other and not much help can be derived from the ratio adopted by the learned Judges of the High Court of Allahabad in the decision just referred to. It is also significant to observe that the learned Judges cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question which falls for decision in these two appeals is if the word "individual" in sub-section (3) of section 16 of the Indian Income-tax Act, hereinafter referred to as the Act, includes also a female, and therefore the income of the minor sons which arises directly or indirectly from their admission to the benefits of partnership in a firm of which their mother is a member is to be included in computing the total income of the mother within the meaning of sub-section (3), clause (a), sub-clause (ii), of section 16. The question is really one of pure construction, that is, construction of sub-section (3) of section 16 of the Act. Nothing turns upon the facts of the case, and as the material facts have been clearly set out in the judgment just read by my learned brother Bhagwati, J., I do not think that any useful purpose will be served by restating them. Therefore, I proceed at once to a consideration of sub-section (3) of section 16 of the Act and state at the very outset that, to my great regret, I have come to a conclusion different from that of my learned brethren. I shall presently read the sub-section ; but before I do so, it will help the exposition which follows if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But it appears to me to be arguing in a vicious circle to begin by assuming an intention apart from the language of the instrument itself, and having made that fallacious assumption to bend the language in favour of the presumption so made." Keeping that warning in mind, I shall first take the words of sub-section (3) of section 16 and see if they are plain or unambiguous. Alternatively, I shall also consider the proper construction of sub-section (3) of section 16 on the assumption that the word "individual" used in the sub-section is ambiguous and should, therefore, be interpreted consistently with the principles laid down in the locus classicus on the subject, namely, the celebrated Heydon's case reported by Lord Coke and decided by the Barons of the Exchequer in the sixteenth century. I shall now read sub-section (3) of section 16 of the Act : "16. (3) In computing the total income of any individual for the purpose of assessment, there shall be included-- (a) so much of the income of a wife or minor child of such individual as arises directly or indirectly-- (i) from the membership of the wife in a firm of which her husband is a partner ; (ii) from the admissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or a bar council or the trustees of a baronetcy trust incorporated by a Baronetcy Act etc. ; whereas sub-section (3) of section 16 makes it quite clear that the word "individual" there does not include a corporation created by a statute. This indeed is correct. But the question before us is whether, in its context, sub-section (3) of section 16 imposes a further restriction on the word "individual' confining it to a male individual only. The critical question before us is whether such a further restriction is imposed on the word "individual" either by the express words used in the sub-section or by necessary implication from the clauses and sub-clauses thereof. It is said to be a presumption in construction that the same words are used in the same meaning in the same statute and particularly in the same section or sub-section. The presumption is, however, of the slightest, and there are many instances where the application of this rule or presumption is impossible. The same words may often receive a different interpretation in different parts of the same Act, for words used with reference to one set of circumstances "may convey an intention quite different from what the self-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The same category is also referred to in sub-section (3) of section 16, subject only to this restriction that in the context of the sub-section, the word "individual" does not include a corporation, etc. We now turn to the critical question before us--is there a further restriction in the sub-section confining the word "individual" to a male individual only ? My answer is that there is nothing in the context of section 16 or of the sub-section which confines the word "individual" to a male individual only. Section 16 deals with the computation of total income and provides what sums are to be included or excluded in determining the total income. The effect of including exempted income in the assessee's total income is mainly two-fold : first, the tax payable by the assessee is determined with reference to the total income and therefore exempted income which is included in the total income would affect the rate of tax applicable to the chargeable portion of the total income ; secondly, in several cases reliefs are given or calculations made with reference to the total income. Sub-section (3) of section 16 appears ex facie to be directed towards preventing an individual's attemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... male individual. I am unable to accede to this argument. The collocation or association of the words "a wife or minor child", in connection with the words "such individual" in the opening sentence of clause (a) does not necessarily, mean that the individual contemplated is a male individual only. I agree that the word "or" in between the words "wife" and "minor child" must be there, even when the individual talked of is a male only ; in other words, the use of the disjunctive word "or" does not necessarily clinch the issue. But I do not see any real difficulty in reading the opening sentence of clause (a) distributively so as to mean a male individual when the wife is being talked of, and either a male or a female individual when a minor child is talked of. I do not think that such a construction does any violence to the words used ; on the contrary, in my opinion, it gives effect to the plain meaning of the word "individual". Turning now to the sub-clauses numbered (i) to (iv), there can be no doubt from the phraseology used that sub-clauses (i) and (iii) refer only to a male individual, because a female individual cannot have a wife. It is worthy of note, however--and this is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote inference. The striking difference in phraseology hits, as it were, one in the face when one reads the four sub-clauses. It seems to me that the meaning is very clear. In the opening part of clause (a), the word "individual" is used to mean a male or a female ; two of the sub-clauses, however, are confined to the male only and therefore the word "husband" is used in juxtaposition to the word "wife". In the other two sub-clauses, however, the word "individual" is used in order to make it clear that they refer either to a male or to a female individual. I do not see any incongruity or disharmony in the enumeration of the four sub-clauses, nor do I appreciate the argument urged before us that the word "individual", on the construction adopted by me, has a different meaning in two of the four sub-clauses of clause (a). The word "individual" has and retains the same meaning, namely, a male or a female, all throughout the sub-section. All that happens is that in two of the sub-clauses of clause (a), when the Legislature intends that they should be confined to a male individual only, the word "husband" is used to make the intention clear. On the same reasoning, when the Legislature in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t clause, what then is the position ? The four principles laid down in Heydon's case have been thus summarised : "That for the sure and true interpretation of all statutes in general (be they penal or beneficial, restrictive or enlarging of the common law) four things are to be discerned and considered : (1) what was the common law before the passing of the Act ; (2) what was the mischief and defect for which the common law did not provide ; (3) what remedy the Parliament hath resolved and appointed to cure the disease of the commonwealth ; (4) the true reason of the remedy. And then the office of all the Judges is always to make such construction as shall suppress the mischief and advance the remedy, and to suppress subtle inventions and evasions for the continuance of the mischief and pro privato commodo, and to add force and life to the cure and remedy according to the true intent of the makers of the Act pro bono publico." Let me now apply these principles in the construction of sub-section (3) of section 16 of the Act. The sub-section was introduced in 1937, and before the enactment of the sub-section, there was no provision for the inclusion of the income of a wife o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide and (2) what remedy the Parliament has resolved and appointed to cure the mischief or defect. In the case under our consideration, the interpretation which has been put by me on sub-section (3) of section 16 does not militate against any of the aforesaid rules of Heydon's case. The interpretation put by me undoubtedly remedies the mischief or defect for which the earlier law did not provide. The only serious criticism made by learned counsel for the assessees against that interpretation is that the remedy not merely cures the mischief for which the earlier law did not provide, but it goes a little further and attacks the evil even when the evil is committed by a female individual, though the Income-tax Enquiry Report (except in one part) did not in specific terms refer to such an evil committed by a female individual. I can see nothing in the rules laid down in Heydon's case which militates against the view taken by me. There is no presumption that, while remedying an evil, the Legislature may not cast its net very wide so as to remedy the evil in all its aspects. Let me again refer to sub-clauses (i) and (ii) of clause (a) of sub-section (3) of section 16 of the Act. Those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to remedy" the use of the word "parent" in the statement of objects and reasons shows that the evil was not confined to the male individual only, and the sponsor of the Bill was aware of it. The statement reads : "Section 16(3) was thus designed to bring within the ambit of taxation incomes of wives and minor children as income of husband or parent, which otherwise would escape the whole burden of taxation." I emphasise the use of the word "parent" which would show that the evil contemplated was an evil which was not confined to the "father" only but included the mother as well. My conclusion, therefore, is that there is nothing in the policy of the legislation and the scope and object of the statute which compels one to cut down the natural meaning of the word "individual" used in sub-section (3) of section 16 of the Act so as to confine it to a male individual alone. I now turn to such authorities as have been cited before us. There has been a difference of opinion in the High Courts with regard to the interpretation of sub-section (3) of section 16 of the Act. In Chanda Devi v. Commissioner of Income-tax, the Allahabad High Court has taken the view that the minor's income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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