1939 (3) TMI 7 - HC - Income Tax

Summary

Issues:
1. Whether the Income-tax Officer was entitled to take action under Section 34 of the Act to re-assess the assessee to super-tax as an individual.
2. Whether the assessee is entitled to a deduction of Rs. 7,200 from the total income on account of maintenance allowance paid under a decree of a High Court to certain female members of the Hindu family to which he belongs.

Analysis:
1. The first issue pertains to the Commissioner of Income Tax's reference under section 66(2) of the Indian Income-Tax Act, involving the re-assessment of the assessee for super-tax. The initial assessment was based on the view that the assessee was the last surviving coparcener of a Hindu joint family. However, a notice under Section 34 was served, alleging that the super-tax assessment was too low due to an incorrect deduction allowed. The court held that the wide language of Section 34 covers mistakes of law, allowing for a fresh assessment. The argument that the assessment had become final and conclusive was dismissed, emphasizing the possibility of correction under Section 34 even after payment. The court concluded that the assessment could be altered under Section 34, and the Commissioner's decision was upheld.

2. The second issue revolves around the deduction of Rs. 7,200 from the assessee's total income for maintenance allowances paid under a High Court decree. The income was derived from immovable property subject to maintenance allowances for widows. The Commissioner contended that only deductions specified in Section 9 were allowable, excluding maintenance charges. However, referencing a Privy Council decision, the court determined that the real income liable to tax should be the income after deducting the maintenance allowances. Therefore, the court held that the assessee should be assessed on the income less the maintenance payments. Consequently, the second question was answered in the affirmative, granting the deduction for maintenance allowances.

In conclusion, both issues were decided in favor of the assessee, allowing for the re-assessment under Section 34 for super-tax and permitting the deduction of maintenance allowances from the total income. The judgment was delivered by Beaumont (CJ) and Wadia, JJ., with Justice Wadia concurring with the decision.