1944 (3) TMI 5 - HC - Income Tax

Summary

Issues:
1. Whether the amount paid by the assessee to his mother and stepmother in discharge of his share of maintenance liability should be excluded from his assessable income?
2. Whether the maintenance allowances were received by the widows as members of a Hindu undivided family?
3. Whether the payments made by the assessee in discharge of his share of the liability should be taxed as income in his hands?

Analysis:
The case involved a question of law referred by the Income-tax Tribunal regarding the assessable income of the assessee, Lala Hira Lal, for the year 1939-40. The issue stemmed from payments made by the assessee to his mother and stepmother in discharge of his share of maintenance under awards dated 1936 and 1937. The widows were entitled to maintenance in lieu of their share in the family property, which was made a charge on the property of the brothers. The Tribunal, following a previous case, held that the maintenance allowances were received by the widows as members of a Hindu undivided family, making the payments taxable as part of the family income.

The High Court analyzed the situation post-partition in 1936, highlighting that there was no joint family of which both the assessee and the widows were members. Unlike the previous case cited by the Tribunal, the widows in this case were entitled to share the property on partition. The Court distinguished the present case from the precedent cited by the Tribunal, emphasizing the unique circumstances regarding the maintenance allowances and the entitlement of the widows to a share in the property.

Referring to a previous judgment, the Court established a principle that if a payment is obligatory and subject to an overriding charge, it should be excluded from the income of the payer. In this case, the maintenance payments to the widows were obligatory as per the awards in 1936 and 1937, which were decreed by the Court. Therefore, the payments made by the assessee in discharge of his liability should not be taxed as his income but must be excluded from his assessable income. The Court directed the department to consider taxing the payments in the hands of the recipients, affirming that the question posed by the Tribunal should be answered in the affirmative.