1960 (4) TMI 98 - HC - Income Tax

Summary

Issues:
Interpretation of the proviso of the First Schedule to section 2 of the Indian Finance Act, 1955 regarding the higher exemption limit for Hindu undivided families with members entitled to claim partition.

Detailed Analysis:

The case involved a Hindu undivided family under the Dayabhaga school of Hindu law, where the assessee claimed a higher exemption limit under the First Schedule to section 2 of the Indian Finance Act, 1955. The dispute arose when the Income Tax Officer, the Appellate Assistant Commissioner, and the Appellate Tribunal rejected the assessee's contention regarding the exemption limit. The central issue was the interpretation of the proviso of the First Schedule, specifically clause (b), which required that none of the members entitled to claim partition should be lineally descended from another member. The contention was that Byomkesh was lineally descended from Nidhubala, and Samarendra was lineally descended from Gouribala. The assessee argued that female members like Nidhubala or Gouribala should not be considered a source of lineal descent. However, the court disagreed, stating that even under Hindu law, a female can form a line of descent regarding her stridhan property. The court interpreted the clause to include lineal descent from female members not entitled to claim partition, supporting this interpretation with legal definitions of "descent" and "lineal descendant."

Furthermore, the court referenced a decision by the Full Bench of Rajasthan High Court in a similar case, where it was held that sons or grandsons were considered lineal descendants of their mother or grandmother, respectively, irrespective of whether the mother or grandmother could form a line of succession in Hindu law. Applying this principle to the present case, the court upheld the view of the Appellate Tribunal that the Hindu undivided family was not entitled to the higher exemption limit of Rs. 12,600 under the First Schedule. Consequently, the court answered the question of law against the assessee and in favor of the Income Tax Department, ordering the assessee to pay the costs of the reference and a hearing fee.

In conclusion, the judgment clarified the interpretation of the proviso of the First Schedule to section 2 of the Indian Finance Act, 1955 concerning the higher exemption limit for Hindu undivided families with members entitled to claim partition. The court's decision emphasized that lineal descent could include descent from female members and upheld the view that the assessee was not entitled to the higher exemption limit based on the specific family composition outlined in the proviso.