1960 (9) TMI 119 - HC - Income Tax

Summary

Issues:
1. Whether separate maintenance allowed to a wife of the karta of the assessee Hindu undivided family and charged on his movable and immovable properties by agreement between the spouses is a permissible deduction from the assessee's income in order to arrive at its taxable income?

Analysis:
The case involves a Hindu undivided family with Kunwar Krishna as the karta, his two sons from a second wife, and a first wife from whom he separated. A deed of separation awarded maintenance of Rs. 6,000 per annum to the first wife, secured by a charge on the family's movable and immovable properties. The Tribunal disallowed the deduction claimed by the family, stating that the maintenance was not a charge on the family's properties as per the agreement, and the transaction was voluntary. The Tribunal's decision was based on the interpretation that the charge created by the agreement was on the personal properties of the karta only, not the entire family property.

The High Court, however, noted that the minor children of the karta from his second wife were junior members of the Hindu undivided family and were bound to maintain the female members of the family. As the charge was created when Kunwar Krishna was the sole owner of the entire property, the charge extended to the entire family assets, including the interests of the sons. The Court held that the sons could repudiate the charge if they could prove that their interests in the joint family property were not liable for the maintenance payment, but since they had not taken any action to avoid the charge, the family was entitled to the deduction of Rs. 6,000 under section 9(1)(iv) of the Income Tax Act.

The Court also dismissed the argument that the transaction was not obligatory, emphasizing that the liability on the family property to maintain the lady was a legal obligation, which was recognized and crystallized by Kunwar Krishna in the agreement. Therefore, the Court answered the referred question in the affirmative, allowing the deduction for the maintenance payment. The assessee was awarded costs amounting to Rs. 200.