1935 (4) TMI 21 - HC - Income Tax

Summary

Issues Involved:
1. Taxability of the assessee's income under Section 14(1) of the Income Tax Act, 1922.
2. Determination of whether the assessee is a member of a Hindu undivided family (HUF).
3. Whether the income received by the assessee is as a member of the HUF.

Detailed Analysis:

1. Taxability of the Assessee's Income under Section 14(1) of the Income Tax Act, 1922:
The primary issue is whether the income of Rs. 48,000 received by the assessee is taxable. The question revolves around Section 14(1) of the Income Tax Act, 1922, which exempts sums received by an assessee "as a member of a Hindu undivided family" from taxation. The Act's general scheme is to tax all income unless specifically exempted by provisions such as Section 4(3) or Section 14(1). The onus of proving that a particular class of income is exempt from taxation lies on the assessee.

2. Determination of Whether the Assessee is a Member of a Hindu Undivided Family (HUF):
The assessee claimed to be a member of an HUF, asserting that he was joint with his brother, the present holder of the Darbhanga Raj. The Commissioner of Income Tax argued that a family governed by the rule of primogeniture cannot be a joint family since the income is enjoyed by one member exclusively. However, it is well-established that in the case of an impartible Raj, the holder being exclusively entitled to the estate does not preclude other family members from being joint with him. The court concluded that the assessee is indeed joint with his brother, as the assertion was not controverted by the Commissioner except based on an unsustainable view of the law.

3. Whether the Income Received by the Assessee is as a Member of the HUF:
The more complex question is whether the sum received by the assessee is "as a member of the undivided family." The court referred to previous cases, such as Commissioner of Income Tax, Bihar and Orissa v. Maharani Lakshmibati Saheba, which held that Section 14(1) applies only to sums received from the joint income of the family. The court emphasized that the income must be assessable in the hands of the family to qualify for exemption under Section 14(1). The burden of proof lies on the assessee to show that the income is from joint family property. In this case, the assessee's contention that the allowance was paid out of joint family property was uncontroverted by the Commissioner.

The court also discussed the practical difficulties of proving the source of payment but concluded that it is not insurmountable. The assessee relied on a certificate from the manager of his brother's estate, which was not sufficient to prove the source of the income. However, since the Commissioner did not controvert the assertion that the allowance was paid out of joint family property, the court accepted the assessee's claim.

Conclusion:
The court concluded that the cash allowance of Rs. 4,000 a month received by the assessee from his brother, the Maharajadhiraja of Darbhanga, is not assessable to income tax in the hands of the assessee. The assessee is entitled to costs and a refund of the deposit of Rs. 100. The reference was answered accordingly.