1969 (2) TMI 196 - SC - Indian Laws

Summary

Issues Involved:
1. Liability of the appellant to be assessed on expenditure incurred by other family members.
2. Alleged discrimination between Hindu undivided family and Mappilla undivided family under the Expenditure-tax Act.
3. Constitutionality of Section 3 of the Expenditure-tax Act under Article 14 of the Constitution.

Detailed Analysis:

1. Liability of the Appellant to be Assessed on Expenditure Incurred by Other Family Members:
The appellant, who became the karta of the Hindu undivided family after the death of his brother, filed a return under the Expenditure-tax Act for the assessment year 1958-59. The Expenditure-tax Officer included the expenditure incurred by other family members in the assessment. The appellant argued that he should not be liable for expenditure on properties not under his "personal control and direct enjoyment." Initially, a single Judge of the High Court of Kerala upheld this contention, but a Division Bench reversed this decision, leading to the present appeal.

2. Alleged Discrimination Between Hindu Undivided Family and Mappilla Undivided Family:
The appellant contended that the Expenditure-tax Act discriminates against Hindu undivided families governed by the Marumakkattayam law by taxing them on the total expenditure incurred by all family members. In contrast, a Mappilla undivided family, also governed by the Marumakkattayam law but resident in North Malabar, is taxed as an "individual" and thus at a lower rate. The court examined the historical and legal background of the Marumakkattayam law, highlighting its application to both Hindus and Mappillas and the modifications made by various legislative acts over time.

3. Constitutionality of Section 3 of the Expenditure-tax Act Under Article 14:
The court noted that the equal protection clause of the Constitution does not require absolute equality or uniformity of treatment. Tax laws are complex and necessitate adjustments of various elements. The court emphasized that the Legislature has the discretion to classify objects of taxation and apply different methods and rates, provided the classification is rational and not arbitrary. The court cited various legal principles and precedents to support this view, including the acceptance of different tax treatments for Hindu undivided families and Mappilla tarwads in previous tax statutes.

The court concluded that the classification made by the Expenditure-tax Act, treating Hindu undivided families as a unit of taxation and not extending the same treatment to Mappilla families, does not constitute "obvious inequality." The long-standing legislative history of treating Hindu undivided families as distinct taxable entities further supports this classification. Therefore, the court held that the charging section of the Expenditure-tax Act does not violate Article 14 of the Constitution.

Conclusion:
The appeals were dismissed with costs, affirming the validity of the Expenditure-tax Act's provisions and the inclusion of expenditure incurred by all members of the Hindu undivided family in the appellant's tax assessment.