1969 (2) TMI 60 - SC - Income Tax

Whether appellant was not liable to be assessed to tax on expenditure incurred in respect of property not under his personal control and direct enjoyment ? Held that - Parliament in the present case having made the Expenditure-tax Act applicable to Hindus governed by the law of the joint family but not including Mappilla families who are governed by the Mappilla marumakkattayam Act has not made any discrimination and the charging section is not liable to be struck down on the ground that the Mappilla family may have to pay tax at a lower rate whereas a Hindu undivided family by reason of the amalgamation of the expenditure of all the members of the family may have to pay tax at a higher rate. Appeal dismissed.

Summary

Issues Involved:
1. Liability of a Hindu undivided family (HUF) governed by marumakkattayam law under the Expenditure-tax Act.
2. Alleged discrimination between Hindu undivided families and Mappilla undivided families under the Expenditure-tax Act.
3. Applicability of the equal protection clause under Article 14 of the Constitution.

Issue-wise Detailed Analysis:

1. Liability of a Hindu undivided family (HUF) governed by marumakkattayam law under the Expenditure-tax Act:
The case revolves around the assessment of expenditure tax on a Hindu undivided family (HUF) governed by the marumakkattayam law. The appellant, who became the karta of the family after the death of his brother, contended that he should not be liable for the expenditure incurred by other family members on properties not under his "personal control and direct enjoyment." The Expenditure-tax Officer included the expenditures of all family members in the assessment, leading to a dispute.

2. Alleged discrimination between Hindu undivided families and Mappilla undivided families under the Expenditure-tax Act:
The appellant argued that the Expenditure-tax Act discriminates against Hindu undivided families by taxing them on the total expenditure of all family members, while Mappilla undivided families are taxed as "individuals" and thus at a lower rate. The court examined the historical and legislative background of the marumakkattayam law, noting that while both Hindu and Mappilla families share some characteristics, significant differences exist, particularly in property relations and inheritance laws.

3. Applicability of the equal protection clause under Article 14 of the Constitution:
The court addressed the appellant's claim of discrimination under Article 14 of the Constitution, which guarantees equal protection of the laws. It emphasized that tax laws inherently involve classifications to address complex issues. The court noted that the legislature has broad discretion in selecting objects of taxation and applying different methods and rates, provided the classification is rational and not arbitrary. The court found that treating Hindu undivided families as a distinct taxable entity is a long-standing legislative practice and does not constitute "obvious inequality."

Conclusion:
The court concluded that the Expenditure-tax Act's classification of Hindu undivided families as a unit of taxation, while treating Mappilla families differently, is not discriminatory. The legislative history and the distinct characteristics of the two groups justify the differential treatment. The appeals were dismissed, and the appellant was ordered to bear the costs.

Judgment:
The appeals fail and are dismissed with costs. One hearing fee. Appeals dismissed.