1968 (11) TMI 38 - HC - Income Tax

Expenditure-tax Act - Expenditure of wife and minor children out of their own separate inherited property - includibility of same in husband s expenditure

Summary

Issues Involved:
1. Inclusion of expenditures incurred by the wife and minor sons of the assessee in the taxable expenditure of the assessee under the Expenditure-tax Act.
2. Interpretation of the term "dependant" under section 2(g)(i) of the Expenditure-tax Act.
3. Applicability of section 4(ii) of the Expenditure-tax Act to expenditures incurred by dependants.

Issue-wise Detailed Analysis:

1. Inclusion of Expenditures Incurred by the Wife and Minor Sons of the Assessee:
The primary issue was whether the expenditures incurred by the assessee's wife and minor sons should be included in the taxable expenditure of the assessee for the assessment years 1959-60 and 1960-61. The Expenditure-tax Officer included these amounts, considering the wife and minor sons as "dependants" under section 2(g)(i) and thus, the expenditures were liable to be included under section 4(ii). The Appellate Assistant Commissioner disagreed, stating that since the wife and minor sons had their own sources of income and were not dependent on the assessee, they could not be considered dependants. The Tribunal reversed this decision, holding that the wife and minor sons were dependants within the meaning of section 2(g)(i) and their expenditures were includible under section 4(ii).

2. Interpretation of the Term "Dependant" under Section 2(g)(i):
The court examined the definition of "dependant" as amended in 1959. The amended section 2(g)(i) defines "dependant" to include the spouse or minor child of the assessee, irrespective of whether they are wholly or mainly dependent on the assessee for support and maintenance. The court rejected the assessee's argument that dependency for support and maintenance was necessary even for the spouse and minor children. The court held that the amended definition clearly distinguishes between the spouse and minor children, who are always considered dependants, and other persons, who must be wholly or mainly dependent on the assessee.

3. Applicability of Section 4(ii) to Expenditures Incurred by Dependants:
The court addressed the interpretation of section 4(ii), which includes expenditures incurred by dependants in the taxable expenditure of the assessee. The assessee argued that only expenditures incurred from income or property transferred by the assessee to the dependants should be included. The court disagreed, stating that the provision applies differently to individual assessees and Hindu undivided families (HUFs). For individual assessees, any expenditure incurred by dependants is includible, while for HUFs, the expenditure must be from income or property transferred by the HUF. The court concluded that the expenditures incurred by the wife and minor sons, being dependants, were includible in the taxable expenditure of the assessee.

Conclusion:
The court affirmed the Tribunal's decision, holding that the wife and minor sons of the assessee were dependants under section 2(g)(i) and the expenditures incurred by them were includible in the taxable expenditure of the assessee under section 4(ii). The assessee was ordered to pay the costs of the Commissioner.