1968 (8) TMI 51 - HC - Income Tax

Expenditure Tax Act 1957 - Expenditure of wife and minor child having their own separate account - includibility in expenditure of individual

Summary

Issues Involved:
1. Applicability of Section 4(ii) of the Expenditure-tax Act, 1957.
2. Definition and scope of "dependant" under Section 2(g)(i) of the Expenditure-tax Act, 1957.
3. Interpretation of amendments made by Act 12 of 1959 to the Expenditure-tax Act, 1957.

Issue-wise Detailed Analysis:

1. Applicability of Section 4(ii) of the Expenditure-tax Act, 1957:
The primary question for consideration was whether the inclusion of the expenditure incurred by the assessee's wife and minor son with that of the assessee was justified under Section 4(ii) of the Expenditure-tax Act. The Tribunal had previously concluded that neither Section 4(i) nor Section 4(ii) was applicable. The court noted that the answer to this question would depend on the interpretation of the scope of Section 2(g)(i).

2. Definition and Scope of "Dependant" under Section 2(g)(i) of the Expenditure-tax Act, 1957:
The court examined the definition of "dependant" under Section 2(g)(i), which was amended by Act 12 of 1959. Initially, "dependant" meant the spouse or child wholly or mainly dependent on the assessee for support and maintenance. The amendment expanded this definition to include any person who is factually dependent on the individual for support and maintenance. The court emphasized that the term "dependant" should bear its natural meaning, which does not include someone who is independent and does not require assistance for support and maintenance.

3. Interpretation of Amendments Made by Act 12 of 1959 to the Expenditure-tax Act, 1957:
The court analyzed the amendments made by Act 12 of 1959, which inserted the words "and includes any person" between "child" and "wholly" and prefixed the word "minor" to the word "child." The court concluded that the amendment did not intend to include an independent spouse or minor child as a dependant. The court agreed with the reasoning in Rajakumarsinghji v. Commissioner of Expenditure-tax, which delimited the scope and effect of Section 2(g)(i) as amended. The court also noted that the definition of "dependant" should be interpreted in a manner that does not lead to unjustifiable discrimination between the spouse or minor child of an individual and that of a coparcener in a Hindu undivided family.

The court rejected the contention that the amendment aimed to treat the husband, wife, and minor child as one unit for the exemption limit of Rs. 30,000 in the matter of non-taxable expenditure. The court emphasized that the individual is always the assessee or the Hindu undivided family, and the dependant's expenditure is included in certain circumstances for assessment purposes.

Conclusion:
The court concluded that the inclusion of the expenditure incurred by the assessee's wife and minor son with that of the assessee was not justified under Section 4(ii) of the Expenditure-tax Act. The court answered the question referred to it against the revenue, with costs awarded to the assessee.