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TMI Blog1967 (4) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... er article 226 of the Constitution by Prince Azam Jah Bahadur, hereinafter referred to as the assessee, for the issue of a writ of prohibition or other appropriate writ or order directing the Expenditure-tax Officer (respondent) to forbear from taking or continuing any action in pursuance of the notice dated May 5, 1962, issued under section 16(a) of the Expenditure-tax Act, 1957, hereinafter referred to as the Act, for the expenditure assessment year 1959-60. The relevant facts necessary for appreciating the question referred to the Full Bench are the following: The assessee, the eldest on of Nizam VII, filed expenditure-tax returns under the Act for the assessment years 1959-60, 1960-61 and 1961-62 and the respondent completed the expenditure-tax assessments on March 27, 1961, December 22, 1961, and January 25, 1962, respectively, determining the assessee's taxable expenditure for the three years at Rs. 2,34,864, Rs. 1,66,687 and Rs. 2,30,384, and the assessee also paid the tax demands in full. Subsequently, the respondent issued a notice dated May 5, 1962, under section 16 of the Act calling upon the assessee to file supplemental returns of expenditure for the three years in q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eductions which will not be taken into account if the assessee is to be assessed by adding his wife's expenditure to the expenditure of the assessee. Another contention is that the amendment made by section 24 of the Finance Act, 1959, brought about an unreasonable discrimination as between two units of the assessee, viz., the individual and Hindu undivided family, inasmuch as in the case of an individual, expenditure incurred by any dependant of such individual has to be included in the assessment of the individual, without regard to any other consideration, while in the case of a Hindu undivided family, expenditure by any dependant from or out of any income or property transferred directly or indirectly to the dependant by the assessee alone has to be included. This according to the assessee constitutes discrimination. The assessee's wife did not incur any expenditure from out of the income or property transferred directly or indirectly by the assessee and even so under the amended section 4(ii), expenditure has to be included in the assessee's assessment and tax levied on him, whereas in the case of a Hindu undivided family, no such expenditure of the dependant has to be include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he liabilities imposed by the laws". Equality before law means law should be equal and should be equally administered and there should be no discrimination in the same class. The power of the State to classify for the purpose of taxation is of wide range and flexibility. The class of persons being different, the distinction cannot be claimed to be discriminatory as to offend article 14 of the Constitution. The other contention of the assessee, that the provisions of section 4(ii) read with section 2(g) of the Act are hit by the provisions of articles 19 and 31 of the Constitution, is devoid of any merit or substance. There is no fundamental right involved in the circumstances of the case, nor is there any deprivation of the right of the assessee to property. The learned judge negatived all the contentions of the assessee and dismissed his writ petitions. On the first contention, the learned judge held that the respondent was empowered to reopen the assessment under section 16 of the Act. Regarding the main question under article 14 turning on the interpretation of section 4(ii) of the Act, it was held by the learned judge that different kinds of property may be subject to differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the "dependant" in section 2(g) and also the substituted provisions in section 4, clause (ii), it may be necessary in the first instance to examine the contention of the learned counsel for the assessee that the respondent had no jurisdiction to reopen the assessments by issuing the notice dated May 5, 1962. Section 16 of the Act deals with expenditure escaping assessment. "If the Expenditure-tax Officer has reason to believe that by reason of the omission or failure on the part of the assessee to make a return of his expenditure under section 13 for any assessment year, or to disclose fully and truly all material facts necessary for his assessment for that year, the expenditure chargeable to tax has escaped assessment for that year, whether by reason of under-assessment or assessment at too low a rate or otherwise" he may reopen at any time within 8 years and serve a notice on the assessee or if under section 16(b) in consequence of any information in his possession he has reason to believe that notwithstanding that there has been no such omission or failure as is referred to in clause (a) the expenditure chargeable to tax has escaped assessment for any assessment year, the Expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information as to the truth and correct state of law, as pointed out by the Supreme Court, the only limitation on the powers of the Expenditure-tax Officer being if notice is given under section 16(a), it should be at any time within eight years and in cases falling under clause (b), it should be at any time within four years. In this case notice was served within four years. All that is required for the Expenditure-tax Officer is that be should have reason to believe under clause (a) that as a result of the assessee's failure to make a return or disclose fully the particulars of his expenditure, expenditure has escaped assessment. Under clause (b), the officer should have reason to believe in consequence of the information in his possession that the income has escaped assessment. A scrutiny of the returns filed by the assessee for the three relevant years would show that all the material facts were not disclosed by the assessee in the first instance and even after notice was given under section 16(b), there was no disclosure in the return that the Princess was his wife and she had her own source of income and that she had filed separate returns. Under column 1 to annexure 5 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spective legislatures in respect of areas or fields covered by the said entries; and it is an elementary rule of construction that the widest possible construction must be put upon their words. This doctrine does not, however, mean that Parliament can choose to tax as income an item which in no rational sense can be regarded as a citizen's income. The item taxed should rationally be capable of being considered as the income of a citizen. But in considering the question as to whether a particular item in the hands of a citizen can be regarded as his income or not, it would be inappropriate to apply the tests traditionally prescribed by the Income-tax Act as such." It is clear and manifest from entry 97 in List I that on any other matter not enumerated in List II or III including any tax not mentioned in either of those lists, Parliament has exclusive power under article 246 to make laws. The expenditure-tax which is not specifically provided for in any of the entries in the said lists falls well within the ambit or scope of entry 97 and as such exclusively is within the legislative competency of Parliament. So long it is in fact a tax on expenditure, the mere fact that in furthera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision and there being no rule of guidance as to the selection of a spouse as an assessee, arbitrary power is given to the executive or taxing authority to select any spouse as assessee which is bad in law. Attack also has been made in relation to amendment of section 4(ii) more or less on similar lines. Mr. Kondaiah, the learned counsel for the respondent, argued that the powers of Parliament are wide enough to take within their range this legislation, that the two essential conditions are satisfied inasmuch as there is a reasonable classification of the assessees into two classes, individual and Hindu undivided family, and that this differentia has a rational relation to the object sought to be achieved by the statute. The amendments introduced by the Finance Act, 1959, suffer from no constitutional inhibition and they advance the purpose and objects of legislation. This argument leads us to the question as to the object of the legislation, the purpose for introducing amendment in section 4(ii) and 2(g)(i), the exact meaning of those provisions and whether the classification introduced has a rational and intelligible basis and whether it has a reasonable nexus with the object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o maintenance from the joint family property joint family property. 2. (h) 'expenditure' means any sum in 2. (h) 'expenditure' means any sum in money or money's worth, spent or disbursed money or money's worth, spent or disbursed or for the spending or disbursing of which a or for the spending or disbursing of which aliability has been incurred by an assessee, liability has been incurred by an assessee, and includes any amount which under the and includes any amount which under the provisions of this Act is required to be provisions of this Act is required to be included in the taxable expenditure. included in the taxable expenditure. 2. (o) 'taxable expenditure' means 2. (o) 'taxable expenditure' means the total expenditure of an assessee the total expenditure of an assessee liable to tax under/this Act. liable to tax under/this Act. 3. CHARGE OF EXPENDITURE-TAX-- 3. CHARGE OF EXPENDITURE-TAX-- (1) Subject to the other provisions (1) Subject to the other provisions contained in this Act, there shall be contained in this Act, there shall be charged for every financial year charged for every financial year commencing on and from the first day commencing on and from the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less other wise provided in 4. Unless other wise provided in section 5, the following amounts shall be section 5, the following amounts shall be included in computing the expenditure included in computing the expenditure or an assessee liable to tax under this or an assessee liable to tax under this Act, namely: Act, namely: (i) any expenditure incurred, whether (i) any expenditure incurred, whether directly or indirectly by any person other directly or indirectly by any person other than the assessee in respect of any than the assessee in respect of any obligation or personal requirement of the obligation or personal requirement of the assessee or any of his dependants which, assessee or any of his dependants to the but for the expenditure having been incurred extent to which the amount of all such by the other person, would have been expenditure in the aggregate exceeds incurred by the assessee, to the extent to Rs. 5,000 in any year; which the amount of all such expenditure in the aggregate exceeds Rs. 5,000 in any year; (ii) any expenditure incurred by any (ii) where the assessee is an individual, dependant of the assessee for the benefit any expenditure incurred by any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation hitherto unknown to this country and in fact not experimented anywhere else in the world. Although in the United States of America a bill was introduced in the Federal Legislature in July, 1921, for levy of what was styled as "Spendings Tax", it was summarily rejected by the Congress as it was considered unworkable and too complicated. In the words of one of the Senators, the bill was a "most complicated monstrosity". The idea of expenditure-tax in India seems to have had its origin in the recommendations of Dr. Nicholas Kaldor, Reader in Economics, University of Cambridge, who gave a report on Indian Tax Reform. It is essentially a tax on spending or consumption, i.e., expenditure. It is not the entire expenditure but only the taxable expenditure for any year as defined in the Act that is liable to tax. The assessee is liable to such tax only if his income exceeds certain limits. In computing this taxable expenditure certain deductions are permissible. Sections 5 and 6 exclude certain types of expenditure from being taxed. The object of this legislation, according to the statement of objects and reasons, is to levy annually tax on expenditure above the prescribed level of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has to be gathered only from the language of the various provisions read as a whole. Lord Halsbury in Lord Advocate v. Fleming (Bindra's Interpretation of Statutes, page 503, stated: "'And in construing such Acts, we have no governing principle to look at: we have simply to go to the Act itself to see whether the duty claimed is that which the legislature has enacted.' Lord Russell C. J. in Attorney-General v. Carlton Bank stated: 'The duty of the court is, in my opinion, in all cases the same, whether the Act to be construed relates to taxation or to any other subject, viz., to give effect to the intention of the legislature as that intention is to be gathered from the language employed. The court must no doubt ascertain the subject-matter to which the particular tax is by the statute intended to be applied, but when once that is ascertained, it is not open to the court to narrow or whittle down the operation of the Act by seeming considerations of hardship or of business convenience or the like.' If the language of an Act of Parliament is clear and explicit it must receive full effect whatever may be the consequences (vide Craies on Statute Law, 6th edition, by S. G. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned and considered: (1) what was the common law before the making of the Act, (2) what was the mischief and defect for which the common law did not provide, (3) what remedy the Parliament hath resolved and appointed to cure the disease of the commonwealth, (4) the true reason of the remedy. And then the office of all the judges is always to make such construction as shall suppress the mischief and advance the remedy,......" It is plain that a statute being the will of the legislature has to be expounded according to the intent of those who made it. That intent has to be necessarily gathered from the language employed. If the language employed is clear and unambiguous the question of construction would not arise. The intention being manifest, no difficulty would arise, for nothing can be implied which is inconsistent with the words expressly used. It is only where the express intention is not manifest it has to be determined by inference based on legal principles which are well-settled. We have now to construe sections 2(g)(i) and 4(ii) which have undergone substantial amend ments as shown above for obvious reasons. Section 2(g)(ii), however, it may be noted, is left intact. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, as she is not as a matter of fact wholly or mainly dependent on him for maintenance and support. Whatever may be said of the unamended provision for the qualifying words of dependence for maintenance and support which followed the words "spouse and children" governed both of them having regard to the context created in that provision, the amendment providing for two distinct groups has made all the difference. Indeed, having regard to the clear context in the present provision there is no occasion for such construction. We have already noticed that nothing can be implied which is inconsistent with the express words used. It is said if the words used are sufficiently flexible they must be construed in the sense which, even if less correct grammatically, is more in harmony with the intention. Having regard to the obvious meaning of the words used, there is no occasion for the application of this rule. Reference also is made, though not directly, to the rule of ejusdem generis. As observed by the Supreme Court in Kochuni Moopil Nair v. States of Madras and Kerala, that rule means : when general words follow particular and specific words of the same nature, the general words must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplete by itself and stands independent of the other. There are thus two distinct compartments, of course, in one department of dependants. The words "and includes", in their context, separate one compartment from the other. We are, therefore, unable to agree with the arguments of Mr. Narasaraju that a different construction ought to be placed on the language of the provision which so clearly shows the obvious intention of the legislature. We then advert to section 4(ii). Before doing so, we may notice the definition of "expenditure" and "taxable expenditure." We may note that no change has been made in the definitions of these two expressions. "Expenditure" means any sum in money or money's worth spent or disbursed or for the spending or disbursing of which a liability has been incurred by an assessee and includes any amount which under the provisions of this Act is required to be included in the taxable expenditure. Section 2(o) defines "taxable expenditure" as the total expenditure of an assessee liable to tax under this Act. The charging section is section 3 and this section has undergone changes. In the proviso to the amended section the following words are inserted, "deri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of the assessee or of any of his dependants out of any gift, donation or settlement on trust or out of any other source made or created by the assessee, whether directly or indirectly." After amendment, section 4(ii) reads : "Unless otherwise provided in section 5, the following amounts shall be included in computing the expenditure of an assessee liable to tax under this Act, namely :-- . . . (ii) where the assessee is an individual, any expenditure incurred by any dependant of the assessee, and where the assessee is a Hindu undivided family, any expenditure incurred by any dependant from or out of any income or property transferred directly or indirectly to the dependant by the assessee." It is thus plain that after the amendment a distinction is made between the assessee where he is an individual and where he is not an individual but is a Hindu undivided family. Where the assessee is an individual any expenditure incurred by any dependant of the assessee is included in computing the expenditure of the assessee. But, where the assessee is a Hindu undivided family, only such expenditure incurred by any dependant as is met from or out of any income or property t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of section 2(g)(i) need not be dependent on the assessee for support and maintenance and yet any expenditure incurred by such spouse and minor child is liable to be taxed, for, according to the scheme of the Act, not only the income derived by the assessee, but also that derived by all his dependants is taken into account under section 3 as income of the assessee and likewise the expenditure of that entire unit, namely, the assessee and his dependants, is taken into consideration as taxable expenditure of the assessee, of course with various statutory deductions and allowances. So long as the assessee is an individual and sought to be taxed as such, even he be a member of the Hindu undivided family, is subject to the same test. Thus the persons similarly circumstanced are dealt with in the same or similar manner. There can be no question of discrimination. Of course, if the assessee is an undivided family and not an individual a different yardstick is prescribed by the amended Act. Prior to the amendment of section 4(ii) there was no difference in relation to treatment of income and expenditure of a dependant vis-a-vis the assessee, whether an individual or Hind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t violates article 14 and article 19 of the Constitution. It is but elementary that the legislatures have plenary powers controlled only by the basic concepts of written Constitutions and can exercise their powers as best as they can within the legislative fields assigned to them by the Constitution without trespassing on the fundamental rights of the citizens in a manner not justified by the relevant articles dealing with such rights. We have already stated that taxation laws like any other laws are equally subject to constitutional limitations. There is, however, a presumption in favour of the constitutionality of an enactment. There are also other presumptions, although all of them are rebuttable, in relation to the fact that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. We may do well to refer to them presently by citing the very authorities which have laid down the same. Article 14, which is the main article relied on, says that the State shall not deny to any person equality before law or equal protection of laws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subjected to an incidence of taxation, which results in inequality, the law may be struck down as creating an inequality amongst holders of the same kind of property." The Supreme Court in Ram Krishna Dalmia v. Justice Tendolkar has laid down the principles to be borne in mind by courts in determining the validity of a statute, when challenged on the ground of violation of article 14 of the Constitution. S. R. Das, Chief Justice, speaking for the court, observed : "It is now well established that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group, and (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases, namely, geographical, or according to objects or occupations or the like. What is necessary is that there must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Officer, Subba Rao J. (as he then was), speaking for the court, laid down the test to determine whether a law offends the equality clause, article 14, of the Constitution : "Though a law ex facie appears to treat all that fall within a class alike, if in effect it operates unevenly on persons or property similarly situate, it may be said that the law offends the equality clause. It will then be the duty of the court to scrutinise the effect of the law carefully to ascertain its real impact on the persons or property similarly situated. Conversely, a law may treat persons who appear to be similarly situate differently ; but on investigation they may be found not to be similarly situated. To state it differently, it is not the phraseology of a statute that governs the situation but the effect of the law that is decisive. If there is equality and uniformity within each group, the law will not be condemned as discriminative, though due to some fortuitous circumstance arising out of a peculiar situation some included in a class get an advantage over others, so long as they are not singled out for special treatment. Taxation law is not an exception to this doctrine .... But in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssification should be founded on an intelligible differentia and that the classification or differentia should have a rational relation to the object sought to be achieved by the legislation and that if there be equality and uniformity within each group notwithstanding that owing to some fortuitous circumstances arising out of a peculiar situation some inequality or some advantage over the other might result except that it be plain that such persons are singled out, the law will not be unconstitutional as discriminatory. In the light of the above authorities, it is now to be seen whether the impugned provisions contravene article 14. The impugned legislation is an enactment levying tax on expenditure. It is a charge on spending, i.e., on the activity of the person in spending the amount. It is not the expenditure of every person that is brought to tax. It is only persons or class of persons who come under certain income group are liable to this charge. A person having no income of his own is not assessable to expenditure-tax whatsoever be the extent of capital that he is possessed of and howsoever high his expenditure might soar in any year. It is only when he gets income and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finition in section 2(g)(i) has in relation to an assessee who is an individual regarded his or her spouse and minor child as a dependant merely by reason of that relationship even though for any other person it laid down the test that he or she should wholly or mainly depend for maintenance and support on the assessee. It is urged that by reason of this difference, the spouse or minor child are discriminated against and the vice of article 14 of the Constitution is thus attracted. It is not easy to see how, by reason of the classification of persons to be included in the definition of "dependant" for furtherance of the general scheme of the Act, the question of banned discrimination would arise. Also it is not easy to understand why technical terms in a statute should necessarily be employed only in their literal sense. If such an obligation on the legislature be accepted, there would be no need nor occasion for the legislature to define various expressions used in the Act. But the legislature in every statute does define certain terms and sometimes even refers to other Acts for the meaning and import of certain other terms which have not been defined. Sometimes need to refer to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the undivided family. Further, as to the expenditure, whereas in the unamended provision dependant's expenditure could have been taken into account only if it were a liability of the assessee, section 4(i) in the amended form provides that the amounts expended by the dependant, even if they be in relation to his personal requirements or obligation, ought to be taken into consideration for computing the taxable expenditure of the assessee. As regards the basic allowance provided for under section 6, the amended provision specifies that it is the allowance not only for the assessee himself but also for all his dependants. Thus it is plain that all the said amendments were effected to give effect to one integrated plan. The legislature in order to effectively carry out the purposes of the Act thought thus of including necessarily the spouse and minor child of an individual assessee in the unit of dependants and made other persons dependants only on their satisfying the test of dependence and sought to include the income of all dependants in the income of the assessee and so also their expenditure irrespective of the source from which it was made. Whether this classification in se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is on that ground that they have carefully categorised the various types of dependants. Further, experience of Parliament has taught them that, unless the spouse and minor child are necessarily brought into the unit, the purpose of the Act would not be effectively carried out on account of, inter alia, the various possible devices that may thwart the purpose. As observed by Subbarao J. (as he then was), while delivering the opinion of the courtin Balaji v. Income-tax Officer : "A wife in India, particularly if she be illiterate--a large majority of them are illiterate--would ordinarily be in economic matters a tool in the hands of her husband. Many things are done in her name without her knowledge of the same. When the legislature of this country, which is assumed to know the conditions of the people and their requirements, with the awareness of this particular widespread fraudulent device in the matter of evasion of taxes ; made a law to prevent the said fraud, it is difficult for this court, in the absence of any counter-balancing circumstances to hold, on the analogy drawn from American decisions, that the need for such a law is not in existence. On the contrary, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also by its tendency to prevent tax evasion." Of course these remarks relate to a country where prevail somewhat different social and economic conditions from those of our country. But the principle laid down affords much guidance for our purposes also. We are inclined to the view that if the legislature has in the light of past experience included unconditionally the spouse and minor child in the definition of dependants under section 2(g)(i), for carrying out effectively the purposes of the Act, this classification can in no sense be unreasonable but only just and legitimate and based on intelligible differentia and further that differentia has a reasonable nexus with the object to be achieved. An argument has been raised on the basis of a comparison between the wife of an individual assessee and the wife of a karta of a Hindu undivided family, that the law has not treated both the dependants alike. It must be borne in mind that the vice of discrimination has to be judged having regard to the position in which the persons similarly circumstanced are placed. There can be no question of discrimination if the persons in two different categories are not treated alike. It is pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgued that the spouse, in this case, the Princess, lives separately and maintains herself from her own sources of income and she could not, therefore, be categorised as dependant. Apart from the fact that there is nothing to show from the returns filed by the assessee that his wife, the Princess, was maintaining herself from her own sources of income and not from or out of any income or property transferred directly or indirectly by him to her, the very fact that she is the spouse of the assessee brings her within the meaning of dependant under section 2(g)(i) and her expenditure irrespective of the fact from which source the income has come has to be included in the taxable expenditure of her husband. We have already said that Parliament after some experience of the working of the Act has come to the conclusion that the wife and minor child are necessarily to be included in the definition of dependants of an assessee who is an individual. Indeed, Parliament has considered them as constituting the integral unit of the family and this for good reasons, viz., having regard to the social conditions of the country for effective working of the legislative enactments and avoiding devices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed its powers within the permissible limits and the classification has been founded on intelligible differentia and that has a rational relation to the object sought to be achieved by the legislature and there is equality and uniformity within each group, merely because owing to fortuitous circumstances arising out of peculiar situations some inequality has resulted, unless it be claimed that such persons are singled out, the law will not be unconstitutional as discriminatory. It has been so held by the Supreme Court in the case to which we have already referred. We do not think that there is any unreasonable restriction on the right of the assessee to hold property for he is called upon to pay the tax due under the provisions of the Expenditure-tax Act. The legislation cannot be impugned as confiscatory in nature merely for the reason that the spouse has been treated as dependant and the expenditure incurred by her not from or out of the income of the property transferred to her by the assessee, has been taxed. As already noticed the concept of family includes the spouse and the minor child. That being necessarily the unit of the family the assessee is made liable for the expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein. The appeals are, therefore, dismissed with costs with the above remarks. Advocate's fees, rupees two hundred in each appeal. KRISHNARAO J.-I have had the advantage of going through the judgment of my learned brother, Obul Reddi J., and it is needless for me to set out the facts once again as they are stated fully in the said judgment. The first question for determination is whether the taxing authority has jurisdiction to issue notice under section 16 of the Expenditure-tax Act as amended in 1959 (hereinafter referred to as "the Act") which is analogous to section 34 of the Income-tax Act, 1922, proposing to reopen the previous assessments. The ground for reopening the prior assessments is that the assessee omitted or failed to disclose the expenditure of his wife who was his dependant. The attention of the assessee was pointedly drawn in the printed form of the return, annexure V of which requires the assessee to disclose the names of the individuals-dependants, setting forth their relationship, age, etc.; but the assessee did not mention the name of his wife as a dependant. It is now argued on behalf of the assessee that the said omission by him does not really affec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her expenditure also should be included in the taxable expenditure of the assessee even if she was not being maintained by the assessee. It has therefore become necessary in these appeals to go into the said questions. On these questions, my learned brother, Obul Reddi J., agreed with the views expressed by our learned brother, Jaganmohan Reddi J. (as he then was), but, with great respect, I am unable to agree with the said conclusions on this part of the case and I would, therefore, give my own reasons : Section 2(g) of the Act, which defines a "dependant", reads as follows : 2. (g) 'dependant' means- (i) where the assessee is an individual, his or her spouse or minor child, and includes any person wholly or mainly dependent on the assessee for support and maintenance." Prior to the amendment introduced in 1959, this definition read as follows : "2. (g) 'dependant' means-- (i) where the assessee is an individual, his or her spouse or child wholly or mainly dependent on the assessee for support and maintenance." The interpretation placed by Sri Narasaraju on behalf of the assessee is that, both before and after the amendment, the qualifying expression "wholly or main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irrespective of the fact whether the assessee maintained the spouse or child or not. It was further contended by the learned counsel that the amendment was introduced to prevent evasion of tax. But there is no whisper in the objects and reasons of the amending Act that any evasion of the tax was sought to be remedied by the amending Act. If the above material, namely, the speech of the Finance Minister and the notes pertaining to the proposed amendment are ignored, I do not find any difficulty in coming to the conclusion which I did. The scope and object of the Expenditure-tax Act is to tax the expenditure of an individual assessee and that expenditure may be incurred on his own behalf or on behalf of his near relatives like spouse or a minor child or any other member or non-member of the family. In all these cases, the crucial test is whether it is expenditure incurred by the assessee. Section 2(h) of the Act which defines "expenditure" also indicates that the expenditure should be incurred by the assessee. Section 3, which is the charging section, also emphasises the fact that the expenditure is one incurred by the individual. The word "dependant" may involve various elements, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' is very generally used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute ; and when it is so used, these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include .... It maybe equivalent to 'mean and include' ....... Hence, the amending Act merely included any person other than a spouse or a child who is also maintained by the assessee, that is, in addition to a spouse or a minor child who are being maintained by the assessee. It cannot, therefore, be interpreted as a matter of grammatical construction that the qualifying clause refers only to the last class immediately preceding is "any person", but not to the previous classes of persons. If the context requires that the qualifying clause should refer to all the previous classes of persons, it should be so interpreted. Reference may be made in this connection to the case of the Supreme Court in Regional Provident Fund Commissioner, Bombay v. Shree Krishna Metal Manufacturing Co., in which it is held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord of person "which immediately precedes the said clause but also the earlier words" his or her spouse or minor child". In this view of the matter, the question whether the assessee's spouse is wholly or mainly being maintained by the assessee has got to be determined by the assessing authority during the course of his investigation. The other provision of the Act which falls for consideration is section 4(ii), which reads as follows : "4. Unless otherwise provided in section 5, the following amounts shall be included in computing the expenditure of an assessee liable to tax under this Act, namely : ..... (ii) where the assessee is an individual, any expenditure incurred by any dependant of the assessee, and where the assessee is a Hindu undivided family, any expenditure incurred by any dependant from or out of any income or property transferred directly or indirectly to the dependent by the assessee" Section 3(1) provides that the expenditure incurred by any individual or Hindu undivided family shall be charged at the rates specified for the relevant year. Section 4 mentions what other amounts should be included in computing the expenditure of an assessee. Sub-section (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X
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