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TMI Blog1972 (3) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... vidual returns he did not include the expenditure incurred by him as karta of the family for the benefit of his wife and minor children. The said expenditure had, however, been included in the returns filed by him as karta of the Hindu undivided family. The original individual assessments for 1959-60 and 1960-61 were completed on December 31, 1959, and December 31, 1960, on a taxable expenditure of Rs. 3,749 and Rs. 1,724, respectively. The expenditure incurred by the assessee as karta for his wife and children was not included in his individual assessments, but the said expenditure had, however, been included in the assessments of the Hindu undivided family which was, however, declared not liable to expenditure-tax for those years. Subsequent to the completion of the original individual assessments for the said two years, the assessee wrote on January 12, 1961, to the department claiming the benefit of recomputation of expenditure under section 6(2) of the Expenditure-tax Act as amended by the Finance Act of 1959. In that letter the assessee wanted that for the purpose of calculating the average expenditure for the three years before the year 1959-60 the expenditure incurred for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amily on the assessee's wife and children had been shown in the returns of the Hindu undivided family for the two years and that the Expenditure-tax Officer who was aware of the said expenditure was not justified in reopening the assessments on the basis of the letter of the assessee dated January 12, 1961, as there was no omission or failure on the part of the assessee nor was there any fresh information as contemplated in section 16 of the Act. The Tribunal rejected this contention holding that the information contained in the returns filed by the Hindu undivided family could not be considered as information contained in the returns of the assessee himself and that, therefore, as the original returns filed by the assessee as an individual did not contain the information regarding the expenditure in question, the Expenditure-tax Officer should be taken to have become aware of the same only on the receipt of the letter after the completion of the original assessments on the assessee. The Tribunal also held that the information about the correct position of law would also amount to information within the meaning of section 16 of the Act relying on the decision of the Andhra Pradesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case, the inclusion of the expenditure incurred by the Hindu undivided family for the benefit of the assessee's wife and minor children was properly includible in the individual assessments of the assessee for the years 1959-60 and 1960-61 ? (3) Whether, on the facts and in the circumstances of the case, the expenditure incurred by the assessee's wife and minor children after the disruption of the Hindu undivided family was properly includible in the individual assessment of the assessee for the year 1961-62 ? " The last question can easily be answered in view of the subsequent decision of the Supreme Court in H. H. Prince Azam Jha Bahadur v. Expenditure-tax Officer . In that case the Supreme Court, while considering the scope of section 2(g)(i) and (ii), 3 and 4(ii), as amended by the Finance Act, 1959, expressed the view that where the assessee is an individual, the spouse or the minor child of the assessee, irrespective of whether the latter is dependent or independent of the assessee for support and maintenance would fall within the definition of " dependant " and that the spouse or minor child simpliciter has to be treated as a dependant and it is not necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the husband comes to be included in computation of her liability to tax because the word used is ' spouse ' in section 2(g)(i). But it must be remembered that logic or reason cannot be of much avail in interpreting a taxing statute." Applying the principle laid down in the above decision, the wife and minor children of the assessee continued to be his dependants even after partition as per the definition under section 2(g)(i) notwithstanding the fact that they are not factually depending on the assessee for support and maintenance. Therefore, the expenditure incurred by them from and out of the properties allotted to them at the partition has to be treated as an expenditure incurred by persons other than the assessee on the personal requirements of his dependants. We are, therefore, of the view that such expenditure has rightly been included under section 4(i) of the Act in the individual assessment of the assessee. Therefore, the last question is answered in the affirmative and in favour of the revenue. The first question deals with the scope of the powers of the Expenditure-tax Officer to bring to tax an expenditure which has escaped assessment under section 16(b) of the Act. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee as they were not shown in his relative returns and that, therefore, the Expenditure-tax Officer should be deemed to have no knowledge of the said items of expenditure so far as the individual assessments are concerned. It was also contended on behalf of the revenue that the subsequent knowledge about the correct legal position as to the taxability of the expenditure in question will amount to information within the meaning of section 16(b) of the Act. The scope of section 34(1)(b) of the Indian Income-tax Act, 1922, which corresponds to section 16(b) of the Expenditure-tax Act came up for consideration recently before the Supreme Court in Bankipur Club Ltd. v. Commissioner of Income-tax . In that case the assessee, a members' club, filed " nil " returns claiming that it was not liable to pay income-tax. In that return it had shown certain receipts as guests charges from its members. After considering the return the Income-tax Officer came to the conclusion that the assessee was not liable to pay any tax in respect of the amount realised by it from its members. Subsequently, the Income-tax Officer issued notices to the assessee under section 34(1)(b) proposing to rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce from which that information came is immaterial. Admittedly, the Expenditure-tax Officer, in this case, was aware of the said two items of expenditure and he considered them to be the expenditure of the Hindu undivided family. The mere fact that the assessee did not show it in his individual returns but showed it in the returns filed as the karta of the Hindu undivided family cannot make the contents of the assessee's letter dated January 12, 1961, fresh information in relation to his individual assessments. It is not in dispute that it is the same officer who made the assessments on the assessee both in his individual capacity and in his capacity as the karta of the Hindu undivided family. The fact that the Expenditure-tax Officer, considered the expenditure as an expenditure of the family will amount to a finding that the same is not his individual expenditure. In our view the letter in question cannot constitute a fresh information. The Tribunal has also given an additional reason to sustain the power of the Expenditure-tax Officer to reassess under section 16(b). It has stated that the decision in His Highness Prince Azam Jah v. Expenditure-tax Officer will constitute a fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer cannot seek to revise his own view purporting to exercise the power under section 16(b) and the reopening of the original assessments by him under that section is not legal. The first question is, therefore, answered in the negative and against the revenue. The second question involves the true scope and effect of section 4 read with the definition of "dependant " in section 2(g). Section 4 and section 2(g) as they originally stood and as amended by the Finance Act of 1959 are as follows: Section as it stood prior to amend Section as it stands after the amendment by the Finance Act, 1959. " 2(g) ' dependant' means- 2(g) 'dependant ' means- (i) where the assessee is an (i) where the assessee is an individual, his or her spouse or individual, his or her spouse or child wholly or mainly dependent minor child, and includes any person on the assessee for support and wholly or mainly dependent on maintenance; the assessee for support and maintenance; (ii) where the assessee is a (ii) where the assessee is a Hindu undivided family- Hindu undivided family (a) every coparcener other (a) every coparcener other than the karta; and than the karta ; and (b) any other member of the ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustomary hospitality or which is of a trivial or inconsequential nature. trivial or inconsequential nature. " On behalf of the revenue it is urged that the two items of expenditure incurred by the family for 1959-60 and 1960-61 for the wife and minor children of the assessee was in respect of a legal obligation of the assessee to maintain his wife and minor children which but for the expenditure having been incurred by the Hindu undivided family would have been incurred by the assessee and that, therefore, the said amounts spent by the Hindu undivided family should be included in computing the expenditure of the assessee in the assessment years in question. It is also urged by the revenue that in any event the incurring of an expenditure by the Hindu undivided family for the benefit of the wife and minor children of the assessee will have the effect of discharging at the same time two obligations, one of the Hindu undivided family and another of the assessee, and as such section 4(i) will stand attracted in this case. The assessee, however, contends that the expenditure has been incurred by the Hindu undivided family in discharge of its own obligation to maintain the wife an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the dependants to discharge an obligation of the family. The relevant observations are these: " Expenditure incurred out of the family estate by the karta for and on behalf of the family is undoubtedly expenditure by the Hindu undivided family and taxable accordingly. Expenditure incurred by a coparcener or other member of the family out of his separate property is liable to lie included in the taxable expenditure of the family, only if it is incurred in respect of the ligations of the family, or for the personal requirements, of the coparceners or other members of the family, which if not incurred would have been incurred by the family. But every item of expenditure incurred by a coparcener or other member of the Hindu undivided family for his own purposes out of his separate property is not expenditure in respect of an obligation of the Hindu undivided family; nor is it expendi ture to meet the personal requirements of the coparceners or other members of the family. For an item to be included under section 4(i) within the taxable expenditure of a Hindu undivided family, it must be incurred for the collective obligation of the family or for the separate personal requirements o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the very existence of the relationship and quite independently of the possession of any property, ancestral or acquired. It cannot be disputed that the maintenance of a wife by her husband or of minor children by their father is a matter of personal obligation which attaches from the moment of marriage or birth, as the case may be. It has, therefore, to be taken that both the Hindu undivided family as well as the assessee are under an obligation to maintain the wife and minor children of the assessee, the obligation of the family being dependent on the existence of joint property and the personal obligation of the assessee being independent of his possession of any property. It can, therefore, be said that when the Hindu undivided family incurred the expenditure for the wife and minor children of the assessee it had the effect of discharging two obligations, one of the Hindu undivided family and another of the assessee. The question is whether for that reason both the Hindu undivided family as well as the assessee could be taxed on the same expenditure, the former under section 3 and the latter under section 4 of the Act. In our view when the expenditure in question was incur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture incurred by the trustees of the estate of the children would fall under section 4(ii) and that cannot be construed as an exposition of the true scope and effect of section 4(i). The learned counsel for the revenue points out that the Supreme Court considered the expenditure incurred by the trustees of the estate of the children as one incurred by a person other than the Hindu undivided family though the expenditure was incurred in respect of an obligation cast on the trustees by the trust deed, and that the observations referred to above will support his proposition that the expenditure incurred by a person in respect of his obligation can be treated as one incurred by another if it has got the effect of discharging the latter's obligation as well. But, in our view, the above observations cannot be construed in that light. In the case before the Supreme Court when the expenditure was incurred by the trustees of the children they cannot be taken to have incurred the same in discharge of an obligation on their part, but they should be deemed to have incurred the expenditure as agents or on behalf of the children. In such an event the expenditure should be deemed to have been inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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