9911796707
TMI Blog1973 (12) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... was impressed with an obligation in the nature of a trust and, therefore, its expenditure is exempted from expenditure-tax under clause (j) of section 5, while the contention of the revenue is that the said clause has no application to the facts of the case. Facts of the case are that the assessee was an ex-Ruler of Lakhtar State. Some time before the year 1952, there were some disputes between him on one side and his senior wife and her children on the other. These disputes seem to have been resolved at the intervention of the Government of India in the year 1952. The record of the case contains a copy of the letter dated 8th May, 1952, addressed to the assessee by the Raj Pramukh of the State of Saurashtra. This letter shows the terms of the settlement of the above referred disputes. One of the terms of this settlement was as regards the provision for the marriage expenditure of the two daughters of the assessee by his senior wife. According to this term of settlement, the assessee was expected to set apart the sum of Rs. 1,75,000 out of the sale proceeds of one of his immovable properties called " Lakhtar Utara " situated at Rajkot, for meeting the marriage expenditure of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the payment of this amount was exempted under clause (j) of section 5. Being aggrieved by this decision of the Tribunal, the revenue has approached us in this reference. The Tribunal has, therefore, referred to us the following question for our opinion : "Whether, on the facts and circumstances of the case, the view that the sum of Rs. 75,000 paid by the assessee to the Yuvraj does not form part of the assessee's taxable expenditure during the previous year is justified in law ? " Our answer to this question is in the affirmative for the reasons which follow. Before considering the respective contentions of the parties, we may shortly refer to the relevant provisions of the Act. The Act came into force on the first day of April, 1958. Section 3 of the Act is the charging section which says that, subject to the provisions of the Act, there shall be charged for every financial year commencing on and from the first day of April, 1958, a tax which is hereinafter referred to as "expenditure-tax " at the rate or rates specified in the Schedule. The word " expenditure " is given a statutory definition by clause (b) of section 2 as under : " Expenditure means any sum in money or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (1) thereof. This clause was in force at the relevant time. Read together with the main provisions of sub-section (1) of section 6, clause (c) was as under: "6. (1) Taxable expenditure of an assessee for any year shall be computed after making the following deductions and allowances, namely :-.... (c) any expenditure incurred by the assessee- (i) if an individual, in respect of his own marriage or the marriage of any of his dependants, and (ii) if a Hindu undivided family, in respect of the marriage of the karta or any other member of the family, subject to a maximum of Rs. 5,000 for each marriage." Thus, under this clause (c), the assessee was entitled to deduction of the maximum amount of Rs. 5,000 for the purpose of marriage of his second daughter. This deduction is in fact given by the Appellate Assistant Commissioner. Therefore, the question which remains to be considered is whether the department was correct in including the remaining. amount of Rs. 70,000 in the taxable expenditure of the assessee. It is at this stage that we should refer to the relevant provisions of section 5 under which the assessee claims exemption. These provisions are as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement on trust ". This genus, according to the learned Advocate-General, is the transfer of ownership right. It was alternatively contended on behalf of the revenue that the letter of the Raj Pramukh dated 8th May, 1952, shows that the obligation which was incurred by the assessee was of a political nature and not a contractual or a legal one and such an obligation is not contemplated by clause (1) of section 5 of the Act. Taking the above referred alternative argument first for our consideration, we find that the obligation incurred by the assessee at the intervention of the Government of India does not remain merely a political obligation after the assessee's acceptance of the same. There are no facts in the record to show how and under what circumstances the parties had sought the intervention of the Government of India. In fact, this point is raised for the first time during the course of the arguments and hence there is no finding of the Tribunal to show whether the Government of India acted as a conciliator or acted in exercise of its political powers. The only fact found in the record is that the disputes between the assessee and his Yuvraj were settled by the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the assessee, the expenditure in question would be exempted. Let us, therefore, examine whether the arrangement did amount to a settlement for the benefit of the assessee's two daughters. The crucial test on this point is supplied by clause (c) of section 6(1) of the Act which is already quoted above. This clause permits the marriage expenditure up to Rs. 5,000 for any of the dependants of the assessee. Under the provisions of the Act, therefore, the assessee could have avoided the payment of expenditure-tax by incurring the expenditure on the marriage of his second daughter within the limits of Rs. 5,000. But, could he have done that in view of the obligation which he had incurred by accepting the decision of the Government of India as evidenced by the above referred letter of the Raj Pramukh ? The answer is only too obvious. It is thus clear that when the marriage of his second daughter took place the assessee had no option but to comply with the provisions of the letter of the Raj Pramukh. His obligation to incur the expenditure of nothing less than Rs. 75,000 was of an overriding character. This obligation was in the nature of a settlement for the benefit of his second ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
