Patna High Court
Raja Shiva Prasad Singh vs Commissioner Of Income-Tax, Bihar And ... on 11 April, 1942
Equivalent citations: [1942]10ITR249(PATNA)
JUDGMENT
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M. J. C. 69 of 1940 MANOHAR LALL, J - This is a case stated by the Commissioner of Income-tax, Bihar & Orissa, under Section 66 (3) of the Indian Income-tax Act upon the following question : (1) Whether the amount of Rs. 19,587 paid as maintenance allowance to the two widows is in the circumstances of this case, assessable income under the Income-tax Act; and (2) if the answer to question (1) Whether the amount of Rs. 19,587 paid as maintenance allowance to the two widows is in the circumstances of this case, assessable income under the Income-tax Act; and (2) if the answer to question (1) be in the affirmative, could such sum be assessed in this case by proceedings taken under Section 34, Indian Income-tax Act?
The assessee is the Raja of Jharia, the owner of an imprtible estate, and was assessed for the year 1937-38 upon a sum of Rs 4,42,142 on account of his income from various assessable sources after allowing a deduction for Rs. 19,587 which he paid in that year as maintenance allowance to the Ranis of Jharia, but as the result of an order passed by the Commissioner of Income-tax on the result of an order passed by the Commissioner of Income-tax on the 12th September, 1938, by which he sets aside the assessment of one of the Ranis with regard to the maintenance which she had received from the Raj, the Income-tax Officer started proceedings under Section 35 of the Indian Income-tax Act against the Raja, the income escaped being said to be Rs. 19,587 for which he had been allowed a deduction in the original assessment. The Income-tax Officer following the decision of this (1) 2 I. T. C. 104 (4) (1939) 7 I. T. R. 362. (2) 8 I. T. R. 413 (5) (1940) 8 I. T. R. 236. (3) 8 I. T. R. 195. Court reported in 8 Income-tax Cases, 295 (Maharajadhiraja Kumar Visheswar Singh1), held : "It is immaterial whether the payment made by the assessee is in accordance with the obligation of the head of an undvided family or in pursuance of a Court decree. Whethever be the impelling force for making the payment neither the charcter of the allowances nor the capacity in which they are paid is altered ". He accordingly added the sum of Rs. 19,587 to the sum of Rs. 4,43,142 on which the assessee had been assessee had been assesed previously and made a fresh assessment under Section 34 of the Indian Income-tax Act on a total income of Rs. 4,62,929 by an order dated the 31st July 1939. An appeal against this decision was dismissed by the Appellaate Assistant Commissioner on the 11th December, 1939. The Commessioner also refused to grant any relief to the assessee under Section 33 of the Indian Income-tax Act. The assesses application to the Commissioner for referring the case to the High Court under Section 66 (2) of the Indian Income-tax Act was also rejected by the Commissioner on the 28th March, 1940. Against that order he moved this Court who directed the Commissioner by an order dated the 3rd of Octomber 1940, to state a case upon the quesion already stated in the beginning of the judgment The Commissioner has sent up a statement of the case for our decision.
The facts found are that the assessee succeeded to the Jharia estate on the death of his predecessor, the late Raja Durg Prasad Singh, as a result of a protracted Civil Court litigaation between the assessee on the one hand and the windows of Raja Durga Prasad Singh called the Ranis, on the other hand. The Rsnis claimed the entire properties of the late Raja Durga Prasad Singh on the ground that the assessee was not a member of the joint family wiht their deceased husband and there was no male member in the joint family with their deceased husband and there was no male memberin the joint family. The assessee on the other hand contended that he was aa member of the Hindu undivided family of the deceased Raja Durga Prasad Singh and that he was, therefore, entitled to the properties by the rule of survivorship and by the custom of lineal primogeniture, which governed succession to the ancestral estate of the family. The contention of the assessee was allowed by the trial Court and confirmed by he High Court and the privy Council. In the litigation it was decided : "the two Rain, being members of a Hindu undivided family with the assessee, were entitled to maintenance, the amount of which was subsequently determined, after getting enquiries made through the High Court, Rs. 750 per month to each of the two Ranis. It was also ordered that the maintenance allowance, together with the arrears of such allowances should constituate a charge upon the estate. It was also decreed by the Court that the assessee was to pay to the Ranis, in addition to the abover sums certain other amounts, being certain proportion of values of jewellery and of other amounts, being certain proportion of values of jewellery and of other movable properties left by the deceased Raja Durga prasad Singh. A portion of the dues of the Ranis so determined was satisfied by adjustmet and the balance is being paid by the assessee by instalments".
On these facts the assessee contended that a sum of Rs. 19,587 which he paid to the Ranis in he year of assessment was not a part of his inome but was the amount received by him for and on account of the Ranis, and, therefore, was an admissible deduction nd no tax was payable by him on that amount, In my opinion the contention of the assessee is correct and ought to have been accepted. Their Lordships of the Judicial Committee in the case of Raja Bijoy Singh Dudhuria1, had to consider a sismilar situation. In that case under a decree of the Court the entire estate comprising all assessable and non-assessable soucre of income of the assessee was charged with payment of mainteneance annually to his step-mother. Lord Macmillan in delivering the judgment of their Lordship in the appeal prefrred by the assessee against the decision of the Calcutta High Court which had refused the contentions of the assessee, observed as follows : "When the Act by Section 3 subjects to charge all inome of an individual, it is what reaches the individual as income which it is intended to charge. In the present case the decree of the Court by charging the appllants whole resources with a specific payment ot his step-mother has to that extent divierted his income from him and has directed it to his step-mother; to that extent what he received for her is not his income. It is not a case of the application by the appellant of part of his income in a particular way; it is rather an allocation of a sum out of his revenue before it becomes income in his haands." This is exactly the situation in the present case.
The Income-tax authorities had been following this view in the case of this assessee. In the original assessment which was made in the year in question this sum was allowed as an admissible deduction, but they proceeded to take action under Section 34 upon the assumption that Rs. 19.587 haws escped assessment because the Commissioner took the view that the allowance paid to the Rains was not taxable by reason of Section 14 (1) of the Indian Income-tax Act. It is convenietnt to quote here the reasons of Mr. Wall the trrhen Commissioner of Income-tax, Patna :
"As regards maintenance allowancem, howeverm there is some force in the assessees objection. As already sstated, the final result of (1) (1933) 1 I. T. R. 135; 6 I. T. C. 449; 61 I. A. 196.
the litigation was that the family. It follows that the assessee is member of suchj family and the maintences allowance is recived by her in that capacity. The allowance is therfor exempt under Section 14 (1). It has of course been held by the Patna and Madras High Courts in the cases of Rajha Jyoti prasad singh and the Raja of Bobbili2, respectively, that the income of an imprtible estate is the incom of the individral who for the time being holds the estate and the income of the individual who for the time bing holds the state and the income of the Hindu undivided family of which he is the Head; and as the Raj in this case is an imprtible Raj it may be argued from this that the maintenance allowance is not received by the assessee as amember of a Hindu unduvuded family. This argument, however, is completelyl disposed of by the decision of the Patna High Court in the case of Maharajadhiraja Kumar Vishewar Singh of Darbhanga3. There also the Raj was an impartible Raj was held to be exempt in his hands under Section 14 (1). The two cases are indistinguishable in any essential respect and the present case. The maintenance allowance received by the assessee cannot therefore be assessed in her hands and must be excluded from the assessments."
It is argued that this view taken by the Commissioner is wrong in view of the recent decision of their Lordships in the case of Commissioner of Income-tax, Punjab v. Dewan Krishna Kishore which has been approved of in a still later decision of the Lordships in the case of Raj Velugti Sarvagna Kumara Krishna Yachendra BahadurVaaru v. Rajeswara Rao5. The judgment of their Lordships was delivered by Sir George Rankin (unreported yet). But in my opinion it is unnecessary to consider the correctness of the decision as to whether the Rani is liable under the Income-tax Act to assessment in repect of the payment received by her. The question was left open by their Lordships of the Judicial Committee in Raja Bijou Singh Dudhuria6 and that questio does not fall to be determined in the present case. All that is necessary to determine in the present case is wether the assessee is liable to pay income-tax on this sum which he recipes for the Ranis and which never becomes income in his hands.
Learned Counsel for the assessee withdrew the second question and desired us not give an decision on that question. Accordingly I refrain from giving any decision on that question.
The assessee is entieled to his costs of this reference. Hearing fee so fixed at Rs. 250. The assessee will also be entitled to withdrawn that sum of Rs. 100 which was deposited by him before the Commissioner as the fee for making a reference to the High Court.
M. J. C. 78 of 1940.
In this case also the assessee is the Raja of Jharia and the question which the Commissioner of Income-tax has been called upon to state under Section 66 (3) of the Indian Income-tax Act is "Whether the amount of Rs. 21,000 and a portion of Rs. 2,00,000 paid as maintenance allowance to the widows is in the circumstances of this case assessable income under the Indian Income-tax Act."
The facts of this case are the same as the facts which govern the decision of Miscellaneous Judicial Case No. 69 of 1940 in which judgment has just been delivered and which was heard along with this case. It was agreed at the bar that the answer to the question in this case must be the same as the answer to the question which we may ultimately decide to give in Miscellanwou Judicial Case No. 69 of 1940. The reasonings which I have given at length in that case need not be repeated here.
For these reasons the answer to the question is in the negative. The assessee is entitled to his costs in this case, but not to any hearing fee in the circumstances. The assessee, however, will be entitled to withdrawn the sum of Rs. 100 which he has deposited with the Commissioner as the fee prescribed by the Act.
HARRIES, C. J.-I agree.