Expenditure-tax inclusion of family fails without proof of obligation or personal requirement and the payer's legal capacity.

Expenditure incurred by a person other than the assessee can be brought within section 4(i) of the Expenditure-tax Act, 1957 only if the revenue proves that it was incurred in respect of an obligation or personal requirement of the assessee or his dependants. The Court found that the existing record did not establish whether the expenditure related to coparceners other than Hiralal, or whether it was incurred in their capacity as coparceners of the smaller families or of the larger HUF. Because those essential factual findings were missing, the reference could not be finally determined and required a supplemental statement of the case.

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Issues: Whether the expenditure incurred by the smaller Hindu undivided families could be finally brought within section 4(i) of the Expenditure-tax Act, 1957 on the present record, and whether further findings were necessary on the capacity in which the coparceners incurred the expenditure.

Analysis: The charging provision taxed expenditure incurred by the assessee, while section 4(i) artificially included expenditure incurred by another person only when it was in respect of an obligation or personal requirement of the assessee or his dependants. The revenue bore the burden of establishing that the statutory conditions were satisfied. On the material before the Court, there was no finding whether the expenditure was incurred for coparceners other than Hiralal, and if so, whether it was incurred for them in their capacity as coparceners of the smaller families or of the larger assessee-family. The absence of findings on these essential facts prevented final disposal of the reference.

Conclusion: The matter could not be finally answered on the existing findings and further factual determination was necessary.

Final Conclusion: The reference was not concluded on merits and was sent back for a supplemental statement of the case on the unresolved factual issues.

Ratio Decidendi: Expenditure incurred by another person can be included in a Hindu undivided family's taxable expenditure under section 4(i) only if the revenue proves that it was incurred in respect of an obligation or personal requirement of the assessee or his dependants, and the capacity in which the expenditure was incurred must be established on the facts.

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