TaxTMI 
TaxTMI 
TaxTMI 
1967 (12) TMI 27
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....ut of the income received from the trust estates. In a proceeding for assessment of tax under the Expenditure-tax Act, 1957, of the Hindu undivided family for the assessment year 1958-59 the Expenditure tax Officer brought to tax Rs. 20,508 being the aggregate of the following heads of expenditure less the basic allowance of Rs. 30,000 : Rs. 11,504--Expenditure of the Hindu undivided family ; Rs. 10,321--Expenditure for the minors out of the separate properties ; Rs. 28,683--Expenditure incurred by Surendra out of his separate property. The order of the Tax Officer was confirmed by the Appellate Assistant Commissioner and the Appellate Tribunal. The Tribunal referred to the High Court of Gujarat under section 25(1) of the Act, three questions, out of which only two survive for consideration : " 1. Whether, on the facts of the case, in computing the taxable expenditure of the assessee Hindu undivided family the sum of Rs. 28,683 being the expenditure incurred by Shri Surendra, the karta of the Hindu undivided family, out of his own self-acquired and separate property was includible in law ? 2. Whether, on the facts of the case, in computing the taxable expenditure of....
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....er person, would have been incurred by the assessee, to the extent to which the amount of all such expenditure in the aggregate exceeds Rs. 5,000 in any year ; (ii) any expenditure incurred by any dependant of the assessee for 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 ...... " Section 5 sets out certain exemptions and section 6 sets out certain deductions in the computations of taxable expenditure. In computing the taxable expenditure of an assessee under the Act, the expenditure actually incurred by an assessee is increased by certain specific items of expenditure incurred by persons other than the assessee, and reduced by the amounts exempted under section 3 or permitted to be deducted under section 6 of the Act. The dispute in the appeal relates to the inclusion of the expenditure incurred by Surendra out of his separate estate, and the expenditure incurred out of the estate beneficially vested in his children under the deeds of trust. The Tax Officer brought to tax the first item under section 4(i) read with clause (ii)(....
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....ure 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 of the coparceners or other members of the family in their capacity as members of the family. The karta of a Hindu undivided family assessed to tax under the Expenditure-tax Act is by the express words of section 2(g)(ii)(b) not a dependant ; and when expenditure is incurred by a karta out of his separate estate for his own purposes, even though the family would have been liable to meet that expenditure if the expenditure were not incurred, the expenditure will, prima facie, not be liable to be included in the taxable expenditure of the family. Counsel for revenue contended that Parliament could not have intended, in the computation of the taxable expenditure of a Hindu undivided family, to exclude the expenditure for the personal requirement of the karta, when expenditure for the personal requirement of other coparceners and members of the family is liable to be included. He submit....
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....arta incurs expenditure for the coparceners or other members out of his separate estate and for that expenditure the family would have been liable if it had not been, incurred, the expenditure will be included in the taxable expenditure of the family. But when the expenditure is incurred by the karta out of his separate estate for his personal requirements it will not be included even if the family would have been liable to incur that expenditure if it had not been incurred. This may apparently be anomalous. But that is not a ground for attributing to the expression " dependant " a wholly artificial meaning different from its statutory definition. No coparcener in a Hindu undivided family is a dependant of the family ; he is an owner of the entire property of the family in common with the other coparceners. His rights arise on birth into the family, and so long as the family remains joint, his interest in the property is no whit less than the interest of any other coparcener. The Parliament in devising a special definition of the expression " dependant " has included therein all coparceners except the karta. If it be that the definition given in section 2(g) is not to apply in in....
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....hildren by the trustees. Clause 2(b), which is common to all the three deeds of trust provides that the trustees shall " pay, spend or apply the residue of the trust income to and after the beneficiary until the beneficiary attains the age of twenty-one years for or towards the maintenance, education, advancement in life, religious ceremonies, marriage, welfare and benefit of the beneficiary in such manner as the trustees shall in their absolute and uncontrolled discretion deem fit. " The Tribunal has in the statement of the case stated that in accordance with the terms of the trust settlement, the " trustees had paid, spent or applied the income in the account year 1957 ". That finding of the Tribunal is vague. But the position in law in any one of the three alternatives is plain. If the trustees incurred the expenditure for the education, maintenance, advancement in life, or for religious ceremonies, the case would clearly fall within the terms of section 4(i), for there can be no doubt that the expenditure would be deemed to be incurred by a person other than the assessee--the Hindu undivided family, for the dependants to discharge the obligation which the family was bound to di....
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....e or any of his dependants, to the extent to which the amount of all such expenditure in the aggregate exceeds Rs. 5,000 in any year ; (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. " Clause (i) is a reproduction of the original clause, subject to the deletion of the words " which but for the expenditure having been incurred by that other person, would have been incurred by the assessee ". In our view, the words which were deleted did not add to the meaning of the expression " obligation or personal requirement of the assessee or any of his dependants ". Expenditure which was not related to any obligation or personal requirement of the dependants in their capacity as dependants did not fall within the terms of section 4(i) before it was amended. The words to which we have already referred, were a surplusage : by deleting them no intention to alter the meaning of the original clause (i) may be attributed to the legislature. We....