TaxTMI 
TaxTMI 
1971 (8) TMI 89
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....e assessee to file supplementary returns for the three years in question on the ground that he had reason to believe that the assessee's expenditure had escaped assessment or had been under-assessed. The supplementary returns were filed on March 16, 1962, declaring the same expenditure as shown in the original returns. It appears that the assessee or the assessee's representative was informed by the Expenditure-tax Officer that the assessments had been reopened for including the expenditure incurred by the wife of the assessee. A letter also appears to have been written by the said officer to the assessee on July 20, 1962, but that letter has not been included in the printed record. The assessee filed three writ petitions in the High Court of Andhra Pradesh challenging the reopening of the assessments on various grounds. The writ petitions were dismissed by a learned single judge of the High Court on November 1, 1963. Appeals were filed by the assessee under the Letters Patent which were ultimately decided by a Full Bench of the High Court. The judgment of the learned single judge was upheld by the Full Bench, although Krishna Rao J., while agreeing with the other two learned judge....
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....rupees thirty-six thousand. Provided that no expenditure-tax shall be S.4...... the following amounts shall be payable by an assessee for any assessment included in computing the expenditure year if the income from all sources derived by of an assessee... the assessee and his dependants during the previous year as reduced by the amount of taxes to which such income may be liable under any law for the time being in force does not exceed rupees thirty-six thousand. Explanation......... S. 4(i)............... S. 4.---no change. (ii) Any expenditure incurred by (ii) Where the assessee is an individual, any dependant of the assessee for the any expenditure incurred by any dependant of benefit of the assessee or of any of his the assessee, and where the assessee is a dependants out of any gift, donation Hindu undivided family, any expenditure or settlement on trust or out incurred by any dependent from or out of any of any other source made or created by income or property transferred directly or the assessee, whether directly or indirectly to the dependant by the assessee. indirectly. Explanation ............ S. 6(1) The taxable expenditure of an 6(1) The taxab....
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....ivided family but also when the assessee was an individual. But the reasoning with regard to delimiting the scope and effect of section 2(g)(i) in the Madhya Pradesh case was accepted. This is what was observed by the Madras High Court at page 545 : " The word " dependant " is not a term of art in taxation and should bear its natural meaning, which may not include one who is independent and who does not require and get the assistance of another for support and maintenance. There is nothing in the language of section 2(g)(i) which compels us to take a different view. As it originally stood, the expression meant in the case of an assessee who is an individual 'his or her spouse or child wholly or mainly dependent on the assessee for support and maintenance'. Even after the amendment, that substantially remains to be the position in the case of a spouse or child except that the child should be be a minor and that the expression 'dependant' has been expanded to include, apart from spouse or minor child, any person who factually is a dependant on the individual for support and maintenance. " It was further observed that it was not possible to see why a distinction had been made betw....
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..... The first part which ends with minor child followed by a comma contains the word " means ". The second part is intended to include the kind of person mentioned therein, namely, one who is wholly or mainly dependant on the assessee for support and maintenance. Before the inclusive part of the definition starts the meaning of the word " dependant " has been clearly and completely specified. If section 2(g)(i) as it stood before the amendment is contrasted with the section as it was substituted by the amendment the intention of the legislature becomes obvious. Before the amendment " dependant " meant, where the assessee was an individual, his or her spouse or child wholly or mainly dependent on the assessee for support and maintenance. After the amendment, section 2(g)(i) underwent a complete change. The legislature stopped short of making the spouse or the minor child dependent on the assessee for support and maintenance and employed those words only for the new category of persons who came to be included, namely, any one who was neither the spouse nor the minor child of the assessee but was otherwise wholly or mainly dependent on him for support and maintenance. Thus, in the concl....
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....nt as defined in section 2(g)(i). In the case of a Hindu undivided family it could be included only if it is from out of the income or property transferred directly or indirectly to the dependant by the family. Even otherwise looking at the context in which the word " assessee " is found in the concluding part of section 4(ii) that word has clearly been used only with reference to the second part of clause (ii) which relates to the case of an assessee which is a Hindu undivided family. It does look somewhat anomalous and illogical that where the expenditure has been incurred by the wife and minor children who are altogether independent of the assessee and which has no connection with their being dependent on him or with any property transferred to them should be included in the expenditure of the assessee. The position would be similar where the wife is the assessee and the expenditure incurred by 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. We are unable to see that any double taxation would ....
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....out any classification or that there is no rational relation to the object. According to the learned judge, the object of the enactment is to augment the revenue, to encourage thrift and to avoid wasteful expenditure and because some classes are taxed higher than the others or some are given concessions while others are not, it cannot be held that there has been discrimination within the meaning of article 14. It was contended before the High Court and that contention has been reiterated in a half-hearted manner before us that the Act was void ab initio for want of legislative competence. It has been pointed out that there is no entry in List I of the Seventh Schedule or List III relating to tax on expenditure. Reference has been made to entry 62 in List II which reads " Taxes on luxuries including taxes on entertainments, amusements, betting and gambling ". We are wholly unable to comprehend how expenditure-tax can fall within the aforesaid entry. We are in entire agreement with the majority decision of the Andhra Pradesh High Court that entry 97 in List I which is the residuary entry covers the tax of the kind imposed by the Act. Mr. M. C. Chagla while supporting the judgment....
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....igh Court. In our judgment the majority of the Full Bench of the Andhra Pradesh High Court was right in holding that the expenditure incurred by the wife of the assessee was includible in his assessment for computing the expenditure-tax under the Act. The other point which was canvassed before the High Court of Andhra Pradesh and has been urged before us relates to the validity of the notice which was issued by the Expenditure-tax Officer for reopening the assessments in question. In the notices it was stated that whereas the Expenditure-tax Officer had reason to believe that expenditure chargeable to expenditure-tax had (a) escaped assessment, (b) been under-assessed, (c) been assessed at too low a rate, it was proposed to reassess the expenditure for the assessment year in question. The assessee was required to file a return in Form "A" of expenditure for the assessment years in question. From the judgment of the learned single judge it appears that in a subsequent letter, the Expenditure-tax Officer referred to " return of expenditure filed in response to the notices issued under section 16(a) of the Expenditure-tax Act, 1957. " In the writ petition which was filed on behalf o....
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....use (a), that the expenditure chargeable to tax has escaped assessment for any assessment year, whether by reason of under-assessment or assessment at too low a rate or otherwise ; he may, in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that assessment year, serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 13, and may proceed to assess or reassess such expenditure, and the provisions of this Act shall, so far as may be, apply as if the notice had issued under that sub-section. " On behalf of the assessee, a contention had been raised before the learned single judge of the High Court that the notices had been issued by the Expenditure-tax Officer under section 16(a) of the Act. The notices were illegal inasmuch as the facts that Princess Durree Shehvar was the wife of the assessee and that she had to be considered as his dependant within the meaning of section 2(g)(i) of the Act were within the knowledge of the Expenditure-tax Officer and had been duly mentioned to him and as such there was no ....