John Beaumont, Kt., C.J. -
(1.) THIS is a reference made by the Commissioner of Income-tax under Section 66(2) of the Indian Income-tax Act, and the first question Raised is,
Whether, in the circumstances of the case, the income received by right of survivorship by the sole surviving male member of a Hindu undivided family can be taxed in the hands of such male member as his own individual income, or it should be taxed; as the income of a Hindu undivided family, for the purposes of assessment to super-tax, under section 55 of the Indian Income-tax Act, 1922.
(2.) THE facts are that there was a joint Hindu family consisting of a father and his wife and a son and his wife, the son being the present assessee. THE father died in 1929 before the year of assessment, so the joint Hindu family then consisted of the son, his mother and his wife, and the question raised by the Commissioner appears to me to admit the existence of a joint Hindu family. Of such existence, I think, there can be no question. It is clear law that you may have a joint Hindu family consisting of one male member and female members who are entitled to maintenance, although that does not mean that every Hindu who possesses a wife and a mother is necessarily a member .of a joint Hindu family, as Mr. Justice Lort-Williams seems to think in the Calcutta case referred to below. THE question raised is whether the assessee is to be assessed as an individual or as a member of the joint Hindu family, and the importance of the question lies in this, that for the purposes of super-tax he will be allowed a larger exemption if he is taxed as the manager of a joint Hindu family than if he is taxed as an individual.
The Income-tax Act refers in various sections to a Hindu undivided family, though that expression is nowhere defined. A Hindu undivided family is a unit for taxation under Sections 3 and 55, and under Section 14(1) it is provided that the tax shall not be payable by an assessee in respect of any sum which he receives as a member of a Hindu undivided family ; which seems to mean that as a Hindu undivided family is taxed as a unit, the individual members thereof are not liable to be charged in respect of what each member receives as his or her share of the joint income. The nature of a Hindu undivided family was perfectly well-known to the legislature when the Indian Income-tax Act was drafted, and it was well-known that the expression " Hindu undivided family " includes females, and is much wider than the expression " coparcenery" which includes only the males in whom the joint family property is vested. It is argued by the Advocate General that the Act, dealing as it does with property, when it refers to a Hindu undivided family, really means to denote the coparceners, that is to say, male members of the family in whom the family property is vested. I see no ground for arriving at that conclusion, since the meaning of the two expressions was well-known when the Act was drafted, and the legislature has thought fit to use the wider expression rather than narrower one. I have no doubt that this was deliberate. The more liberal allowance to a joint family in respect of super-tax was presumably given because the whole income of the family would not go to one, individual. If there were a large number of male members, each member would get only a small portion of the income, and it would be hard to charge the family with super-tax merely because the joint income was over the limit at which super-tax commences for an individual. But the same principle would apply, though perhaps to a less extent, to the case of a Hindu joint family consisting of one male member and several female members entitled to maintenance, where maintenance might absorb a large share of the family income.
It has been held by a special bench of the Madras High Court in Veda-thanni v. Commissioner of Income-tax, Madras that one male member and the widows of deceased coparceners can form a joint Hindu family, and that therefore the arrears of maintenance received by a widow of a deceased coparcener are exempt from tax under Section 14 (1) of the Act. If we were to accept the view contended for by the Advocate General, I think we should have to differ from the basis of that decision, and I see no reason for so doing. We have also been referred to a decision, at present unreported, of a division bench of the Calcutta High Court consisting of Lort-Williams and Jack JJ. (In the matter of Moolji Sicka and five other assessees, decided on December 13, 1934). We have only an uncertified copy of the judgment, and therefore I hesitate to deal in any detail with the reasoning in the judgment, but the effect of the decision appears to be that references in the Income-tax Act to a Hindu undivided family should be read as referring to coparcenery. I am unable to agree with that view, which seems to me inconsistent with the words of the Act. I think, therefore, the first question submitted to us must be answered by saying that the income of the assessee should be taxed as the income of a Hindu undivided family for the purposes of super-tax under Section 55. The second question " Whether, under the circumstances of the case, the assessment as levied in this case is in order " must be answered in the negative.
(3.) THE Commissioner to pay the costs of the assessee to be taxed by the Taxing Master on the Original Side scale.
The question raised on this reference is whether the assessee is liable to be taxed as an individual or as a representative of an undivided Hindu family. The importance of the question lies in the fact that an undivided Hindu family is treated as a single unit for assessment under Section 3 of the Act and is also entitled to a larger exemption in the matter of assessment to super-tax.;