- (1.) The points involved in all these appeals by certificate are common and relate primarily to the true scope and interpretation of certain provisions of the Expenditure Tax Act 1957, as amended by the Finance Act, 1959, hereinafter called the 'Act'.
(2.) The facts in C. As. 1794-1796/67 may be stated. Prince Azam Jha Bahadur the eldest son of the Nizam of Hyderabad filed returns for the purpose of assessment of Expenditure Tax for the assessment years 1959-60, 1960-61 and 1961-62. The assessment were completed as follows: 1959-60 completed on 27-3-1961. 1960-61 completed on 22-12-1961. 1961-62 completed on 25-1-1962. On May 5, 1962 the Expenditure Tax Officer issued notices under S.16 of the Act calling upon the assessee to file supplementary returns for the three years in question on the ground that he had reason to believe that 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 assessment 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 judges in dismissing the appeals wrote a separate judgment and expressed a somewhat different view on some of the points.
(3.) In order to determine the questions that have been raised it is necessary to refer to the relevant provisions of the Act as they stood before the amendment made by the Finance Act 1959 and after the amendment. "BEFORE AMENDMENT AFTER AMENDMENT 2(g) "dependent" means - (i) where the assessee is an individual his or her spouse or child wholly or mainly dependent on the assessee for support and maintenance. 2 (g) "Dependent" means (i) where the assessee is an individual his or her spouse or minor child and includes any person wholly or mainly dependent on the assessee for support and maintenance. (ii) where the assessee is a Hindu undivided family (ii) where the assessee is a Hindu undivided family (a) every coparcener other than the Karta; and (a) every coparcener other than the karta; and (b) any other member of the family who under any law or other or decree of a Court, is entitled to maintenance from the joint family property. (b) any other member of the family who under any law or order or decree of a Court is entitled to maintenance from the joint family property; 2 (h).......................... 2 (h) ......................... 3. CHARGE OF EXPENDITURE TAX 3. CHARGE ON EXPENDITURE TAX (i) Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the first day of April 1958 a tax (hereinafter referred to as expenditure tax) at the rate or rates specified in the schedule in respect of the expenditure incurred by any individual or Hindu undivided family in the previous year (i) Subject to the other provisions contained in this Act there shall be charged for every financial year commencing on and from the first day of April. 1958 a tax (herein after referred to as expenditure tax) at the rate or rates specified in the schedule in respect of the expenditure incurred by any individual or Hindu undivided family in the previous year; Provided that no expenditure tax shall be payable by an assessee for any assessment year if his income from all sources during the relevant previous year as reduced by the amount of taxes to which such income may be liable under any other law for the time being in force does not exceed rupees thirty-six thousand Provided that no expenditure tax shall be payable by an assessee for any assessment year if the income from all sources derived by 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 thirty-six thousand. Section 4..........the following amounts shall be included in computing the expenditure of an assessee............. Explanation........" Section 4 no change ......................... Section 4 (i).................... (ii) Any expenditure incurred by any dependant of the assessee for the benefit of the assessee or 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. (ii) Where the assessee is an individual any expenditure incurred by any dependant of the assessee where the assessee is a Hindu undivided family, any expenditure incurred by any dependant from or out of any income of property transferred directly to the dependant by the assessee. Explanation..............." Section 6 (1) The taxable expenditure of an assessee for any year shall be computed after making the following deductions and allowances, namely:- 6 (1) The taxable expenditure of an assessee for any year shall be computed after making the following deductions and allowances namely:- (h) a basic allowance:- (h) a basic allowance:- (i) where the assessee is an individual of Rupees 30,000/- and (i) where the assessee is an individual of Rupees 30,000/- for himself and all his dependants". (ii) ............... ;