VENUGOPALA VARMA RAJAH S Vs. COMMISSIONER OF AGRICULTURAL INCOME TAX
HIGH COURT OF KERALA
S. VENUGOPALA VARMA RAJAH
COMMISSIONER OF AGRICULTURAL INCOME-TAX, TRIVANDRUM
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Mathew, J. -
(1.) THIS is a reference made at the instance of the assessee by the Agricultural Income-tax Appellate Tribunal under Section 60(1) of the Agricultural Income-tax Act, 1950, hereinafter referred to as the Act.
(2.) THE questions referred are: (1) Whether the arrangements made in the karar of 1909 for the maintenance of the junior members of tharwad is a diversion of the tharwad income; (2) Whether the provisions of Sub-section (1) of Section 9 of the Act are applicable only in cases of diversion of income and (3) Whether in the facts and circumstances of this case, the provisions of Sub-section (1) of Section 9 read with the provisos thereof are applicable in assessing the "income of the Hindu undivided family.
A Hindu undivided Marumakkathayam tharwad represented by its karnavan was assessed to agricultural income-tax for the year 1959-60 by the Agricultudal Income-tax Officer, Chittoor, by his order dated 13-4-1961. The assessee had contended before the officer that there was a karar in the tharwad executed by all the members of the tharwad in the year 1909 (29.5.1909), by which the properties of the tharwad have been allotted to what may be called the "Rani Group" and the junior members of the tharwad for their maintenance that the income from the properties allotted is being taken by the "Rani Group" and the junior members and that the tharwad should not be assessed to tax in respect of the income so received by them. The Agricultural Income-tax Officer overruled the contention and assessed the tharwad on the entire income. The assessee preferred an appeal before Appellate Assistant Commissioner. The Appellate Assistant Commissioner held that the income from the properties allotted to the "Rani Group" should be excluded in computing the income of the tharwad, but that income from the properties allotted to the junior members should be included in the income of the tharwad.
Against this decision, there was a further appeal before the Agricultural Income-tax Appellate Tribunal bv the assessec. As there was no appeal by the Department against that part of the order directing the exclusion of the income of the "Rani Group" for computing the income of the assessee, the Tribunal only concerned with the question whether the income received by the junior members should be included in the income of the assessee The Appellate Tribunal held that:
"In view of our finding that the karar does not create any diversion of income but only application of income, there seems to be no necessity for considering the other contention that the income could not be assessed at the bands of the appellant in virtue of the provision under Section 9(1) of the Act. We feel that provisions under Section 9(1) would come in only if there is diversion of income. It is such diverted income that is made taxable at the hands of the transferor under Section 9(1)."
The appeal was therefore dismissed by the order of the Tribunal dated 5-2-1966.
There were 12 members in the tharwad at the time of the karar. All of them were parties to it. The properties mentioned in "A" schedule in the karar were set apart for the maintenance, education and all other expenses of the female and male members residing in Kalari Kovilagam. The karnavan, for the time being, is to see to the performance of the thalikettu kalyanam of the female members of the Kalari Kovilagam in accordance with the prevailing condition, and meet the expenses thereof. All the other expenses of male and female members residing in the Kalari are to be met from the income of 'A' schedule properties. The members residing in the Kalari have no right to alienate or encumber the properties allotted to them and all Government revenues due in respect of the properties are to be paid by them. Parties Nos. 7 and 8 in the karar had obtained from their father certain items included in 'A' schedule. Though the jenmam rights of these items were purchased with Kovilagam funds, the amount taken from the Kovilagam has mostly been recouped from the income of the properties and the aforesaid properties were agreed to be retained as "stree tavazhi" properties.
The net income from the "A" schedule properties was estimated at 30785 paras of paddy and Rs. 1250 300 cartloads of paddy out of the income has to be given for the years 1085, 1086 and 1087 (M. E.) to Party No. 1, who was the karnavan of the tharwad at the time. The surplus income from 'A' schedule properties has to be accumulated and properties acquired for the "stree tavazhi". The managing member of the tavazhi is to keep accounts of the income and expenditure and render account to the female members and to the karnavan for the time being. 'A' schedule properties and acquisitions out of the income therefrom would remain as "stree Tavazhi" properties of Kalari Kovilagam, and they shall be preserved in accordance with the marumakkathavam system without division.
(3.) PARTY No. 2 has been given 7000 paras of paddy annually for his maintenance and for this purpose paddy lands yielding 3,500 paras of paddy, shown in 'B' schedule, were given possession to him and PARTY No. 1 is directed to give PARTY No. 2, from 1085 onwards, 3500 paras of paddy. "Karukakode Challa Nilam" should be entrusted by PARTY No. 1 to PARTY No. 2 by a separate document after redeeming it. The above-mentioned 3500 paras of paddy need be given by PARTY No. 1 only till such entrustment is made. PARTY No. 2 and his successors-in-office are to enjoy the properties.
'C' schedule properties yielding an income of 4750 paras of paddy were allotted for maintenance to Party No. 3 and to persons who succeed to the stanom. then occupied by Party No 3.;
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