S VENUGOPALA VARMA RAJAH Vs. CAIT
HIGH COURT OF KERALA
S. VENUGOPALA VARMA RAJAH
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(1.) This is a reference made at the instance of the assessee by the Agricultural Income Tax Appellate Tribunal under S.60 (1) of the Agricultural Income Tax Act, 1950, hereinafter referred to as the Act.
(2.) The questions referred are: (1) Whether the arrangement 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 S.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 S.9 read with the provision thereof are applicable in assessing the income of the Hindu undivided family.
(3.) A Hindu undivided Marumakkathayam tharwad represented by its karnavan was assessed to agricultural income tax for the year 1959-60 by the Agricultural 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 e 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 the 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 by the assessee. As there was no appeal by the department against that part of the order directing the exclusion of the income of the "Rani Croup" for computing the income of the assessee, the Tribunal was 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 he income could not be assessed at the hands of the appellant in virtue of the provisions under S.9(1) of the Act. We feel that provisions under S.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 S.9(1)."
The appeal was therefore dismissed by the order of the Tribunal dated 5 2 1966.;
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