RAJKUMARSINGHJI Vs. COMMISSIONER OF EXPENDITURE TAX

JUDGEMENT

(1.) IN the matter of assessment of Shri Rajkumarsinghji of INdore under the Expenditure-Tax Act, 1957. (hereinafter referred to as the Act), for the assessment years 1959-60, 1960-61 and 1961-62 the Appellate Tribunal has made this consolidated reference under Section 25(1) of the Act. The question referred to us for decision is :--

(2.) THE facts as found by the Tribunal are that the assesses inherited large properties. A partition thereof was effected on 21st August 1957 under which the wife of the assessee and his children, including two minors, were awarded extensive properties. In the assessment period in question, the wife and the two minors incurred certain expenditure out of the property allotted to them; the assessee himself did not incur any expenditure for or on their behalf. THE said expenditure was taken to be the expenditure assessable in the hands of the assessee by the departmental authorities and the Tribunal upheld that decision. THE Tribunal has, construing Section 4(ii) and Section 2(g)(i) of the Act, held that expenditure of the wife and minors incurred from whatever source is taxable in the hands of the assessee.

(3.) IT was argued by Shri Chitale, learned counsel for the assessee, that under the Expenditure-Tax Act an 'individual' is an assessee, both the spouses can, therefore, be made assessee and in assessment proceedings initiated against them the expenditure of the one may lawfully be included in the expenditure of the other and thus the same expenditure will be included twice for assessment if the interpretation put by the Tribunal were to be accepted as correct. Learned counsel pointed out that the Legislature left the definition of 'assessee' unchanged and even the charging section (Section 3) only referred to an individual as a unit and not the individual together with his or her spoust and minor children as a unit. IT was therefore submitted that the contention advanced on behalf of the Revenue that the amendments made in 1958 were for the purpose of making the assessee together with his or her spouse and minor child as the unit for assessment of tax could not be accepted and the interpretation put by the Tribunal on Section 2(g)(i) was not warranted. Learned counsel further urged that, as is obvious from the second part of Clause (ii) of Section 4, that expenditure incurred by the dependants is to be included in computing the expenditure of the individual which comes from or out of any income or property transferred, directly or indirectly, to the dependant by the assessee. In other words, under the Act all expenditure incurred by the individual out of his own resources including the expenditure incurred by him on his dependants together with the expenditure incurred by the dependants out of sources made available to them by the individual is made liable to tax and nothing more; the expenditure incurred by a dependant out of his or her or its own property cannot be included in computing the expenditure of an assessee. IT was said that the reading of the Tribunal of the definition of 'dependant' did not in any way alter the construction sought to be put by him on Section 4.