COMMISSIONER OF INCOME-TAX, PUNJAB, NORTH-WEST FRONTIER AND DELHI PROVINCES, LAHORE Vs. DEWAN BAHADUR DEWAN KRISHNA KISHORE, RAIS, LAHORE

JUDGEMENT

(1.) This appeal arises out of a reference made to the High Court of Lahore under S.66, Income-tax Act (11 of 1922), in respect of the year of assessment 1937-38. The assessee is Dewan Bahadur Dewan Krishna Kishore. His family is governed by the Mitakshara but by custom the rule of primogeniture controls the devolution of the impartible property in the Punjab to which this appeal relates. He is the present holder of the impartible estate having succeeded as the eldest son of the previous holder. He has a younger brother who established against him in arbitration proceedings a right to maintenance which has now been fixed at rupees 600 per month. He has also four sons who live with him, are maintained by him, and are with him joint and undivided members of a Hindu family. He has certain personal and inividual income chargeable to tax as well as income which is not taxable being derived from a jagir. No question now arises as to these classes of income. The problem laid before the High Court for solution has reference only to the income which is derived from the impartible estate and the question is confined to this : whether in respect of that income the assessee is chargeable as an individual. The contention of the assessee is that such income is only chargeable as the income of a Hindu undivided family of which he is the karta or managing member. If so, less super-tax is payable upon it, the Hindu family, as the law stood in the year of assessment, being favourably treated as regards the graduation of the tax. The question as framed by the Commissioner of Income-tax, Punjab, North- West Frontier and Delhi Provinces, who is appellant before the Board, was in these terms : Whether the income of the impartible estate to which the assessee has succeeded by rule of primogeniture prevailing in his family governed by the Mitakshara is chargeable in his hands in the status of "individual" the assessee being the head of the family consisting of himself and his sons ?

(2.) A second question framed was merely formal and consequential: it asked whether if the income was chargeable as his individual income, his other "personal" income is to be "clubbed together" with it for a combined assessment ? The sections of the Act to which the question directly refers are Ss.3 and 55 which in language almost, but not quite, parallel impose the tax and the additional duty or super-tax. Section 55 prescribes that there shall be charged an additional duty in respect of the total income of the previous year, "of every individual, Hindu undivided family, company, unregistered firm or other association of individuals not being a registered firm." The differences of wording in Ss.3 and 55 though important for some purposes are not significant for the present purpose.

(3.) The opening words of S.9 and sub-sec. 1 of S. 14, however, are as follows : 9 (1). The tax shall be payable by the assessee under the head "property" in respect of the bona fide annual value of the property consisting of any buildings or lands appurtenant thereto of which he is the owner .... 14 (1). 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. By a decision of the High Court of Lahore given in 1932 with reference to the year of assessment, 1929-30, it was held that the income from this impartible estate was chargeable to tax as income of a Hindu undivided family; and also that the younger brother's allowance was no part of the income of the family though chargeable against the recipient as his income : 14 Lah 255.1This ruling was carried out until the assessment now in question came to be made for the year 1937- 38. In consequence of a Madras decision, ILR (1937) Mad 797,2the assessee was notified by the income-tax officer in January 1938, that it was proposed to assess the income from the impartible estate as his individual income. He promptly petitioned the Commissioner to state a case "at this interlocutory stage" for the opinion of the High Court and the Commissioner did so on 6 September 1938. The result is that their Lordships have not before them any order of assessment or other formal statement in detail of income classified under the different heads mentioned in S. 6 of the Act. In the case stated the Commissioner says only that the income of the impartible estate "comprises mainly rent of property and interest." To this Dalip Singh J., in his judgment, adds: "This latter source is however small and the income consists mainly of rent from house property." There is a reference in a further passage of the judgment to "interest from securities, if any" as distinct from income arising from property and coming under S. 9 of the Act. But there is no material before their Lordships to justify them in accepting as a fact that the income of the impartible estate other than that arising from house property is interest receivable on any of the kinds of security mentioned in S. 8. The question as framed refers to the assessee as head of "the family consisting of himself and his sons." The maintenance paid to the younger brother is assumed to be an admissible deduction, as was held in the previous case of 1930. It may be inferred from the Commissioner's language and collected from the report of the previous case that the younger brother lives separately from the elder. This would not necessarily import division in any sense and certainly it nowhere appears that he has relinquished his right to succeed by survivorship to the estate so as to bring about a partition in respect thereof. On these matters the implications of fact and law which underlie the case as stated have not been made explicit. Their Lordships pick no quarrel on these points but desire to make it clear that they have neither occasion to examine them nor the materials for a conclusion. They proceed upon the case as stated.