Courtney Terrell, C.J:— I have read the judgment prepared by my brother Agarwala. I entirely agree and have nothing to add.
Khaja Mohammad Noor, J.:— I have also read the judgment prepared by my brother Agarwala. I entirely agree with it.
Agarwala, J.:— The assessee is the younger brother of the present holder of the Darbhanga Raj which is an impartible estate. By an indenture executed soon after the death of the late Maharajadhiraja the assessee's brother made a babuana grant in favour of the assessee in accordance with the custom prevailing in the Darbhanga Raj. The grant consisted of a number of villages yielding an income of about five lakhs of rupees per annum. The indenture stated that, in consideration of this grant, the grantee renounced and relinquished all claims to any of the properties moveable or immoveable, ancestral or self-acquired possessed and held by his late father. It appears that in the lifetime of his father the assessee had received from the former an allowance of Rs. 38,000 a year. The present Maharaja makes an allowance of Rs. 48,000 per annum to the assessee in addition to the babuana grant. The question which has been referred for our opinion is whether the assessee is taxable in respect of this Rs. 48,000. The question has been argued, with reference to the terms of the first sub-section of section 14 of the Income-tax Act, 1922. Section 3 of that Act provides that income-tax shall be charged in respect of all income, profits and gains of ever individual Hindu undivided family, company, firm and other association of individuals. For the purposes of the Act, section 2(9) enacts that “person” includes a Hindu undivided family, and for the purpose of proceedings under the Act a Hindu undivided family is treated as a unit for the purposes of taxation. In the third sub-section of section 4 of the Act are enumerated certain classes of income which are exempted absolutely from the operation of the Act. The classes of income included in this sub-section are not taken into consideration either for the purpose of ascertaining the amount of the taxable income or the rate at which the tax is to be levied. The Act also provides other exemptions of a rather different nature, for example, section 15 exempts sums payable by an assessee in respect of an insurance on his own life or on the life of his wife, and section 14(1) exempts from taxation in the hands of an individual dividends which have already been assessed to taxation in the hands of a company and the profits or gains of a firm which have already been assessed to income-tax in the hands of the firm. These exemptions, however, unlike the exemptions referred to in the third sub-section of section 4, are taken into consideration in ascertaining the total income of the assessee which determines the rate at which he is liable to be taxed (section 16) and the amount of super-tax which is payable by him (sections 55 and 56). There is a third exemption provided by the Act which differs both from the exemptions granted by section 4(3) and by section 14(2) and that is the exemption granted by the first sub-section of s. 14 in respect of any sum which the assessee receives “as a member of a Hindu undivided family”. This differs from the exemptions mentioned in the second sub-section of section 14 in this respect, that a sum received by an assessee as a member of a Hindu undivided family is exempt from taxation in his hands whether or not it has already been taxed in the hands of the family. It differs from the exemptions granted by the third sub-section of section 4 inasmuch as the income referred to in that sub-section is not taxable at all while the income of a Hindu undivided family is taxable in the hands of the family.
As has already been observed, the assessee's claim to exemption has been argued on the basis of the provisions of the first sub-section of section 14. It is well established that although the burden is on the revenue authorities to show that income which it is sought to tax is income which is rendered liable to be taxed by the statute, the onus of showing that a particular class of income is exempt from taxation lies on the assessee. As was observed in Scottish Widow's Fund and Life Assurance Company In re, in one sense it is true that a taxing statute should be construed liberally and favourably to the subject, but, on the other hand, equality and impartial justice in the incidence of taxation are of greater moment and the statute should be construed so as to promote that equality and that impartiality of justice. There is no presumption in favour of the exemption of the few from the incidence of a general tax. The presumption is for equality and rather against the partiality which is involved in special exemptions [see also Young, In re, per Lord Deas and per Lord Ardmillan]. In the present instance the revenue authorities discharged the onus which lay upon them by showing that the assessee is in receipt of income. When that has been established, section 3 of the Act renders that income liable to taxation. It is for the assessee to prove that the income which he is in receipt of is exempted from taxation by the Act. For the purposes of section 14(1) what he has to show is (a) that he is a member of a Hindu undivided family and (b) that he receives the income in question as a member of that family. The Commissioner of Income-tax states:
“For the purposes of income-tax, which is a tax on income, a family governed by the law of primogeniture cannot be a joint family as the income is enjoyed by one particular member to the exclusion of others. In this case the assessee comes from a family governed by the rule of primogeniture. Subject to this the family belongs to the Mitakshara School of Hindu Law…………………. The assessee in no sense can be held to be a member of the Hindu undivided family of his brother in respect of the property held by the latter as the assessee has no share in that property during the lifetime of the present incumbent, or even later if he dies leaving a child.”
The question whether a person is or is not a member of the joint undivided family is one of fact, but when the tribunal of fact states the circumstances on which it relies for its finding and those circumstances do not in law lead to the conclusion arrived at by the tribunal of fact, it is open to a Court of law to draw the proper inference from the circumstances stated. It is now well established that, in the case of an impartible Raj, the fact that the holder for the time being is exclusively entitled to the estate is not inconsistent with other members of the family being joint with him [see Collector of Gorakhpur v. Ram Sunder Mal]. The assessee in the present case asserted that he was joint with his brother and this assertion is not controverted by the Commissioner except in so far as it follows from the view he took of the law governing impartible estates, but which is unsustainable in view of the authorities. It must, therefore, be taken that the assessee is joint with his brother. The next and the more difficult question which arises for decision is whether the assessee receives the sum which is sought to be taxed as a member of the undivided family. It was sought to raise this question in the case of Maharani Lakshmibati Saheba v. Commissioner of Income-tax, Bihar and Vrissa, but the assessee was held not to have agitated before the revenue authorities the facts necessary for its decision. There are, however, observations in the judgment in that case, the effect of which may be shortly stated to be that the first sub-section of section 14 applies only to sums received by a member of a Hindu undivided family out of income to a share in which he has a vested right, that is to say, sums which he receives from the joint income of the family. A further consideration of the question has not led me to doubt the correctness of the view taken in that case. The material words of section 14(1) are “as a member of a Hindu undivided family”. It is contended that these words must be construed in a strictly literal sense and that in that sense they refer to any sum received by a member of an, undivided family because he is a member of that family. There are, indeed, observations of Ramesam, J. in Commissioner of Income-tax, Madras v. Sri Raja Vyricherla Narayana Gajapathi Raju Bahadur Garu which supported this view. It had been contended that a sum received by an assessee because he is a member of an undivided family is on the same footing as a sum received as a member of the family within the meaning of section 14(1). In the judgment in that case there is no reference to other sections of the Act which, in my opinion, have a bearing on the correct construction of these words and without considering which it is not possible to arrive at the true intention of the Legislature. Nor were the observations relied on necessary for the determination of the question referred to the High Court which was—
“Whether the sum of Rs. 6,000 received as maintenance by the petitioner as a brother of the late Raja of Kurupam entitled under the law to receive maintenance out of the ancestral impartible estate of Kurupam is a sum received by him as a member of a Hinchi undivided family within the meaning of clause (1) of section 14 of the Act.”
The question so framed pre-supposes that the sum in dispute was paid out of ancestral property and the only question before the Court was whether, when an estate has acquired the attribute of impartibility, it continues to be the joint property of the family. On a review of the decisions of the Privy Council, Ramesam, J., held— “The right to maintenance which the son of a zamindar still possesses is not the creature of custom but it is an incident to the ordinary joint family property which was left untouched by custom, despite its encroachment on the other incidents.” Once it is shewn that the custom prevailing in a family does not negative the right of the junior members of the family to maintenance their right to maintenance out of an impartible estate must be held to be based upon the joint ownership of the junior members of the family [see Collector of Gorakhpur v. Ram Sundar Mal].
In the present case, of course, the family custom does entitle the junior members to maintenance so that in so far as maintenance is paid out of joint family property the recipient receives it as a member of the family by virtue of his right to it, and it is exempted from taxation by section 14(1). But the further question whether the recipient would receive it “as a member” of the family if it were not paid out of joint family property still remains. A definite illustration, will, I think, bring out the anomally of holding that a sum received because a person is a member of an undivided family is the same thing as a sum received as a member of the family—
(1) X, feeling himself to be under an obligation to a certain family, makes a regular allowance to a member of the family who is in distressed circumstances.
The illustration premises that the allowance is made because the recipient is a member of the family to which X considers himself to be under an obligation. Is it arguable that the recipient receives it “as a member” of the family within the meaning of section 14(1)?
(2) Y, the karta of an impoverished undivided family, is himself the possessor of a substantial income from self-acquired properties. Out of this income he makes regular allowances to some of the members of the family.
Here, again, it may reasonably be assumed that Y makes the allowances because the recipients are members of the family but I am unable to appreciate what, difference there is in principle between the two cases.
To me it seems impossible to ascertain what is meant in this section by these words without considering the scheme of the statute with respect to the taxation of Hindu undivided families.
As was pointed out by Lord Herschell in Colquhoun v. Brooks, the Court is entitled, and indeed bound, when considering the terms of any provision in the statute, to consider any other parts of the Act which throw light upon the intention of the legislature and which may serve to show that the particular provision ought not to be considered as it would be if considered alone and apart from the rest of the Act. It has been shown that the general scheme of the Act is to tax all income which is not excluded from the operation of the Act by section 4(3) and not to tax in the hands of an assessee income which has accrued to him and which has already been taxed in the hands of a company or firm. The Act clearly contemplates that in the cases of members of a joint Hindu family the unit of taxation shall be the family itself and not each individual member, i.e the entire joint income, of the members of the family is taxable only in the hands of the family and no part of it is taxable in the hands of its individual members. In my opinion this provides the clue to the meaning of the words “as a member of a Hindu undivided family” in section 14(1). That sub-section exempts from taxation in the hands of a member of family income which is liable to taxation in the hands of the family, whether in fact it has been so taxed or not. It follows from this view of the matter that the burden is on the assessee to show that the sum in respect of which he claims exemption is assessable in the hands of the family. It was suggested that the practical difficulty of proving that a sum received by a member of a family has been paid out of the joint family property indicates that it could not have been the intention of the Legislature to lay this burden on him. I See no more difficulty in proving the source from which a payment is made than in proving many other facts which arise in the course of an assessment or litigation. In the present case the assessee relied on a certificate of the Manager of his brother's estate 5 to prove that he has remained joint with his brother since the latter succeeded to the Raj and that the allowance was paid out of zamindari income. It was no more difficult for him to have produced the Manager as a witness to state whether the allowance was paid from joint income or from the self-acquired properties (if any) of the Maharajadhiraja. It is not easy to conceive a case in which the karta of a joint family, who is paying a maintenance allowance to a member of the family, would not be willing to appear before the income-tax authorities and state the source from which the allowance is paid. And if he maintains separate accounts for the joint income of the family and his own income from self-acquired properties, his testimony, supported by such evidence, would be irresistable. In the statement of the case the Commissioner of Income-tax states that the assessee's contention was that the
“48,000 rupees which he, received in addition to the Babuana grant was made as a sort of maintenance allowance paid to a member of a joint family out of the joint family property.”
The Commissioner has rejected this contention on two grounds, apart from his finding that the assessee is not joint with his brother. Those two grounds are, first, that the allowance is not a maintenance allowance but something in addition to the maintenance allowance fixed by the indenture, and, secondly, that it is not shown that the allowance is paid to the assessee from zamindari income. He has not controverted the assessee's assertion that the allowance is paid out of joint family property. Whether the allowance is paid out of zamindari income or from other sources available to the holder of the Raj is immaterial for the decision of the present question. If the allowance is paid out of joint family income it is exempt from taxation by reason of the provision of section 14(1). I desire to make it clear that I am expressing no opinion on the question whether an allowance paid to a member of an undivided family and not exempted from assessment by section 14(1), may not be exempt on some other ground. For the purposes of this reference it is sufficient to say that the Commissioner's reason for holding that the assessee, is not a member of a joint Hindu family being unsustainable in law, and the assessee's contention that the allowance is paid to him out of joint family property being uncontroverted in fact, I would answer the question referred to us by saying that the cash allowance of 4,000 rupees a month which the assessee receives from his brother the Maharajadhiraja of Darbhanga is not assessable to income-tax in the hands of the assessee.
The assessee is entitled to costs. He will be refunded the deposit of Rs. 100. Hearing fee 15 gold mohurs.
Order accordingly.