Commissioner of Income Tax, Bombay v. Gomedalli Lakshminarayan, AIR 1935 Bom. 412

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BEAUMONT, C.J. – This is a reference made by the Commissioner of Income-tax under S. 66
(2), Income-tax Act, and the first question raised is:

Whether, in the circumstances of the case, the income received by right of
survivorship by the sole surviving male member of a Hindu undivided family can be
taxed in the hands of such male member as his own individual income, or it should be
taxed as the income of a Hindu undivided family, for the purposes of assessment to
super-tax, under S. 55 of Income-tax Act, 1922.

The facts are that there was a joint Hindu family consisting of a father and his wife and a son
and his wife, the son being the present assessee. The father died in 1929 before the year of
assessment, so the joint Hindu family then consisted of the son, his mother and his wife and the
question raised by the Commissioner appears to me to admit the existence of a joint Hindu
family. Of such existence, I think there can be no question. It is clear law that you may have a
joint Hindu family consisting of one male member and female members who are entitled to
maintenance, although that does not mean that every Hindu who possesses a wife and a mother is
necessarily a member of a joint Hindu family as Lord- Williams, J., seems to think in the Calcutta
case referred to below. The question raised is whether the assessee is to be assessed as an
individual or as a member of the joint Hindu family, and the importance of the question lies in
this, that for the purposes of super-tax he will be allowed a large exemption if he is taxed as the
manager of a joint Hindu family than if he is taxed as an individual.

The Income-tax Act refers in various sections to a Hindu undivided family, though that
expression is nowhere defined. A Hindu undivided family is a unit for taxation under Ss. 3 and 55
and under S. 14 (1) it is provided, that 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, which seems to mean that
as a Hindu undivided family is taxed as a unit, the individual members thereof are not liable to be
charged in respect of what each member received as his or her share of the joint income. The
nature of a Hindu undivided family was perfectly well-known to the legislature when the Incometax Act was drafted, and it was well-known that the expression “Hindu undivided family”
includes females and is much wider than the expression “coparcenary” which includes only the
males in whom the joint family property is vested. It is argued by the Advocate-General that the
Act, dealing as it does with property, when it refers to a Hindu undivided family, really means to
denote the coparceners, that is to say, male members of the family in whom the family property is
vested. I see no ground for arriving at that conclusion, since the meaning of the two expressions
was well-known when the Act was drafted, and the legislature has thought fit to use the wider
expression rather than narrow one. I have no doubt that this was deliberate. The more liberal
allowance to a joint family in respect of super-tax was presumably given because the whole
income of the family would not go to one individual. If there were a large number of male
members, each member would get only a small portion of the income, and it would be hard to
charge the family with super-tax merely because the joint income was over the limit at which
super-tax commences for an individual. But the same principle would apply, though perhaps to a
less extent, to the case of a Hindu joint family consisting of one male member and several female
members entitled to maintenance, where maintenance might absorb a large share of the family
income.

It has been held by a special bench of the Madras High Court in Vedathanniv. CIT [56 Mad
1] that one male member and the widows of deceased coparceners can form a joint Hindu family,
and that therefore the arrears of maintenance received by a widow of a deceased coparcener are
exempt from tax under S. 14 (1) of the Act. If we were to accept the view contended for by the
Advocate-General, I think we should have to differ from the basis of that decision, and I see no
reason for so doing. I think therefore the first question submitted to us must be answered by
saying that the income of the assessee should be taxed as the income of a Hindu undivided family
for the purposes of super-tax under S. 55. The second question “whether, under the circumstances
of the case, the assessment as levied in this case in the order” must be answered in the negative.

RANGNEKAR, J. – The question raised on this reference is whether the assessee is liable to be
taxed as an individual or a representative of an undivided Hindu family. The importance of the
question lies in the fact that an undivided Hindu family is treated as a single unit for assessment
under S. 3 of the Act and is also entitled to a larger exemption in the matter of assessment to
super-tax. The facts are that the assessee, his father, mother and wife formed a joint Hindu family.
They were possessed of ancestral property which on the death of his father devolved on the
assessee by survivorship, and thereafter he and his widowed mother and his wife continued to live
together as members of an undivided Hindu family. Under S. 2(9) Income-tax Act, a Hindu
undivided family is included under the definition of ‘person’, but has not been otherwise defined
anywhere in the Act. In my opinion therefore the expression must be construed in the sense in
which it is understood under the Hindu law. Under the Hindu law, an undivided Hindu family is
composed of (a) males and (b) females. The males are (1) those that are lineally connected in the
male line; (2) collaterals; (3) relations by adoption; and (4) poor dependants. The female
members are (1) the wife or the “widowed wife” of a male member and (2) maiden daughters.
The commentaries mention female slaves and illegitimate sons also as being members of an
undivided Hindu family. I shall content myself by referring to two well-known text-books.
Mayne in his work at p. 344 observes as follows:

The whole body of such a family, consisting of males and females… some of the
members of which are coparceners, that is, persons who on partition would be entitled to
demand a share while others are only entitled to maintenance.
Then dealing with what is called coparcenary, the learned author at p. 347 observes:

Now it is at this point that we see one of the most important distinctions between the
coparcenary and the general body…

I think perhaps a more accurate description of what a Hindu undivided family means is given
by Sir Dinshah Mulla in his Principles of Hindu Law [Edn. 7, at p. 230], in these words;
A joint Hindu family consists of all persons lineally descended from a common
ancestor, and include their wives and unmarried daughters.

An undivided Hindu family in this sense differs from which is called a Hindu coparcenary,
which is a much narrower body. A Hindu coparcenary includes only those male members who
take by birth an interest in the coparcenary property. This is what is known as apratibandhadaya
or unobstructed heritage, which devolves by survivorship. These are the three generations next to
the last holder in unbroken male descent. The Crown contends that the assessee was the sole
surviving coparcener and therefore free to deal with the property in any way he liked, and that
being so, there was no undivided Hindu family. Now under the Hindu law undoubtedly the sole
surviving coparcener has wider powers to deal with property which he takes by survivorship. But
these powers are subject to well recognised rights of the female members of the family. Thus the
widow of a deceased coparcener has a right to be maintained out of the family property and a
right to a due provision for her residence. An unmarried daughter has a right to maintenance and
residence and to marriage expenses. Similarly the disqualified heirs, as the blind, the deaf etc.,
have similar rights. If the rights of these persons are threatened, or if the holder of the estate is
dealing with the property in a manner inconsistent with or so as to endanger the rights of these
persons, he may be restrained by a proper action from acting in that manner. Similarly, the widow
of a deceased coparcener may adopt a son to her deceased husband and he would therefore
become a coparcener with the sole surviving coparcener. Then the expenses of religious
ceremonies, such as the shraddha relating to deceased coparceners have also to come out of the
property. I need not refer to the other restrictions on the power of the sole surviving coparcener.
Therefore because there is no coparcenary, it does not follow that there is no undivided Hindu
family. The joint status of the family does not come to an end merely because for the time being
there is only one member of the family who is in possession of the family property.

It is clear therefore that there is a sharp distinction between what is understood in the Hindu law
by the expressions “undivided Hindu family” and “coparcenary”. Now these two expressions
which are known to every Hindu lawyer were before the legislature when the Income-tax Act
came to be enacted. It is a canon of construction that one cannot impute ignorance to legislature
of well known legal expressions. The legislature must be presumed to be acquainted with not only
the actual state of the law but with the legal interpretation put upon technical expressions by the
Courts. If then the legislature chose to adopt a wider expression like “undivided Hindu family”
the Courts have no option left but to construe the wider expression in the way in which it has
been construed and understood under the Hindu law. To put a narrower meaning on the
expression “undivided Hindu family” as the Crown wants us to do, would, in my opinion, be
legislating instead of interpreting the section. The view which we are taking is not without
authority, and I need refer only to 56 Mad 1. It is said that that was a decision under S. 14 (1),
Income tax Act, but reading the judgment carefully, it seems to me that the point which has arisen
before us also arose before the Judges of the Madras High Court, and the whole ratio decendi of
that case is that the expression “undivided Hindu family” has to be understood in the sense in
which it is understood in the Hindu law. The learned Advocate-General has referred to an
unreported decision of the Calcutta High Court and produced an uncertified copy of the
judgment. I have no hesitation in saying, with respect to the learned Judges in that case, that their
reasoning does not appeal to me and and is opposed to the fundamental principles of the Hindu
law. For these reasons, I agree that the questions raised must be answered in the manner proposed
by my Lord the Chief Justice.