Back
HIGH COURT OF CALCUTTA
CHAKRABARTI, SARMA SARKAR
COMMISSIONER OF INCOME-TAX, WEST BENGAL, CALCUTTA - Appellant
Versus
STATE BANK OF INDIA, CALCUTTA - Respondent
Income-Tax Ref. 21 Of 1949
Decided On : MARCH 29, 1956
INCOME TAX - Section 9(1)(iv) - Annual charge - Whether a charge created by the assessee himself out of his own free will is an annual charge within the meaning of Section 9(1)(iv) - Held, yes.
Fact of the Case:
The assessee, H. M. Thaddeus, got into trouble with his wife in regard to their married life and the lady sought the assistance of the Court by instituting a suit for judicial separation. The suit was disposed of on 28-2-1940 by consent. The terms of the consent decree, so far as they are material for the present purpose, were that an order for judicial separation was to be made in favour of the plaintiff wife and the defendant husband was to be directed to pay to his wife a sum of Rs. 800/- as her alimony "in the manner specified in the terms." About three years later, on 20-12-1943, the husband executed a Deed of Charge whereby he made the payment of the alimony, payable by him under the consent decree, a charge on two house properties owned by him.
Finding of the Court:
The Court held that the charge created by the assessee himself out of his own free will was an annual charge within the meaning of Section 9(1)(iv) of the Income Tax Act, 1922. The Court observed that the word "charge", as used in Section 9(1)(iv), must mean payment and not security. The relevant words of the section are: "where the property is subject to an annual charge. . . . . the amount of such charge." Clearly, the phrase "the amount of such charge" indicates that the word 'charge' used in the earlier phrase also means payment. It would be singularly inappropriate to use the word 'charge' if security was intended, for, "annual security" would be wholly meaningless. That the meaning is 'payment' would also seem to be clear from the explanation appearing after Clause (vii) of the sub-section where it is said that the expression 'annual charge' in Clause (iv) does not include any tax in respect of property or income from property, if such tax is of a certain kind.
Issues: Whether a charge created by the assessee himself out of his own free will is an annual charge within the meaning of Section 9(1)(iv) of the Income Tax Act, 1922.
Ratio Decidendi: The Court held that the charge created by the assessee himself out of his own free will was an annual charge within the meaning of Section 9(1)(iv) of the Income Tax Act, 1922. The Court observed that the word "charge", as used in Section 9(1)(iv), must mean payment and not security. The relevant words of the section are: "where the property is subject to an annual charge. . . . . the amount of such charge." Clearly, the phrase "the amount of such charge" indicates that the word 'charge' used in the earlier phrase also means payment. It would be singularly inappropriate to use the word 'charge' if security was intended, for, "annual security" would be wholly meaningless. That the meaning is 'payment' would also seem to be clear from the explanation appearing after Clause (vii) of the sub-section where it is said that the expression 'annual charge' in Clause (iv) does not include any tax in respect of property or income from property, if such tax is of a certain kind.
Final Decision: The Court answered the question referred to it in the affirmative, holding that the assessee was entitled to the deduction claimed under Section 9(1)(iv) of the Income Tax Act, 1922.
( 1 ) THIS is a Reference under Section 66 (1), Income-tax Act made at the instance of the Commissioner of Income-tax and involves a single question of law. The matter was argued before us at some considerable length.
( 2 ) THE relevant facts are few in number. One H. M. Thaddeus, an inhabitant of Calcutta, appears to have got into trouble with his wife in regard to their married life and the lady sought the assistance of this Court by instituting a suit for judicial separation. That suit, which was Suit No. 20 of 1940, was ultimately disposed of on 28-2-1940 by consent. The terms of the consent decree, so far as they are material for the present purpose, were that an order for judicial separation was to be made in favour of the plaintiff wife and the defendant husband was to be directed to pay to his wife a sum of Rs. 800/- as her alimony "in the manner specified in the terms. " The first of the terms of settlement referred to the payment of this alimony and was to the following effect: "permanent alimony to be paid at the rate of Rs. 800/- per month, payments to be made on the 7th day of every month, the first of such payments to be made on the 7th day of March, 1941. "
( 3 ) ABOUT three years later, on 20-12-1943, the husband executed a Deed of Charge whereby he made the payment of the alimony, payable by him under the consent decree, a charge on two house properties owned by him. The preamble of the deed recited that the husband had come to know that the wife was intending to make an application to the Court to compel him to secure the payment of the alimony by charging the same on his properties and that the husband, was anticipating the threatened move on the part of the wife by executing the deed so as to prevent the intended application and also avoid the liability as to costs which would necessarily be incurred. A desire to safeguard the wife against the future uncertainty as to recovering the alimony was stated to be an additional reason for executing the deed. The operative part of the document read as follows:-"now these presents witness that in consideration of the premises the said husband both hereby charge all and singular the messuage, lands hereditaments and premises being his said preperties hereinafter described for the said alimony amounting to Rs. 800/- per month or Rs. 6,600/-per year and payable to his wife in terms of the said decree, for and during the remainder of her life and he also declares that his said properties and the rents, issues and incomes thereof shall remain charged with the due payment of the said alimony or such sum as may be ordered by Court from time to time in favour of his said wife for her life. "the properties mentioned in the Schedule to the deed and charged thereby were premises No. 1 Lower Rawdon Street and Premises No. 10/1-A Radha Bazar Lane, both situated in the town of Calcutta.
( 4 ) IT will be noticed that whereas the compromise decree directed the alimony to be paid at the rate of Rs. 800/- per month, the Deed of Charge, in addition to describing the payment in the same language, contained the alternative description "or Rs. 9,600/- per year. "
( 5 ) IT appears that thereafter in course of the assessment for the year 1945-46, the assessee claimed a deduction of the payment of the amount of Rs. 9,600/- which he had paid to his wife as her alimony during the relevant accounting year. No reference appears to have been made before the Income-tax Officer to Section 9 (1) (iv), Indian Income-tax Act. The claim was put forward on the basis that an amount, equivalent to the amount payable to the wife as her alimony, had been diverted from the hands of the assessee to those of his wife before it could become the assessee's income. Quite obviously, the assessee was then shaping his case on the decision of the Judicial Committee in the case of Bijoy Singh Dudhuria v. Commr. of Income-tax, Calcutta, 60 Cal 1029 : 60 Ind App 196 (1933) 1 ITR 135 : (AIR 1933 P
AI
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
