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HIGH COURT OF ALLAHABAD
C.S.P. SINGH, R.R. RASTOGI, JJ.
Addl. Commissioner Of Income-Tax - Appellant
Versus
Rani Pritam Kunwar - Respondent
Income-tax Reference 500 of 1974
Decided on : Nov 15, 1979
INCOME TAX - Deduction - Maintenance allowance paid to relatives - Whether permissible deduction - U.P. Estates Act, 1920, Section 13, Schedule II - U.P. Zamindari Abolition and Land Reforms Act, 1951, Sections 11, 71 - Hindu law - Custom.
Fact of the Case:
The assessee, a widow, inherited an estate from her husband. She paid maintenance allowance to her husband's mother, sister, daughter, and co-widow. The assessee claimed a deduction for these payments in her income tax return. The revenue authorities disallowed the deduction, but the Income Tax Appellate Tribunal (ITAT) allowed it to the extent of 25% of the income. The assessee appealed to the High Court.
Finding of the Court:
The High Court held that the assessee was legally obligated to provide maintenance to her husband's mother and co-widow. This obligation arose from the personal law governing these persons, the statutory provisions contained in Section 13 read with Schedule II of the U.P. Estates Act, 1920, and Section 71 of the U.P. Zamindari Abolition and Land Reforms Act, 1951. Apart from that, it was also based on the special custom obtaining in the family. As for the other two ladies, viz., Smt. Laxmi Devi, sister, and Smt. Indramohini Devi, daughter of the late estate-holder, also the assessee was under a legal obligation to maintain them which obligation is based on special custom obtaining in this family.
Issues: 1. Whether the assessee was legally obligated to provide maintenance to her husband's mother and co-widow. 2. Whether the assessee was legally obligated to provide maintenance to her husband's sister and daughter. 3. Whether the payments made by the assessee were deductible from her income.
Ratio Decidendi: 1. The assessee was legally obligated to provide maintenance to her husband's mother and co-widow. This obligation arose from the personal law governing these persons, the statutory provisions contained in Section 13 read with Schedule II of the U.P. Estates Act, 1920, and Section 71 of the U.P. Zamindari Abolition and Land Reforms Act, 1951. Apart from that, it was also based on the special custom obtaining in the family. 2. The assessee was legally obligated to provide maintenance to her husband's sister and daughter. This obligation arose from the special custom obtaining in the family. 3. The payments made by the assessee were deductible from her income.
Final Decision: The High Court answered all three questions in the affirmative, in favor of the assessee and against the department. The assessee was entitled to her costs which were assessed at Rs. 200 and counsel's fee in like figure.
R.R. Rastogi, J.
1. THIS is a reference under Section 66(1) of the Indian I.T. Act, 1922 (hereinafter referred to as "the Act"). The Income-tax Appellate Tribunal, Delhi Bench-A, has stated a case and referred the following three questions to this court for its opinion :
"1. Whether, on the facts and in the circumstances of the case, and having regard to the agreement dated March 22, 1943, the Hon'ble High Court's order in Suit No. 2 of 1962, dated August 24, 1967, and the judgment dated January 22, 1962, in Suit No. 95 of 1953 of the civil judge, Moradabad, the Tribunal was legally correct in holding that the allowance paid to Rani Amrit Kunwar and Rani Jai Devi were dependent on obligation arising from family custom and usage, from the provisions of Hindu law and from the provisions of the U.P. Zamindari Estate Act ?
2. Whether, on the facts and in the circumstances of the case, and having regard to the documents mentioned in question No. (1) above, the Tribunal was legally correct in holding that the maintenance allowance to Raj Kumari Laxmi Devi and Raj Kumari Inder Mohini were by virtue of a family custom and they also partake of the nature of an overriding allowance ?
3. Whether, on the facts and in the circumstances of the case, the maintenance allowance of Rs. 15,737 to various relations were permissible deductions from the total income of the assessee for the assessment year 1960-61 ? "
2. BRIEFLY stated the facts are that one Raja Raj Kumar was the owner of Sahaspur Bilari Estate in the district of Moradabad. He died on November 3, 1915, leaving behind him two widows: Smt. Amrit Kunwar and Smt. Panna Kunwar, one son. Raja Jagat Kumar, and one daughter, Rajkumari Laxmi Devi. There were also two illegitimate sons, known as Sarin Brothers, left by him. Since Raja Jagat Kumar was a minor, the management of the estate was taken over by the Court of Wards, Uttar Pradesh, Raja Jagat Kumar became major in January, 1933, and the estate was released in his favour. Shortly after, on March 7, 1934, he died in a motor accident leaving behind two widows, Smt. Pritam Kunwar, who is the assessee before us, and Smt. Jai Devi, and one daughter, Rajkumari Indramohini. Again the management of the estate was taken over by the Court of Wards. It appears that certain members of the family used to receive some maintenance allowance from the estate. However, on March 22, 1943, an agreement was executed between the court of wards representing the assessee on the one hand and Smt. Laxmi Devi for self and as guardian of her minor son and Rani Amrit Kunwar on the other. By that agreement the allowance of Rani Amrit Kunwar was increased from Rs. 500 to Rs. 650 and that of Rajkumari Laxmi Devi from Rs. 150 to Rs. 500. Apart from that Rani Amrit Kunwar was given the right of residence in Warwich House, Moradabad, and it was agreed that after her death it would devolve upon Rajkumari Laxmi Devi during her lifetime. The other terms of that agreement are not necessary for the present purpose. It may be noted that the late Raja had extensive zamindari properties in the districts of Moradabad, Bareilly and Budaun and the whole of that property was a settled estate under the U. P. Estates Act, 1920. After the enforcement of the U. P. Zamindari Abolition and Land Reforms Act, U. P. Act No. 1 of 1951, the entire settled estate was taken over by the Government. In 1953, Rani Jai Devi filed a suit for partition claiming the relief that she was entitled to the compensation money equally with the assessee. She further claimed a declaration of her half share in movable and other properties which were not settled. During the pendency of that suit, the civil judge, Moradabad, made an order" on February 16, 1954, directing the continuance of the maintenance allowance to various persons according to the aforesaid agreement. Later on, the Collector, Moradabad, was appointed receiver for taking over possession of the settled and unsettled properties of this esta
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