Commissioner Of Income Tax, M. P. And Bhopal: Damayanti Sahni, Partner Of Ishwar Das Sahni And Brothers vs Sodra Devi: Commissioner Of Income-tax

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1957 Supreme(SC) 61

SUPREME COURT OF INDIA
17th May 1957.
BHAGWATI, S.K. DAS AND KAPUR, JJ.
Commissioner of Income-Tax, Madhya Pradesh and Bhopal, Appellant
Versus.
Smt. Sodra Devi, Respondent.
Sm. Damayanti Sahni, Partner of M/s. Ishwar Das Sahni and Bros., Appellant
Versus
Commissioner of Income-tax, Respondent.
Civil Appeals Nos. 322 and 25 of 1955.
Civil Appeal No. 322 of 1955.
Civil appeal No. 25 of 1955. 833
(From: A.I.R. 1953 Punj. 199.)
Advocates appeared
Mr. C. K. Daphtary, Solicitor-General of India (M/s. G. N. Joshi and R. H. Dhebar Advocates with him), for Appellant (in No.322 of 55) and for Respondent (in No. 25 of 55); M/s. R. J. Kolah, Advocate and M/s. J. B. Dadachanji, S. N. Andley and Rameshwar Nath, Advocates of M/s. Rajinder Narain & Co., for Respondent (in No.322 of 55); Mr. G. S. Pathak, Senior Advocate, (Mr. M. L. Kapur, Advocate, with him) for, Appellant (in No.25 of 55).

Advocates:
C.K.DAFTARY, G.N.Joshi, G.S.PATHAK, J.B.DADACHAN, M.L.KAPUR, R.H.Dhebar, R.J.KOLAG, RAJINDAR NARAIN, RAMESHWAR NATH ROY, S.N.ANDLEY

Headnote:Section 16 (3) (a) (ii)-Individual" if includes female Mother member of partnership-Minor sons admitted to benefits of partnership-Income of minors son if liable to be included in mothers income.
       "Individual"-Group of persons forming unit or corporation.
       Prior to October 18, 1944, N and his wife S (the assessee) and his three major and three minor sons, constituted a joint and undivided Hindu family. There was a severance of joint status between the erstwhile members of the said joint family on October 18, 1944, and the joint family properties were accordingly partitioned. On such partition the business of the spinning and weaving mills and agency shop at Hinganghat fell to the share of the assessee and her three major and three minor sons. A partnership was entered into between the assessee and her three major sons for the purpose of carrying on the business of the mills and the agency firm. The three minor sons of the assessee were admitted to the benefit of the partnership.
       The question which arose for the consideration of the tribunal was whether the income falling to the share of the three minor sons was liable to be included in the total income of the assessee. On a construction of section 16 (3) (A) (ii) of the Income-tax Act, 1922, the tribunal held that the income falling to the share of the three minor sons of the assessee was liable to be included in her total income. The assessee thereupon applied to the tribunal for a reference to the High Court of judicature at Nagpur on the question of law arising out of its order under section 66(1) of the Act. The High Court on reference came to the conclusion that it was not the intention of the legislature to include in the income-of the mother the income of her minor children arising from the benefits of partnership of a firm in which the mother is a partner. The High Court, however, granted the necessary certificate under section 66A (2) of the Act to the Commissioner of Income- tax, Madhya Pradesh and Bhopal, who preferred an appeal to the Supreme Court.
       Held (Per Bhagwati and Kapur, JJ, S.K. Das, J contra) : (I) The words "any individual" and "such individual" occurring in S. 16(3) and S. 16(3) (a) of the Act are restricted in their connotation to mean only the male of the species, and do not include the female of the species even though by a disjunctive reading of the expression "the wife" or "a minor child of "such individual" in S. 16(3) (a) and the expression "by such individual for the benefit of his wife or a minor child or both" in S. 16(3) (b), it may be possible in the particular instances of the mothers being connected with the minor children to include the mothers also within the connotation of these words. Such inclusion which involves different interpretations of the words" any individual" or" such individual" in the different contexts could never have been intended by the Legislature and would in any event involve the addition of the words" as the case may be" which addition is not normally permissible in the interpretation of a statute. The income of the minor sons derived from a partnership to the benefits of which they have been admitted is not, therefore, liable to be included in the income of the mother who is a member of that partnership.
       (2) The section only talks of "individual" capable of having a wife or minor child or both. It therefore necessarily excludes from its purview a group of persons forming a unit or a corporation created by a statute and is confined only to human beings who in the context would be comprised within that category.

Judgement

BHAGWATI, J.- These two appeals with certificates under S. 66A(2) of the Indian Income-Tax Act (hereinafter referred to as the Act) raise a common question of law and will be governed by this common judgment.

2. The facts leading up to these appeals may be shortly stated as under.

3. Prior to October 18, 1944, one Rai Bahadur Narsingdas Daga (since deceased), his wife Shrimati Sodradevi (the assessee), and his three major and three minor sons constituted a joint and undivided Hindu family. There was a severance of joint status between the erstwhile members of the said joint family on October 18,1944 and the joint family properties were accordingly partitioned.

On such partition, the business of the Spinning and Weaving Mills and agency shop at Hinganghat fell to the share of the assessee and her three major and three manor sons. A partnership was entered into between the assessee and her three major sons for the purpose of carrying on the business of the Spinning and Weaving Mills and the agency firm at Hinganghat. The three minor sons of the assessee were admitted to the benefits of the partnership. The genuineness of the partnership was not disputed.

The only question which arose for the consideration of the Tribunal was whether the income failing to the share of the three minor sons was liable to be included in the total income of the assessee. On a construction of S. 16 (3) (a) (ii) of the Act, the tribunal held that the income falling to the shares of the three minor sons of the assessee was liable to be included in her total income.

The assessee thereupon applied to the Tribunal for a reference to the High Court of Judicature at Nagpur of the question of law arising out of its order under S. 66 (1) of the Act and the Tribunal submitted a statement of case referring the following question of law for the determination of High Court:

"Whether on a true construction of the provisions of S.16 (3) (a) (ii) of the Indian Income-tax Act 1922, the income of the three minor sons of the assessee is liable to be included in her total income."

4. The High Court heard the reference, and came to the conclusion that it was not the intention of the Legislature, to include in the income of the mother, the income of her minor children arising from the benefits of partnership of a firm in which the mother is a partner and accordingly answered to the referred question in the negative. The High Court, however, granted the necessary certificate under S. 66A(2) of the Act to the Commissioner of Income-Tax, Madhya Pradesh and Bhopal and hence Civil Appeal No.322 of 1955 before us.

5. One Ishwardas Sahni who died on November 7, 1946, was a partner in the firm of Messrs. Ishwardas Sahni & Bros. The firm s accounting year ended on March 31,1947. The said Ishwardas Sahni left him surviving his widow Damayanti (the assessee) and two minor sons. The assessee became a partner in the said firm which also admitted her two minor sons to the benefits of the partnership. The Income-tax authorities included the minor sons shares in the reconstituted firm s profits in computing the income of the assessee on the ground that individual in S. 16 (3) (a) (ii) of the Act meant an individual person of either sex.

The Income-tax Appellate Tribunal held that the word individual must be taken as referring only to a male assessee wherever that occurred in S.16(3) and directed the deletion from the assessee s income of the shares of her minor sons in the profits of the firm. At the instance of the Commissioner of Income-tax Delhi, the Tribunal referred to the High Court of Punjab at Simla the question of law arising out of its order under S. 66(1) of the Act together with a statement of Case. The referred question was:-

"Whether the word "individual" in S. 16 (3) (a) (ii) of the Income Tax Act 1922, includes also a female and whether the shares of the two minor sons of Shrimati Damayanti Sahni in the profits of the re-constituted firm of Messrs Ishwardas Sahni

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