# AZAM JHA BAHADUR (DEAD) BY ms LEGAL REPRESENTATIVES v. EXPENDITURE TAX OFFICER, HYDERABAD

- **Citation:** [1972] 1 S.C.R. 470
- **Court:** Supreme Court of India
- **Decided:** 1971-08-30
- **Case number:** Writ Appeals Nos. 67 to 69 qf 1964. and CIVIL APPEALS Nos. 2389 to 2391 of 1968
- **Bench:** K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/azam-jha-bahadur-dead-by-ms-legal-representatives-v-expenditure-tax-officer-5379
- **Pages:** 14

## Headnote

Expenditure Tax Act, 1957-S. 2(g) (i) as amended by Finance Act,
1957-"Dependent"' meaning of-S. 16, validity of notice under Legislative competence-Act covered by entry 97 List /,
Constitution of India. 1950-Article 14-Taxing statute-Incidence of
tax different on different classes of assessees-Does not a1nount to legislation
without classification:
Section 2(g) of the Expenditure Tax Act, 19'57, before its amendment
by the Finance Act, 1959, defined 'dependent" to mean "where the assessee
is an individual, his or her spouse or child wholly or mainly dependent on
the assessee for support and maintenance". After the amendment 'dependent' meant "where the assessee is an individual, his or her spouse or minor
child, and includes any person wholly or mainly dependent on the assessee
for support and maintenance".
The appellant was assessed as an individuol to expenditure tax for the
assessment years 1959-60, 1960-61 and 1961-62. After the completion of
the assessment, the Expenditure Tax Officer issued notice under section 16
of the Act calling upon the appellant to file supplementary returns for the
three years on the ground that be had reason to believe that the appellant's
expenditure had escaped assessment dr had been under assessed.
The
assessments were sought to be reopened for including the expenditure incurred by the wife of· the appellant. The appellant, thereupon, filed a
writ petition in the High Court challenging the reopening of the assessments on various grounds. The petition was dismissed. In appeal to
this Court it was contended :
(1) the appellant's wife, who admittedly
had her own properties and assets and had substantial income therefrom
could not be regarded as 'dependent' within the meaning of section 2(g)
(i) and, therefore, her expenditure could not be included under section
4(ii) for computing the expenditure of the assessee;
(2) that there was
no reasonable basis for making a distinction between an assessee, who was
an individual and an assessee which was a Hindu undivided family; (3)
that the action of the Expenditure Tax Officer in reopening the assessments
under s. 16(a) was wholly arbitrary and illegal; that there had been no
omission or failure on the part of the assessee to make a return of hi~ expenditure or to disclose fully and truly all material facts; and the Act was
void for want of legislative competence.
Dismissing the appeal.
HELD : (I) The Act divided the assessees mto well known classes,
namely, an assessee who was an individual and an assessee which was a
Hindu Undivided Family. The two cases were dealt with separately in
s. 2(g) and in s. 4(ii). Where the assessee was an individual one had to
look for his "deoendent" in cl. •(il and where the assessee was a Hindu
Undivided Family the "deoendent" ,had to be found in cl. (g) (ii) of section 2. After the amendment cl. g(i) of s. (2) under went a complete
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PRINCE AZAM JHA v. E.T.O. (Grover, J.)
471
change. Before the inclusive part of the definition the meaning of the
word "dependent" had been clearly and completely specified. The legisla·
ture stopped short of making the spouse or the minor child "dependent on.
the assessee for support and maintenance" and employed those words only
for the new category of persons who came to be included, namely, any
one who was neither the spouse nor the minor child of the assessee but was
otherwise wholly ot mainly dependent on him for support and maintenance.
In the absence of any ambiguity in the language employed in the first part
of s. 2(g) (i) the plain meaning had to be taken. The whole construction
of that clause left no room for doubt that in the first part, no question of
dependence in fact arose and the spouse or the minor child simplicitcr had
to be treated as .a "dependent". [477 A-H; 480 B-C]
Commissioner of Expenditure Tax, Madras v. T. S. Krishna, 78 I. T. R.
541 and Rajku1nar Singhji v. Conunissioner of Expenditure Tax, Nl.P.,
78 l..T.R. 405, disapproved.
M. N

## Text

470
AZAM JHA BAHADUR (DEAD) BY ms
LEGAL REPRESENTATIVES
v.
EXPENDITURE TAX OFFICER, HYDERABAD
August 30, 1971
[K. S. HEGDE AND A. N. GROVER, JJ.]
Expenditure Tax Act, 1957-S. 2(g) (i) as amended by Finance Act,
1957-"Dependent"' meaning of-S. 16, validity of notice under Legislative competence-Act covered by entry 97 List /,
Constitution of India. 1950-Article 14-Taxing statute-Incidence of
tax different on different classes of assessees-Does not a1nount to legislation
without classification:
Section 2(g) of the Expenditure Tax Act, 19'57, before its amendment
by the Finance Act, 1959, defined 'dependent" to mean "where the assessee
is an individual, his or her spouse or child wholly or mainly dependent on
the assessee for support and maintenance". After the amendment 'dependent' meant "where the assessee is an individual, his or her spouse or minor
child, and includes any person wholly or mainly dependent on the assessee
for support and maintenance".
The appellant was assessed as an individuol to expenditure tax for the
assessment years 1959-60, 1960-61 and 1961-62. After the completion of
the assessment, the Expenditure Tax Officer issued notice under section 16
of the Act calling upon the appellant to file supplementary returns for the
three years on the ground that be had reason to believe that the appellant's
expenditure had escaped assessment dr had been under assessed.
The
assessments were sought to be reopened for including the expenditure incurred by the wife of· the appellant. The appellant, thereupon, filed a
writ petition in the High Court challenging the reopening of the assessments on various grounds. The petition was dismissed. In appeal to
this Court it was contended :
(1) the appellant's wife, who admittedly
had her own properties and assets and had substantial income therefrom
could not be regarded as 'dependent' within the meaning of section 2(g)
(i) and, therefore, her expenditure could not be included under section
4(ii) for computing the expenditure of the assessee;
(2) that there was
no reasonable basis for making a distinction between an assessee, who was
an individual and an assessee which was a Hindu undivided family; (3)
that the action of the Expenditure Tax Officer in reopening the assessments
under s. 16(a) was wholly arbitrary and illegal; that there had been no
omission or failure on the part of the assessee to make a return of hi~ expenditure or to disclose fully and truly all material facts; and the Act was
void for want of legislative competence.
Dismissing the appeal.
HELD : (I) The Act divided the assessees mto well known classes,
namely, an assessee who was an individual and an assessee which was a
Hindu Undivided Family. The two cases were dealt with separately in
s. 2(g) and in s. 4(ii). Where the assessee was an individual one had to
look for his "deoendent" in cl. •(il and where the assessee was a Hindu
Undivided Family the "deoendent" ,had to be found in cl. (g) (ii) of section 2. After the amendment cl. g(i) of s. (2) under went a complete
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PRINCE AZAM JHA v. E.T.O. (Grover, J.)
471
change. Before the inclusive part of the definition the meaning of the
word "dependent" had been clearly and completely specified. The legisla·
ture stopped short of making the spouse or the minor child "dependent on.
the assessee for support and maintenance" and employed those words only
for the new category of persons who came to be included, namely, any
one who was neither the spouse nor the minor child of the assessee but was
otherwise wholly ot mainly dependent on him for support and maintenance.
In the absence of any ambiguity in the language employed in the first part
of s. 2(g) (i) the plain meaning had to be taken. The whole construction
of that clause left no room for doubt that in the first part, no question of
dependence in fact arose and the spouse or the minor child simplicitcr had
to be treated as .a "dependent". [477 A-H; 480 B-C]
Commissioner of Expenditure Tax, Madras v. T. S. Krishna, 78 I. T. R.
541 and Rajku1nar Singhji v. Conunissioner of Expenditure Tax, Nl.P.,
78 l..T.R. 405, disapproved.
M. N. Patwardhan v. Co1nniissioner of Expenditure, Tax,
Poona, 78
I.T.R. 338, referred to.
No double taxation would be involved if the meaning of the word
"dependent" as given in the first part of s. 2(g) (i) was to be applied without qualifying the same with what followed. The charging section 3, only
subjected to tax the expend•iture incurred by an indi,idual or a Hindu Un·
divided Family.. Once the expenditure incurred by both the assessee as
an individual and the spouse had been included in his or her assessment
of expenditure tax, it could not be again subjected·to tax in the assessment
of the other spouse. There was nothing in the Act which did away with
the principle that in the absence of express provision the same item will
not be taxed over again, [478 El
(2) The High Court was right in coming to the conclusion that in tax
legislation where the incidence of the tax fell differently upon
different
classes of assessees, as in the prcsen~ case, it could not be said that there
\ras legislation without any classification or that there
was no
rational
relation to the object.
Because some classes are taxed higher than the
others, or somC' are given concessions while others are not, it cannot be
held that there had been discrimination within the meaning of art. 14.
[479 B-Dl
(3) Though the impression created by the notices which were issued
and the correspondence which followed between the assessee
and the
Expenditure Tax Officer was that the notice had been issued under s: I~
(a) of the Act, in the writ petitions and in the returns which were filed
both sides were quite clear that the matter was not confined to only clause
(a) of section 16(1) and clause (bl figured prominently. The pleadings
in the writ petitions covered both clauses of s. 16 and, in any case, the Ex.·
penc!iture Tax Officer had made a positive avennent that the information
\Vith regard to expenditure incurred by assessee's wife became available to -
him only on 5th May. 1962. Thus the notices were issued on that date
were within the period of 4 years which was the limit prescribed with
regard to Acts under clause (b) the limit being more in respect of clause
(a). It was no where controverted in the High Court that the requisite
information came into possession of the Expenditure Ta.< Officer only on
5th Mav. 1962. [482 El
(4) Entry 97 in List I which is the residuary entry co;-erec! the tax of
the ~ind imposed by the Act.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1794 to·
1796 of 1967.
472
SUPREME COURT REPORTS
[1972] l S.C.R.
Appeals from the judgment and order dated April 14, 1967 of
the Andhra Pradesh High court in Writ Appeals Nos. 67 to 69 qf
1964.
and CIVIL APPEALS Nos. 2389 to 2391 of 1968.
Appeals from the judgment and order dated August 17, 1967
.of the Madhya Pradesh High Court in Misc. Civil Case No. 32 of
1966.
Y. V. Anjaneyulu, A. Subha Rao, B. Datta, J.B. Dadachanji,
0. C. Mathur and Ravinder Narain, for the appellants (in C.As.
No. 1794 to 1796 of 1967.
Jagadish~warup, Solicitor-General, A. N. Kirpa/, R. N. Sach·
they and B. D. Sharma, for the respondeint (in C.As. Nos. 17941796 of 1967) and the appeliant (in C.As. Nos. 2389 to 2391
of 1968).
M. C. Chagla, A. K. Chilah and S. K. Gambhir, for the respondent (in C.As. Nos. 2389 to 2391 of 1968).
The Judgment of the Court was delivered by
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The points involved in all these appeals by certificate are common and relate primarily to the true scope and interpretation of certain provisions of the Expendioture Tax Act, 1957,
as amend·~d by the Finance Act, 1959, hereinafter called the
E
'Act'.
The facts in C.As. 1794-1796/67 may be
stated.
Prince
Azam Jha Bahadur the eldest son of the Nizam of Hyderabad
filed returns for the purpose of assessment of Expenditure Tax
for the assessment years 1959,
1960-61 and
1961-62.
The
assessments were completed as follows :-.
F
1959-60
. co:npleted on 27-3-1961.'
1960-61
,.
"
22-12-1961.
1961-62
..
25-1-1962.
;
On May 5, 1962 the Expenditure Tax Officer issued notices under
s. 16 of the Act calling upon the assessee ito file supplementary
returns for the three years in question on the ground that he
had reason to
beli·~ve that assessee's expenditure had escaped
assessment or had been under-assessed. The supplementary returns were filed on March 16, 1962 declaring the sam'e expenditure as shown in the original returns. It appears that the assessee
or the assessee's repr~sentative was informed by the Expenditure
Tax Officer that the assessments had been
reop.~ned for including th·~ expenditure incurred by the wife of the
assessee.
A
letter also appears to have been written by the said officer to the
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PRINCE AZAM JHA v. E.T.O. (Grover, /.)
assessee on July 20, 1962 but that letter has not been included
in the printed record.
The assessee filed three writ petitions in
the High Court of Andhra Pradesh challenging the reopening
of the assessments on various grounds. The writ petitions were
dismissed by a learned single judge of the High Court on November 1, 1963. Appeals were filed by the assessee under the
Letters Patent which were ultimately decided by a full bench of
the Bigh Court. The judgment of the learned single judge was
upheld by the full bench although Krishna Rao J. while agreeing
with the other two learned judges in dismissing the appeals wrote a
separate judgment and expressed a somewhat different view on
some of the points.
In order to determine the questions that have been raised it
is necessary to refer to ~he relevant provisions of the Act as they
stood before the amendmen~ made by the Finance Act 1959
and after the amendment.
"BEFORE AMENDMENT
(2) (g) "dePendent" means:-
(i) where the assessee
is
an individual,
his or her spouse or child wholly or main.
ly dependent on the assessee for support
and maintenance;
(ii) where the assessee is a Hindu undivided
family.
AFTER AMENDMENT
2(g) "Dependent" means
(i) where the assessee is an
individual,
his or
her
spouse or minor child, and
includes any person whol1y
or mainly dependent on the
assessee for support
and
maintenance;
.
(ii) where the assessee is a Hindu·
undivided family.
(a) every coparcener other than the karta; (a)
every coparcener other than
and
the karta; and
(b)
any other member of the family who under any Jaw or order or decree of a court,
is entitled to maintenance from the joint
family property.
2(h) ............................. .
(b)'any- other men1ber of
the family who under any
law or order or decree of a
court is entitled
to 1naintenance from the joint family
property;
2(h) .•.•..••••
3. CHANGE OF EXPENDITURE TAX.
3. CHARGE
ON
EXPEN-
(i) Subject to the other Provisions contained in (i)
this Act, there shall be charged for every
financial year commencing on and fron1
the first day of April 1958 a tax (hereinafter referred
to as expenditure tax)
at the rate or rates specified in the
schedule in respect of the expenditure incurred by an individual or Hindu undivided family in the previous Year:
DITURE TAX
Subject
to the other provisions
contained in this
Act, there shall be charged
for every financial Year commencing on and from the
first day of April, 1958 a
tax (hereinafter referred to
as expenditure tax) at the
rate or rates
specified in
the schedule in respect of
the exPenditure incurred by
any individual or Hindu
undiyided family in the
previous Year:
SUPREME COURT REPORTS
[197~] 1 S.C.lt.
providtd that no expenditure t•x shall be
payable by an assessee for •ny assessment
year if his income from an sources during
the relevant previous year as redueed by the
amount of taxes to which such income
may be Hable under any other Jaw for
the time bein~ in force does not exceed
rupees thirty-six thousand.
before amendment.
S. 4 ....... the
following
amounts shall be
in-cluded in computing the expenditijre
of an assessee ..................... .
S. 4 (i) .. , ...................... .
.(ii) Any exncnditire incurred by any depen~
dent of the assessee for the benefit of the
assessee or of his depenrlents out of any
gift. donation or settfernent on trust or
out-of any other source made or created
by the asscssee, whether directly or in~
directly.
Exp1an<1tion
............ .
S. 6 (ll
The
taxable
expenditure of
Zill lrSsessee for any
Ycar,shall be computed
aftre:r · making the following
deductions and
aitow'anccs, nan1cty:--
{Ir) a basic allowance:-
(i)
(ii)
· Where the assessee is an
Rs. 30,000/- and
individual, of
After amendment.
Provided
that no expendi·
ture tax shall be payable by
an
assessee
for
any
assessment year if the in·
come from
all
sourees
derived by the assessee and
his dependants during the
previous Year as redueed by
the
amount
of taxes to
which such income may be
liable under any law for
the time being in force does
not exceed thirty.six thousand.
S. 4.. no change
(ii)
Where the asscssee· is an
individual any expenditure
incurred by any dependent
of the assessce where
the
assessee is a Hindu undivided
family, any
eX·
penditure incurred by any
dependant from or out of
any
income or property
transferred
directly to the
dependant by the assessce.
6(1) The taxable expenditure of
an assesscc for
anv year sha11
be computed after ri-taking the
following deductions and allow·
ances, n:irne1y:-
(h) a basic allowance:--
(i) when;.
the asscs<;cc )s an in·
dividual, of Rs. .10.000/-
for
himself and all
his depen·
d::lnt'-."'
The controversy has centered round the definition in s. 2(g)
of the word "dependent" for the purpose of s. 4 (ii). According
to the assessee his wife who admittedly had her own properties
and assets and had substantial income therefrom could not be
regarded as a dependent within s. 2 (g) and therefor>~ her expenditure could not be includ~ under s. 4(ii) for computing the
e~p'&nditure of the assessee for the purpose of aS&~ssing his liability
to tax under the A{:t.
In other words even after the amendment
made in 1959 "dependent" means where the assessee was an indi-
~l his o't her SJX>nse or child wlfo!ily or mai11Iy dep.<;!ndent on
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PRINCE AZAM JHA v. E.T.O. (Grover, /.)
475
the assessee for support and maintenance.
Now after the amend1
ment 'the language underwent a complete change and sufficiently clear language was employed
according
to · which
"dependent" meant where the assessee was an individual his
or her spouse or minor child and included any pecson
wholly or mainly dependent on the assessee for support
and
maintenance.
But the Madras and the Madhya Pradesh High
Court have given decisions which support the view advanced on behalf of the assessee.
It will be best to examine 'Ille reasoning
in these decisions because the arguments which have been addressed to us are based mainly on the same grounds.
In Commissioner of Expenditure Tax, Madras v. T. S.
Krishna(1)
the
Madras High Court referred to the decision of the Madhya
Pradesh High Court in Rajkumar Singhji v. Commissioner of Expenditure Tax, M.P.(') which is the subjeot mattsr of the other
set of appeals i.e. C.As. 2389-2391168. In the Madras case the
view of the Madhya Pradesh High Court was not accepted that
the expression "any expenditure incurred by any dependent from
or out of any income· or property transferred directly or indirectly to the dependent by the assessee" occurring in section 4 (ii)
applied not only when th·~ assessee
was a
Hindu
undivided
family but also when the assessee was an individual.
But the
reasoning with regard to delimiting the scope and
effect
of
s. 2(g) (i) in the Madhya Pradesh case was accepted.
This is
what was observed by the Madras High Court at page 545 :-
"The word "dependent" is not a term of art in taxation and should bear its
natural meaning, which
may not include 011e who is independent and who does
not require and get the assistance of another for support and maintenance. There is nothing in the language of section 2(g) (i) which compels us to take a
different view.
As it originalJy stood, the expression
meant in the case of an assessee who is an individual
"his or her spouse or child wholly or mainly dependent
on the assessee for support a~ maintenance''.
Even
after th·~ amendment, that substantially remains to be
th.e position in the case of a spouS'e or child except that
the child should be a minor and that the expression
"dependent" .has beo::n expanded to include, apart from
spouse or rumor child, any person 'who factually is a
dependent on the individual for support and maintenance"
It. 'Yll5 . further observed that it was not possible to see why a
distinction had been made between the spouse or the minor child
(I) 78 I.T.R. S41.
(2) 78 !.T.R. 405
476
SUPREME COURT REPORTS
[1972] l S.C.R.
of an individual on the one hand and the spouse or ithe minor
child of a coparcener in a Hindu undivided family on the other
hand.
In the latter case the expenditure of a wife or a minor
child who could be a member or coparcener could be included
in the taxable expenditure of the Hindu undivided family only
if tk. wife or the minor child was entitled .to mairrtenance from
the ic'int family property under any law order of a court. Th.ere
wa~ no reason why from the standpoint of checking evasion of
tax th'n qualification was to be ignored in the case of a spouse
or minor child of an individual. It was also suggested that if the
view commended by the Revenue were to be accepted one will
have to impute to the le~islature an unjustifiable discrimination
in the marter of addition of expenditure between a
spouse or
minor child of an individual and spouse and minor child of a
coparcener in a Hindu undivided family.
Such a discrimination
could not have been intended.
Another argument which was employed
in
the
Madhya
Pradesh case and which appealed to the High Court was that
as the unit of assessment was the individual and not the individual together with his or her spouse and 'the minor children
the result would 1J.e, that the expenditure incurred by the husband
and the wife separately from their independent sources would
be subject to double taxation once with
the husband as
an
asse1;see and the wife as the dependent and again with the wife
as the assessee and the husband as the dependent.
This result
would follow if s. 2(g) (i) is to b~ interpreted to
mean 'that
where. the assessee is an individual his or her spouse or minor
child would be a dependent
irrespective of the fact whether
such spouse or minor child was wholly independent of the assessee for support and maintenance.
As such an
absurd
result
could be contemplated by the Act it
must be held that it was
only that spouse or minor child who was wholly or mainly dependent on the assessee for support and maintenance who would
fall within the definition of the term "dependent" given in section
2(g)li).
We are unable to concur in the view of 'the
Madras and
Madhya Pradesh High Courts that the word "dependent ins. 2(g)
(i) should be given a meaning which, owing to the clear and plain
language employed therein, cannot possibly be given.
Section
2(g)(i) has to be read in two parts.
The first part which ends
with minor child followed by coma contains the word "means".
The second part is
intended to include the kind of person
mentioned therein
namely,
one
who
is wholly
or mainly
dependent
on the
assessee
for
support
and maintenance.
Before the inclusive part of the definition starts the meaning of the word "dependent"
has
been
clearly
and
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pletely specified. If s. 2(g)(i) as it stood before the amend-
, ment is contrasted with the section as it was substituted by the
amendment the intention of the Legislature becomes obvious.
Before the amendment "&pendent" meant where the assessee
was an individual his or her spouse or child wholly or mainly
dependent on the assessee for support and maintenance.· After
the amendment s. 2(.g) (i) underwent a complete change. The
legislature stopped short of making the spouse or the minor
child dependent on the assessee for support and maintenance and
employed those words only for the new category of persons who
came to be included, namdy, any one who was neither the spouse
nor the minor child of the assessee but was otherwise wholly or
mainly dependent on him for support and maintenance. Thus
in the concluding part eve!) major children of the assessee came
to be included so long as they sa•tisfu~d the conditions that they
were wholly or mainly dependent on him.
The argument that
the amended definition is only .intended to ·enlarge the categories
of "dependent'' by adding another category cannot be sustained.
Coming next to clause (ii) of s. 2(g) which deals with a case
where the assessee is a H.U.F. no change was made in the language even after the amend.men!.
There every coparcener other
than the karta would fall within the meaning of "dependent" and
also any other member of the family who under any law, order or
decree of a court is entitled to maintenance from the joint family
property. Section 4(ii) again deals with different cases.
The
first is where the assessee is an individual; in his case any ex)'enditure incurred by his dependent is to be included in computation
of the expenditure to be subjected to tax.
The other is where
the assessee is a H.U.F. Any expenditure incurred by any dependent from out of the income or property transferred directly or
indirectly to the dependent by the assessee is to be included in
computation of the assessee's liability.
Thus the two cases are
dealt with separately both ins. 2(g) ands. 4(ii). In oti:Jer words
where the assessee is an individual one has to look for his dependent to clause (g) (i) and where the assessee is a H.U.F. the
dependent has to be found in clause (g) (ii) of s. 2. The argument that has been pressed on behalf of the assessee is fhat the
us~ of the common word "assessee" in the concluding part of s. 4
( u) which can. take in both the individual as well as the H.U.F.
shows that Ille words preceding it apply to both the cases. It is
!rue that the words "Hindu undivided family" have not been used
mstead of the word "assessee" towards the concluding part 'of
s. 4 (ii). But that will not alter the true import of the aforesaid
provision read with s. 2(g). The scheme, as noticed before, is
that the assessees have been divided into two clauses which are
well known, One is that of an individual and the other of the
.
,
12-Ll340Snn c.r 171
478
SUPREME COURT REPORTS
[1912] 1 S.C.R.
Hindu undivided family.
In the case of an individual assessee
the only qualification for the expenditure to be included in his
assessment is that it should have been incurred by his dependent
as defined in s. 2(g) (i). In the case of a H.U.F. it could be
included only if it is from out of the income or property transferred directly or indirectly to the dependent by the family. Even
otherwise looking at the context in which the word assessee is
found in the concluding part of s. 4(ii) that word has clearly
been used only with reference to the second part of clause (ii)
which relates to the case of an assessee which is a H.U.F.
It does look somewhat anamolous and illogical that where the
expenditure has been incurred by the wife and minor_ children
who are altogether independent of the assessee and which has no
Connection with tl1eir being dependent on him or with any property transferred to them should be included in the expenditure
of tile assessee.
The position would be similar where the wife
is the assessee and the expenditure incurred by the husband comes
to be included in computation of her liability to tax because the
word used is "spouse" in s. 2 ( g) ( i). But it must be remembered
that logic or reason cannot be of much avail in interpreting a
taxing statute.
We are unable to see that any double taxation would be
involved if the meaning of the word "dependent" as given in the
first part of s. 2(g) (i) is to be applied without qualifying the
same with what follows in the second part of that clause i.e., that
that person should be wholly or mainly dependent on the assesse"'
for support and maintenance. Although there is no bar to double
taxation but the legislature must distinctly enact it.
It is only
when there are general words of taxation and they have to be
interpreted that they cannot be so interpreted as to tax the subject
twice over to the same ta)(. . There is nothing in the Act which
does away with the principle that in the absence ot an express
provision, the same item will not be taxed over again. Moreover
the charging s. 3 only subjects to tax the expenditure incurred
by a~ individual or a Hindu undivided family. Once the expenditure mcu~ed by b~th t~e assessee as an individuaf and the spouse
has been mcluded Ill his or her assessment of expenditure tax, it
cannot be again subjected to tax in the assessment of the other
spouse. . '.f'he learned Solicitor General agrees to this being the
true position.
f!> good deal of reliance has been placed on the decisions which
are m favour of the assessee that there is no reasonable basis for
making a distinction between an assessee who is an individual
and an assessee, that is, . a Hindu undivided family which would
justify a different. ~reatment. It was and has been suggested that
the relevant provisions of the Act should not be so interpreted as
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PRINCE AZAM JHA v. E.T.0. (Grover, /.)
47~
to give rise to discrimination beiween. th~ two cases~ there bein~
no reasonable basis for such d1scnnunat10n.
W~ find _no force
or substance in this argument. Firstly, it is not .<l!spute? tl_lat the
case of an individual arnj that of a Hindu und1v1ded fa1mly fall
into two different classes. The challenge is based only on there
being no nexus between th.e differentia an~ the ?bject sought to
be achieved by the legislation, the suggestion bem~ ~hat f<j,vo~r
able treatJnent has been accorded to the Hmdu und1v1ded family.
The learned Single Judge who disposed of the writ petitions in
the present case considered the matter very fully and we find no
infirmity in his reasoning in coming to the conclu~1on that m a
tax legislation where the )ncidence of the tax falls differently upon
different classes of assessees as in the presnt case it cannot be su1u
that there is legislation without any classification or that there 15
no rational relation to the object. According to the learned Judge,
the object of the enactment is, to augment the revenue, to encourage thrift and to avoid wasteful expenditure and because some
classes are taxed higher than the others or some are given concessions while others are not, it cannot be held that there has beer.
discrimination within the meaning of Art. 14.
It was contended before the High Court and lhat contention
has been reiterated in a half-hearted manner before us that the
Act was void ab initio for want of lgis]Mive competence. Jt hilS
been pointed out· that there is no Entry in List 1 of the Seventh
Schedule or in List III relating to tax on expenditure. Reference
has been made to Entry 62 in List ll which reads "Taxes on
luxuries including taxes on entertainments, amusements, betting
and gambling".
We are wholly unable to comprehend how expenditure tax can fall within the aforesaid Entry.
We are in
entire agreement with the majority decision of the Andhra Pradesh
High Court that Entry 97 in List I which is the residuary Entry
covers the tax oi. the kind imposed by the Act.
Mr. M. C. ChagJa·while supporting the judgment under appeal
in Civil Appeals Nos. 2389-2391/68 has sought support from
what is stated at pages 212-213 in Craies on Statute Law (6th
Edn.).
Cockbum C.J. said as early as in the year 1865 in
Wak~field ~oard of Health v. West Riding, etc., Ry.,(') "I hope
the time will come when we shall see no more of interpretation
clauses, for they frequently lead to confusion". It has also been
pointed out that an interpretation clause which extends the meanmg of a word does not take away its ordinary meaning. In other
w~rds, an intere.retation ~lause which extends the meaning by
usmg the word mclude" is not meant to prevent the word receiving its orc!in11ry, popular 11nd nlliun1I sense whenever that would
(I) (1865) 6 B. & S. 794.
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SUPREME COURT REPOR.TS
[19 72] 1 S.C.R.
be properly applicable.
Mr. Chagla has laid a great deal of
stress on the meaning of the word "dependent" and according to
him Ihat word as defined in the first part of s. 2(g) (i) of the Act
cannot lose its natural signification and import even though the
language of the statutory provision seems to confine itS meaning
to the spouse or minor child of the assessee without any further
qualification. The contention of Mr. Chagla canno~ be acceded
to. In the absence of any ambiguity in the language employed in
the first part of s. 2(g)(i), we have to go by the plain meaning
and that is confined to the spouse or minor child of the assessee
when he is an individual irrespective of such spouse or minor
child b11ing dependent on or ind~pendent of the assessee for support and maintenance. As a m<itter of fact the whole construction
of that clause leaves no room for doubt that in the first part, no
question of dependence in fact arises and the spouse or the minor
child simpliciter has to be '1reat·~d as a dependent. The conjunctive word "and" appearing between the two parts makes the intention of the legislature still clearer. The second part or any words
in that part do not qualify the first part. We may conclude the
discussion on this point by referring to a decision of the Bombay
High Court in M. N. Patwardhan v. Commissioner of Expenditure
Tax, Poona(') in which the decision of the Andhra Pradesh High
Court under appeal has been followed after a full consideration
of the various points which arose for determination.
Rajkumar
Singhji's case{2) which is the subject matter of appeal in C.As.
2389-2391/68 was dissented from by the Bombay High Court.
In our judgment the majority of the full bench of the Andhra
Pradesh High Court was right in holding that the expenditure
incurred by the wife of the assessee was includible in his assessment for computing the expenditure tax under the Act.
The other point which was canvassed before the High Court
of Andhra Pradesh and has been urged before us relates to the
validity of the notice which was issued by the Expenditure Tax
Officer for reopening the assessments in question. In the notices,
it was stated that whereas the'Expenditure Tax Officer had reason
to believe that expenditure chargeable to expenditure tax had (a)
escaped assessment, (b) been under-assessed, ( c) been assessed
at too low a ra'te it was proposed to reassess the expenditure for
the assessment year in question.
The assessee was required to
file a return in form 'A' of expenditure for the assessment years
in question. From the judgment of the learned Single Judge it
appears that in a subsequenf!etter, the Expenditure Tax Officer
referred to "return of expenditure filed in resoonse to the notices
issued under s. 16{a) of the Expenditure Tax Act, 1957".
In
the writ petition which was filed on behalf of Prince Azam Jha
(!l 78 l.T.R. 338.
(2) 78 l.T.R. 405.
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PRINCE AZAM JHA v. E.T.O, (Grover, J.)
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Bahadur in the High Court, it was stated in para 7 that the action
of the Expenditure Tax Officer in reopening the assessments under
s. 16 (a) was wholly arbitrary and illegal. 1t was, however, further
stated "there has been no omission or failure on the part of the
petitioner to make a return of his expenditure or to disclose fully
and truly all material facts.
Nor has the respondent come into
possession ofany information warranting a reasonable belief that
any expenditure has escaped taxation. All the material facts 'were
disclosed, All the necessary information was available .. " In the
counter affidavit of the Expenditure Tax Officer in para 5, it was
asserted that he had reason to believe that on account of omission
or failure on the part of the assessee to disclose .truly and folly
all material facts necessary for his assessment expenditure of his
dependents chargeable to tax had escaped assessment. In para 8
also, reliance was placed mainly on the provisions of s. 16 (a)
of the Act but in para 9, the Expenditure Tax Officer went on to
say that the actual expenditure incurred by the assessee's wife
was disclosed by her returns filed before him and in consequence
of the aforesaid information available to him on 5th May 1962,
he had reason to believe that the expenditure of the assessee
chargeable to tax had escaped assessment.
It was pointed out
that the notices. which had been issued were within four years
limit applicable to s. 16 (b) of the Act. It was reiterated that as.
the notices had been issued within four years reassessment proceedings could be sustained either under s.16(a) or s. 16(b)
of the Act.
Section 16 of the Act is in the following terms :-
"16. If the Expenditure Tax Officer-( a) has
reason to believe that by reason of the omission or
failure on the part of the assessee to make a return of
his expenditure under s. 13 for any assessment year, or
to disclose fully and truly all material necessary for his
assessment for that year, the expenditure chargeable to
tax has escaped assessment for that year, whether by
reason of under-assessment or assessment at too low a
rate or otherwise; or
(b) has in consequence of any information in his
possession reason to believe notwithstanding that there
has been no such omission or failure as is referred to in
clause. (a), that the expenditure chargeable ·to tax has
-escaped assessment for any assessment year, whether by
reason of under-assessment or assessment at too low a
rate or otherwise; he may, in cases falling under clause
(a) at any time within eight years and in cases falling
under clause (b) at any time within four years of the
482
SUPREME COURT REPORTS
[1972] 1 s.c.R,
end of that assessment year, serve on the assessee · a
notice under sub-s. (2) of s. 13, and may proceed to
assess or reassess such expenditure, and the provisions of
this Act shall, so far as may be, apply as if the notice
had issued under that sub-section".
On behalf of the assessee, a contention had been raised before
the learned Single Judge of the High Court that the notices had
been issued by the Expenditure Tax Officer under s. 16(a) of the
Act. The notices were illegal inasmuch as the facts that Princess
Durree Shehvar was the wife of the assessee and that she had
to be considered as his dependent within the meaning of s. 2 ( g) ( i)
of the Act were within the knowledge of the Expenditure Tax
Officer and had been duly mentioned to him and as such there was
no omission or failure on the part of the assessee to make
a
return of his expenditure or to disclose fully and truly all material
facts. Since all the material facts had been disclosed and all the
necessary information was available, the Expen~iture Tax Officer
had no jurisdiction to reopen the assessment merely because he.·
had changed his opinion.
It is no doubt true that the impression created by the notices
which were issued and the correspondence which followed between the assessee and the Expenditure Tax Officer was that the
notices had been issued under s. 16(a) of the Act but in the writ
petitions and ·the returns which were filed, both sides were quite
clear that the matter was not confined only to clause (a) of s. 16
(i) and clause (b) figured prominently. We are unable to see
that the notices which had been issued were confined only to the
terms of s. 16 (a). ·It is not disputed on behalf of the aSsessee
that if the matter was covered by s. 16 (b), they would be perfectly valid.
The pleadings 'in the writ petitions covered both
clauses of s. 16 and in any case. the Expenditure Tax Officer had
made a positive averment 'that the information with regard to the
expenditure incurred by the assessee's wife became available to
him only on 5th May 1962. Thus the' notices which were issued
on 1hat date relating to the assessment years 1959-60, 1960-61
and 1961-62 were·within the period of four years which was the
limit prescribed with regard to action under clause (b) the limit
being more in respect of clause (a). In our judgment, this
concludes the matter because it was nowhere controverted in the
High Court that the 'reauisite information came into possession
of the Expenditure Tax Officer only on 5th May, 1962.
In the result Civil Appeals'Nos. 1794-1796 of 1967 fail and
are hereby dismissed. The other set of aopeals i.e., Civil Appeals
Nos. 2389-2391 of 1968 of the Commissioner of Expenditure Tax
succeed and are hereby allowed. The answer given by the High -
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PRINCE AZAM JHA v. E.T.O. (Grover, J.)
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A - Court in that case to the question referred by the Tribunal shall
stand discharged and instead the answer to the question will be
in the affirmative and in favour of the Revenue. Keeping in view
the nature of the points involved, the parties are left to bear their
own costs in al! these appeals.
K.B.N.
C.A. Nos. 1794 ito 1796 dismissed.
C.A. Nos. 2389 to 2391 allowed.