# C.I.T. BIHAR & ORISSA, PATNA v. MAHARAJ KUMAR KAML SINGH

- **Citation:** [1973] 3 S.C.R. 522
- **Court:** Supreme Court of India
- **Decided:** 1973-02-13
- **Bench:** K. S. Hegde, P. Jaganmohan Reddy, H. R. Khanna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/c-i-t-bihar-orissa-patna-v-maharaj-kumar-kaml-singh-5842
- **Pages:** 6

## Headnote

Indian Income-Tax Act, 1922, ss. 16(3)(a) (a)(iii), 9(4)(a)-Hol4er
of impartible estate, transferring properties of estate to his wife-fnc()me
from properties whether liable to be included in i11come
of assesseeFiction created by s. 9 ( 4 )(a) re11ders
assessee
liable under s. 16( 3)
(a)(iii).
The assessee-respondent is the bolder of an impartible estate. By an
iodonture dated 23rd November, 1963, he granted to his wife two premises
fer life by way of supplementary maintenance grant. If was a direct transfer which was admittedly not effected for any consideration or in connec-
. ticiQ with the agreement to live apart.
During the
assessment
yean
1957-58 to 196G-61, the income from these house properties was included
in the total income of the assessee under section 16(3) (a) (iii) o'f the Act
At the instance of the assessee the matter was referred to the High Court.
Two questions fell for consideration before the High Court, namely, (i)
whether the Tribunal was justified in
holding that the provisions
of
s. 16(3) (1) (iii) applied to the income arising from the property; and
(ii) ·whether the Tribunal was right in holding that the income under the
said provisions was to be included in the total income for the purpose oi
computing the net annual value of the residential house. under the first
proviso of s. 9(2). The High Court answered the first of the two questions in favour of the assessee and. therefore, did nc;t think it necessary
to go into the other question.. On appeal by certificate to this Court, the
material question was whether thl! income
from the house
properties
transferred by the assessee was liable to be included the income of
the
assessee.
HELD : (i) The incident of impartible estate have been well settled
by the decisions of the Courts i11 this country as well. as by the decisions of
the judicial committee.
The holder of an impartible estate has uncontrolled power of enjoyment and disposal of the impartible estate as well as
the income arising therefrom; yet the estate belongs to the Hindu joint
family of which the holuer is a member.
Subject to any custom to the
contrary, on the death of the holder of an impartible estate, the estate devolves by survivorship.
[524G-H]
Baijnath Prasad Singh and Ors. v. Tej Bali, L.R. 48 I.A. 195, Shiba
Prcsad Singh v. Rani Prayad Kumari Devi & Ors., L.R. 59 I. A. 331 and
Commissioner of /ncome-ll/Jc, Punjab. North-West Frontier and Delhi Provinces, Lahore v. Dewan Bahadur Dewan Krishna Kishore, Rrds, Lahore.
68 I.A. 155, referred to.
Cii) After s. 9 was amended by incorporating s. 9( 4). the income of
house property owned by the ho1der of an impartible estate has to be
considered as his individual income.
From this it follows that had the
assessee not transferred the ?remises in question in favour of his wife,
the income from those premises would have been considered as his individual income under section 9.
The contention that s. 9(4) (a)' raises a
legal fiction which is limited for the purpose of s. 9 is fallacious. Section
~deals with onlv one head of income. Section 9(4)(a) speaks for
th~
purpose of this Secticn'' whkh really mea:ns for the purpose of deterA
B
c
D
E
F
G
H
n
('
D
F
C.I.T. v. M. K. K. SINGH (Hegde, }.)
523
mining tho! taxable income of the assessee.
An assessee is not ~epara1el_y
taxed under each Jlead of income. Hence when a source of lDCOmc 11
transferred from assessee to his wife excepting for the two purposes men•
tioned in s. 16(3) (a) (ii), income from that purpose has to be considered
as the income of the assessee because of asset of the assessee stand~ trans·
Jerred to his wife.
Such. a conclusion docs not amount to cxtendmg the
fiction cr.:ated under s. 9 beyond the purpose for which it is created. It
merely gives etl"ect tc that fiction. It is true that a legal fiction may not
he extended beyond the purpose for which it is created but that does not
mean that the Court should not give effect to that fiction.
[S26H to
527D]
Section 27(ii) of the Inco

## Text

522
C.I.T. BIHAR & ORISSA, PATNA
v.
MAHARAJ KUMAR KAML SINGH
February 13, 1973
[K. S. HEGDE, P. JAGANMOHAN REDDY AND H. R. KHANNA, JJ.]
Indian Income-Tax Act, 1922, ss. 16(3)(a) (a)(iii), 9(4)(a)-Hol4er
of impartible estate, transferring properties of estate to his wife-fnc()me
from properties whether liable to be included in i11come
of assesseeFiction created by s. 9 ( 4 )(a) re11ders
assessee
liable under s. 16( 3)
(a)(iii).
The assessee-respondent is the bolder of an impartible estate. By an
iodonture dated 23rd November, 1963, he granted to his wife two premises
fer life by way of supplementary maintenance grant. If was a direct transfer which was admittedly not effected for any consideration or in connec-
. ticiQ with the agreement to live apart.
During the
assessment
yean
1957-58 to 196G-61, the income from these house properties was included
in the total income of the assessee under section 16(3) (a) (iii) o'f the Act
At the instance of the assessee the matter was referred to the High Court.
Two questions fell for consideration before the High Court, namely, (i)
whether the Tribunal was justified in
holding that the provisions
of
s. 16(3) (1) (iii) applied to the income arising from the property; and
(ii) ·whether the Tribunal was right in holding that the income under the
said provisions was to be included in the total income for the purpose oi
computing the net annual value of the residential house. under the first
proviso of s. 9(2). The High Court answered the first of the two questions in favour of the assessee and. therefore, did nc;t think it necessary
to go into the other question.. On appeal by certificate to this Court, the
material question was whether thl! income
from the house
properties
transferred by the assessee was liable to be included the income of
the
assessee.
HELD : (i) The incident of impartible estate have been well settled
by the decisions of the Courts i11 this country as well. as by the decisions of
the judicial committee.
The holder of an impartible estate has uncontrolled power of enjoyment and disposal of the impartible estate as well as
the income arising therefrom; yet the estate belongs to the Hindu joint
family of which the holuer is a member.
Subject to any custom to the
contrary, on the death of the holder of an impartible estate, the estate devolves by survivorship.
[524G-H]
Baijnath Prasad Singh and Ors. v. Tej Bali, L.R. 48 I.A. 195, Shiba
Prcsad Singh v. Rani Prayad Kumari Devi & Ors., L.R. 59 I. A. 331 and
Commissioner of /ncome-ll/Jc, Punjab. North-West Frontier and Delhi Provinces, Lahore v. Dewan Bahadur Dewan Krishna Kishore, Rrds, Lahore.
68 I.A. 155, referred to.
Cii) After s. 9 was amended by incorporating s. 9( 4). the income of
house property owned by the ho1der of an impartible estate has to be
considered as his individual income.
From this it follows that had the
assessee not transferred the ?remises in question in favour of his wife,
the income from those premises would have been considered as his individual income under section 9.
The contention that s. 9(4) (a)' raises a
legal fiction which is limited for the purpose of s. 9 is fallacious. Section
~deals with onlv one head of income. Section 9(4)(a) speaks for
th~
purpose of this Secticn'' whkh really mea:ns for the purpose of deterA
B
c
D
E
F
G
H
n
('
D
F
C.I.T. v. M. K. K. SINGH (Hegde, }.)
523
mining tho! taxable income of the assessee.
An assessee is not ~epara1el_y
taxed under each Jlead of income. Hence when a source of lDCOmc 11
transferred from assessee to his wife excepting for the two purposes men•
tioned in s. 16(3) (a) (ii), income from that purpose has to be considered
as the income of the assessee because of asset of the assessee stand~ trans·
Jerred to his wife.
Such. a conclusion docs not amount to cxtendmg the
fiction cr.:ated under s. 9 beyond the purpose for which it is created. It
merely gives etl"ect tc that fiction. It is true that a legal fiction may not
he extended beyond the purpose for which it is created but that does not
mean that the Court should not give effect to that fiction.
[S26H to
527D]
Section 27(ii) of the Income-tax Act, 1961 which has taken place of
s. 9(4) of the Act makes explicit that was implicit in the provision, es it
originally stood.
[527D-E)
(iii) lt follows as necessary corollary that the annual value of the
as~essee's residential house has to be computed at 10% of the total income
of the assessee which i.ncome includes the income from the house prop_erthis transferred to his wife as required by the first proviso to s. 9(2).
[527~G]
CiVIL APPELLATE JURISDrcnoN : Civil Appeals Nos. 297
to 300 of 1970.
Appeal by Certificate from the Judgment and order dated
August 9, 1966 of the Pa'tna High Court in Misc. Judicial Cases
Nos. 480 to 483 of 1964.
V. S. Desai, I. R. Murthy, S. P. Nayar and R. N. Sachthey,
for the appellant.
N. D. Karkhanis, Santokh Singh a.nd U. P. Singh, for the respondent.
The Judgment of the Court was delivered by
HBGDE, J. These are appeals by certificate. They arise from
a common judgment delivered by the High Court of Patna.
The assessee respondent is the holder of an impartible estate.
By an indenture dated November 23, 1950, he granted to his wife
two premises at Camac Street, Calcutta for life by way of. supplementary Khorposh (maintenance) grant. During the assessment
years with which we .are concerned viz. 1957-58 to 1960-61 the
mcot.1e from those house properties was included in the totai inG
come of the assessee under s. 16(3) (a) (iii) of the Indian Jncomotax .Act, 1922 (to be hereinafter referred to as the Act). The
assessee challenged the validity of that inclusion firstly on the
ground that s. 16(3)(a) (iii) of the Act is ultra vires Art. 14 of
the Constitution and secondly on the ground that the income m
q~estion .cannot be cons~de~d a5 his· income for the purpose of the
H
said section. These objections were ·ove~Ied by the authorities
under the Act. ·Thereafter at the instance-'of the asseuee
the
following three questions were referred to the High Court of Pama
unde:r s. 661 ) of the Act.
· ·
18-L796SupCl/73
5~4
Sul'REME COURT REPORTS
[1973] 3 s.c.a.
" ( l ) Whether the provisions of s. 16 ( 3) (a) (iii) of the
Indian Income-tax Act, 1922 are ultra vires the
Constitution of India ?
( 2) Whether in the facts and circumstances of the
case the Tribunal was justified iri holding that
the provisions of section 16(3)(a)(iii) applied
to the income arising from a property transferred
by the holder of an impartible estate to his wife
for her maintenance ?
(3) Whether in the facts and circumstances the Triw
bunal was right in holding that the income under
section 16(3) (a) (Hi) was to be included in the
total income for the purpose of computing the
net annual value of the residential house at 10%
of the total income under ·the 1st Proviso to
section 9 ( 2) ?"
Before the High Court CoWlSel for the assessee did not press
for any answer on the first question .evidently in view of the deci·
sion of this Court in Balaji v. lncomewTax Officer, Speciallnvestiw
gat ion Circle, A kola and ors. (1) The second question was answered
in favour of the assessee and in view of the decision of the High
Court on that question, the High Court did not think it necess·ary
to go into the third question. The answer to the third question
ueccs.~arily depends on the answer to the second question. If we
come to the conclusion that the second question was not corresctly
answered then it follows that the income from the properties in
question has to be included in the total income of the assessee and
the income frolll! the residential house of the assessee will have to
be computed at 10% of his total income under the 1st proviso to
s. 9(2) of the Act. Hence the material question to be decided is
whether the income from the properties in Calcutta is liable to be
included in the income of the assessee.
·
The assessee is assessed as an individual. As mentioned earw
iiel', he is the holder of an impartible estate. The incidenis of im~
-partible estate have been well settled by the decisions of courts in
this country as well as by the decisions of the Judicial Committee.
The holder of an impartible estate has uncontrolled power Of enw
joyment and disposal over the impartible estate as well as over the
income ·arising theref.
'; but, yet the estate belongs to the Hindu
joint fami1y of which the lanlder i& a member. Subject to any cusw
tom to the contrary, ori the •
1"!-ath of the holder of an impartible
estate, the estate devolves by survivorshi~ee Baljnath Pra.rhad
Singh and ors. v. Tej Bali Sinh(2) ailCS: Shlba Prasad Singh v.
(1) 43, I.T.R. 393.
(2) L.R.. 48 I A. 195.
A
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C.l.!. V. M. K. K. SINGH (Hcglie, J.)
525
Rani Prayad Kumari Debi apd ors. ( ').
In
Commissioner
of
Income-tax, Punjab, North-West Frontier and Delhi Provinces,
Lahore v.
Dewan Bahadur Dewan Krishna Kishore, Rais,
Lahore ( ~), the Judicial Committee held that the income of a ~ouse
propeny which is a part ot an impartible estate cannot be considered as the individual income of an ru.sessee under s. 9 of the Act as
it stood then. Therein the Judicial Committee observed :
"Since the decision of the Board in Baijnath Prashad
Singh v. Tej Bali Singh (supra), it has been settled law
that property, though impartible, may be t~ ancestral
property of a joint family, and that in such cases the
successor falls to be de,signated according to the ordinary
rule of Mitakshra. The concluding words of the judgment, delivered on behalf of the Board by Lord Dunedin ,
in Baijnath's case (supra) are to that effect, and in that
case, as welt as ~n Shiba Prasad Singh v. Prayag Kumari
Devi (supra) which followed jt, "the keynote of the
whole position" is-not that property which is not joint
property devolves by virtue of custom as though it had
been joint-but that the gep.erallaw regulates all beyond
the custom, that the custom of impartibility does not
touch the succession since the right of survivorship is not
inconsistent with the custom; hence the estate retains the
character of join family property and devolves by the
general law upon that person who, being in fact and in
law joint in respect of the estate, is also the senior member in the senior line."
On tlie basis of the above reasoning their Lordships held "for
the purpose of sect.ion 9 of the Act" the income in question is not
the individual income of the holder of the estate. After that deci~
sion was ~endered s. 9 of the Act was amended by incorporating 5•
9 ( 4) whtch reads :
"For the purpose of this section-
( a) the holder of at1 impartible estate shall be deemed
to be the individual owner of all the properties
comprised in the estate.
(b)
X
X
X".
Hence, it is clear that after s. 9 was amended, the income of
house property owned by a holder of an impartible estable has to
be constdered as his individual income. From this it follows that
had _the _assessee not transferred the premises· in question in favour
of hts wrfe, the income from those premises would have been considered as his individual income under s. 9. Now we have to see·
·whethe~ because of the transfer of the premises in favour of hii •
01 L.R. 591 .A~n·----
(21 liS I.A. p. 155.
19-L796sup.c. 1.173
5~6
SUPREME COURT REPORTS
['1973] 3 s.c.R.
wife, the said income cannot be considered as the income of the
assessee under s. 16(3)(a)(iii). Section 16(3)(a)(iii) reads:
"In computing the total income of any individual for
the purpose of assessment, there shaH be included-
( a) so much of the income of a wife or minor child
of such individual as arises directly or indirectly-
(i)
(ii)
(iii)
X
X
X
X
X.
X
from assets transferred directly or indirectly to
the wife by the husband otherwise than for adt:~
quate consideration or in connection with dll
agreement to live apart; or
· (iv)
x
X
X
X
X
(b)
X
There is no dispute that the transfe-r with which we are concerned is a direct transfer. Further it is ~dmitted that the transfer in
question was not effected for any consideration adequate or otherwise, nor was it effected in connection with an agreement to live
apart. But th_e assessee's contention was, which l:Ontention was
accepted by the High Court that s. 9 ( 4) (a) on! y deems the income
of a house property included in an impartible estate as the indivi-
,d\ml income of the holder and that only for the purpose of s. 9
and not for any other purpose. In other wprds; it was urged that
section raises a legal fiction and that legal fi'ction is limited for the
purpose of s. 9. It was further urged that a legal fiction cannot be
extended beyond the purpose for it was created. Counsel for the
assesse:e urged that the fiction incorporated ¥t s. 9 ( 4) (a) can be
taken .into consideration only for the purpose of s. 9 and not for
the purpose of s. 16 ( 3) .
This contention appears to us to be
fallacious.
Section 6 of the Act sets out the various heads of income,
profits and gains chargeable to income-tax. They are (i) salaries;
(ii) interest on securities; (iii) Income from property; (iv) Profits
and Gains of business, profession or vocation~ (v) Income from
othpr sources (vi) Capital gains. Section 3 read with s. 4 brings
to tax the total income, profits and gains of an assessee from whatever source it might have been received or accrued. The total
income is defined in s. 2 ( xv) as meaning total amount of income,
profits and gains referred to in sub-s. ( 1 ) of s. 4 computed in the
manner laid down in the Act.
Section 9 deals with only one head of income.
Prior 'l:o the
.-
transfer by the assessee, he, in law would have be~n. cons_id~red as
. ~ th~ owner of those premises for purposes of. ascertammg hts mcome
A
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c.I.T. V. M. K. K. SINGH (/legdc, J.)
527
111 house proper!Y nn? that irycome would have been taken into
.A
f~~ount in comp~tmg his total mcomc. In other words, in ascer-
~. ·nu the total mcome of the assessee for the purpose of assesstatnlt f11at income also would have entered into the calculatio
»:~ce when s. 9 ( 4 )(a) speaks "for the .P~rpose of this sectio~;
it really means for the purpose of determmmg the _ _taxable-income
of the assessee. It must be rcmem~ered that an assessee is not
B. separately t?xed under each head of mcome. Hence when a source
of income Js transferrc.d by t_he assessee to his wife, exceptino for
the two purposes men~1oned m s. I?(3)(a)(iii), income from"tbat
source has to be considered as the mcome of the assessee because .
an asset of the assessee stands transferred to his wife. Such a con-
, c clusion docs not amount to extending the fiction created under s~
9 beyond ~he purp?sc for which it is cre~ted. It merely gives effect
to that fict1on. It IS true that a legal fict1011 should not be extended
beyond the purpose for which it is created; but that docs not mean
that the court should not give effect to t11at fiction.
·
Section 27(ii) of the Income-tax· Act. 1961 which-has taken
o the place of s. 9 ( 4) of the Act docs not begin by saying "for the
purpose of this section". On the other hand, it says that "the
holder of an impartible estate shalt be deemed to be the individual
owner of all the properties comprised in the estate... It was contended on behalf of the a.-;sessee that this is a change in the Jaw
and on that basis we were asked to accept the assessee's construe-
[ tionofs. 9(4)(a). Weare unable toacccptthiscontention.- We
do not think t!:_lat there is any change in the law. Section 27 (ii) of
the Income-tax Act, 1961 makes explicit what ·was implicit in the
provbion as it originally stood.
Jn view of our conclusion that the income of the house property
!n question should be in~Judcd in the total income of the assessee,
f
1t follows as a nccessar;' corol!nry that the annual value of the
~ssessce's residential house has to be computeu at 10% of the total
~ncomc to the assessee which income as alreaJv held included.the
mcome from the house nroncrtics transfarcd to his wife as reqUired
by the 1st proviso to s. 9(2).
c
For the reasons mentioned above, thcs'! ~pFe:t'~ ;r~. allo"e1;
tltc answer l!ivcn by the High Court to quest1on No. - .'s vacatt;d
and in its nlace we amwcr that qucstilm in the atl1rn;attv.e and 1.n
favour of the Revcnw!. Our an~wcr to the third qul'~~~-:n
1~.~
1
1
~
0 ;n
11h1e affirmative and in favour o~ the .Revenue. Th~ a~s:>H~:h ~o~ri.
1 c <:o~ts of the Revenue both 1n this Court and 10 t e
"
.
s.n.w
.. -- ·. _.,_.....-:: .. - :'
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