# THE COMMISSIONER OF INCOME-TAX, BOMBAY CITY II v. SHRI SITALDAS TIRATHDAS

- **Citation:** [1961] 2 S.C.R. 634
- **Court:** Supreme Court of India
- **Decided:** 1961
- **Case number:** Civil Appeal No. 528of1959
- **Bench:** J. L. Kapur, M. Hidayatullah, J. C. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-commissioner-of-income-tax-bombay-city-ii-v-shri-sitaldas-tirathdas-2006
- **Pages:** 10

## Headnote

Income-fax-Maintenance payable to wife and children under
decree-Whether deductible from total income.
A consent decree was passed against the assessee a warding
maintenance to his wife and children. The decree did not create
any charge upon the income of the assessee. The assessee
claimed in the assessment of income tax deduction of the amount paid under the decree from his total income.
Held, that the assessee was not entitled to the deduction.
Where by the obligation income was diverted by an overriding
title before it reached the assessee, it was deductible; but where
the income was required to be. applied to discharge an obligation
after such income reached the assessee, it was not deductible.
The true test was whether the amount sought to be deducted,
in truth, never reached the assessee as his income. In the present case, the wife and children of the assessee received a portion of the income of the assessee, after the assessee had received the income as his own.
Bejoy Singh Dudhuria v. Commissioner of Income-tax, (1933) l
I.T.R. 135, not applicable.
P. C. Mullick v. Commissioner of Income"tax, Bengal, (r938)
6 I.T.R. 206, applied.
Diwan Kishen Kishore v. Commissioner of Income-tax, (1933)
l I.T.R. 143· Seth Motilal Menekchand v. Commissioner of Incometax, (r957) 31 I.T.R. 735, Prince Khanderao Gaekwar v. Commissioner of Income-tax, (1948) r6 I.T.R. 294, Commissioner of Income-tax, Bombay v. Makanji Lalji, (r937) 5 I.T.R. 539, Commissioner of Income-tax, Bombay v. D. R. Naik, (1939) 7 I.T.R. 362,
D. C. Aich, In re, (1940) 9 I.T.R. 236, Hira Lal, Inre, (1945) r3
I.T.R. 512 and V. M. Raghavalu Naidu 6- Sons v. Commissioner
of Income-tax. (1950) 18 I. T.R. 787, referred to.

## Text

November ~4·
634
SUPREME COURT REPORTS
[1961]
THE COMMISSIONER OF INCOME-TAX,
BOMBAY CITY II
v.
SHRI SITALDAS TIRATHDAS
(J. L. KAPUR, M. HIDAYATULLAH and J. C. SHAH, JJ.)
Income-fax-Maintenance payable to wife and children under
decree-Whether deductible from total income.
A consent decree was passed against the assessee a warding
maintenance to his wife and children. The decree did not create
any charge upon the income of the assessee. The assessee
claimed in the assessment of income tax deduction of the amount paid under the decree from his total income.
Held, that the assessee was not entitled to the deduction.
Where by the obligation income was diverted by an overriding
title before it reached the assessee, it was deductible; but where
the income was required to be. applied to discharge an obligation
after such income reached the assessee, it was not deductible.
The true test was whether the amount sought to be deducted,
in truth, never reached the assessee as his income. In the present case, the wife and children of the assessee received a portion of the income of the assessee, after the assessee had received the income as his own.
Bejoy Singh Dudhuria v. Commissioner of Income-tax, (1933) l
I.T.R. 135, not applicable.
P. C. Mullick v. Commissioner of Income"tax, Bengal, (r938)
6 I.T.R. 206, applied.
Diwan Kishen Kishore v. Commissioner of Income-tax, (1933)
l I.T.R. 143· Seth Motilal Menekchand v. Commissioner of Incometax, (r957) 31 I.T.R. 735, Prince Khanderao Gaekwar v. Commissioner of Income-tax, (1948) r6 I.T.R. 294, Commissioner of Income-tax, Bombay v. Makanji Lalji, (r937) 5 I.T.R. 539, Commissioner of Income-tax, Bombay v. D. R. Naik, (1939) 7 I.T.R. 362,
D. C. Aich, In re, (1940) 9 I.T.R. 236, Hira Lal, Inre, (1945) r3
I.T.R. 512 and V. M. Raghavalu Naidu 6- Sons v. Commissioner
of Income-tax. (1950) 18 I. T.R. 787, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
528of1959.
Appeal from the judgment and order dated September 20, 1957, of the former Bombay High Court in
I.T.R. No. 15 of 1957.
Hardayal Hardy and D. Gupta, for the appellant.
R. J. Kolah, S. N. Andley, J. B. Dadachanji, Ramuhwar Nath and P. L. Vohra, for the respondent.
2 S.C.R. SUPREME COURT REPORTS
635
1960. November 24. The Judgment of the Court
was delivered by
HrDAYATULLAH, J.-The Commissioner of Incometax, Bombay City II, has filed this appeal with a certificate under s. 66A(2) of the Income-tax Act, against
the judgment and order of the High Court of Bombay
dated September 20, 1957, in Income-tax Reference
No. 15 of 1957.
The question referred to the High Court; for its
opinion by the Income-tax Appellate Tribunal, Bombay was:
"Whether the assessee is entitled to a deduction
of Rs. 1,350 and Rs. 18,000 from his total income of
the previous year relevant to the assessment years,
1953-54, 1954-55?"
The assessee, Sitaldas Tirathdas of Bombay, has
many sources of income, chief among them being property, stocks and shares, bank deposits and share in a
firm known as Messrs. Sitaldas Tirathdas. He follows
the financial year ab his accounting year. For the
assessment years 1953-54 and 1954-55, his total income
was respectively computed at Rs. 50,375 and Rs. 55,160.
This computation was not disputed by him, but he
sought to deduct therefrom a sum of Rs. 1,350 in the
first assessment year and a sum of Rs. 18,000 in the
second assessment year on the ground that under a
decree he was required to pay these sums as maintenance to his wife, Bai Deviben and his children.
The suit was filed in the Bombay High Court (Suit
No. 102 of 1951) for maintenance allowance, separate
residence and marriage expenses for the daughters
and for arrears of maintenance, etc.
A decree by
consent was passed on March 11, 1953, and maintenance allowance of Rs. 1,500 per month was decreed
against him. For the account year ending March 31,
1953 only one payment was made, and deducting
Rs. 150 per month as the rent for the flat occupied by
his wife and children, the amount paid as maintenance under the decree came to Rs. 1,350. For the
second year, the maintenance at Rs. 1,500 per month
came to Rs. 18,000 which was claimed as a deduction.
The Commissioner
of Income-ta:<,
Bombay City II
v.
Shri Silaldas
Tirathdas
H idayatullah J.
636
SUPREME COURT REPORTS
(1961]
196o
No Gharge on the property was created, and the
-. .
matter does not fall to be considered under s. 9{l)(iv)
The Comm•moner f h I
A
Th
h
1 ·
1 1
1
o t e ncome-tax
ct.
e assessee, owever, c a1m-
;omb:;·~:;;;j ed this deduction on the strength of a ruling of the
v.
Privy Council in Bejoy Singh Dudhuria v. OommisShri Sitaldas
sioner of Income-tax (1). This contention of the assessee
Tfrathdas
was disallowed by the Income-tax Officer, whose deci-
'
sion was affirmed on appeal by the Appellate AssisHidayatullah f. tant Commissioner. On further appeal, the Tribunal
observed:
"This is a case, pure and simple, where an assessee is compelled to apply a portion of his income for
the maintenance of persons whom he is under a personal and legal obligation to maintain. The Incometax Act does not permit of any deduction from the
total income in such circumstances."
The Tribunal mentioned in the statement of the case
that counsel for the assessee put his contention in the
following words:
"I claim a deduction of this amount from my
total income because my real total income is whatever
that is computed, which I dci not dispute, less the
maintenance amount paid under the decree."
The assessee appears to have relied also upon a decision of the Lahore High Court in Diwan K ishen
Kishore v. Commissioner of Income-tax(').
The Tribunal, however, referred the above question for the
opinion of the High Court.
The High Court followed two earlier decisions of
the same Court reported in Seth Motilal Manekchand
v. Commissioner of Income-tax(') and Prince Khanderao Gaekwar v. Commissioner of Income-tax('), and
held that, as observed in those two cases, the test was
the same, even though there was no specific charge
upon property so long as there was an obligation upon
the assessee to pay, which could be enforced in a Court
of law. In Bejoy Singh Dudhuria's case (1), there was
a charge for maintenance created against the assessee,
and the Privy Council had observed that the income
must be deemed to have never reached that assessee,
(1) (1933) I I.T.R. 135.
(3) (1957) JI l.T.R. 735·
<•> (1933) • I.T.R. •u
(4) (1948) 16 I.T.R. 294.
2 S.C.R. SUPREME COURT REPORTS
637
having been diverted to the maintenance-holders. In
i96o
the J
0udgment under appeal, it was held that the in- 1.h c --. .
e
ommissioner
come to the extent of the decree must be taken to of Income-ta;r
have been diverted to the wife and children, .and
·Bombay u-:.
never became income in the hands of the assessee.
v.
The Commissioner of Income-tax questions the
Shri. Sitaldas
correctness of this decision and also of the t)VO earlier
Tirathdas
decisions of the Bomb~y H~gh Court. We are of Hidayatullah J.
opinion that the content10n raised by the Department
is. correct.
·Before we state the principle on which this and
similar cases are to be decided, we may refer to certain rulings, which illustrate the aspects the problem
takes. The leading case on the subject is the decision
of the Judicial Committee in Bejoy Singh Dudhuria' s
case(1 ). There, the stepmother of the Raja had brought
a suit for maintenance and a compromise decree was
passed under which the stepmother was to be paid
Rs. 1,100 per month, which amount was declared a
charge upon the properties in the hands of the Raja,
by the Court. The Raja. sought to deduct this amount
from his assessable income, which was disallowed by
the High Court at Calcutta.. On appeal to the Privy
Council, Lord Macmillan observed as follows:
"But their Lordships do not agree with the learned Chief Justice in his rejection of the view that the
sums.paid by the appellant to his step-mother were
not 'income' of the appellant at all. This in their
Lordships' opinion is the true view of the matter.
When the Act by Section 3 subjects to charge 'all
income' of an individual, it is what reaches the individual as income which it is intended to charge. In
the present case the decree of the court by charging
the appellant's whole resources with a specific payment to his step-mother has to that extent diverted
his income from him and has directed it to his stepmother; to that extent what he receives for her is not
his income. It is not a case of the application by the
appellant of pa.rt of his income in a particular way, it
is rather the allocation of a sum out of his revenue
before it becomes income in his hands."
(I) (1933) I I. T.R. 13S·
81
638
SUPREME COURT REPORTS
[1961]
'960
Another case of the Privy Council may well be seen
The co:;;;i,,ioner i1:1 this conne?ti?n. That case is reported in P. C. Mulof r..,ome-tax, lick v. Commissioner of Income-tax, Bengal('). There,
Bombay II·
a testator appointed the appellants as executors and
v.
directed them to pay Rs. 10,000 out of the income on
Shri Sitaldas
the occasion of his addya sradh.
The executors paid
Tiralhdas
R
i:
h
s. 5,537 1or sue expenses, and sought to deduct the
Hidayatullah ;. amount from the assessable income. The Judicial
Committee confirmed the decision of the Calcutta
High Court disallowing the deduction, and observed
that the payments were made out of the income of the
estate coming to the hands of the executors and in
pursuance of an obligation imposed upon them by the
testator. It observed that it was not a case in which
a portion of the income had been diverted by an overriding title from the person who would have received
it otherwise, and distinguished the case in Bejoy Singh
Dudhur-ia' s case (').
These cases have been diversely applied in India,
but the facts of some of the cases bring out the distinction clearly. In Diwan Kishen Kishore v. Commi8sioner of Income-tax('), there was an impartible estate
governed by the law of primogeniture, and under the
custom applicable to the family, an allowance was
payable to the junior member. Under an award given
by the Deputy Commissioner acting as arbitrator and
according to the will of the father of the holder of the
estate and the junior member, a sum of Rs. 7,200 per
year was payable to the junior member. This amount
was sought to be deducted on the ground that it was
a necessary and obligatory payment, and that the
assessable income must, therefore; be taken to be pro
tanto diminished. It was held that the income never
became a part of the income of the family or of the
eldest member but was a kind of a charge on the
estate. The allowance given to the junior member, it
was held, in the case of an impartible estate was the
separate property of the younger member upon which
he could be assessed and the rule that an allowance
given by the head of a Hindu coparcenary to its members by way of maintenance was liable to be assessed
(1) (1938) 61.T.R. 206.
(2) (1933) I l.T.R. 135.
(3) (1933) I I.T.R. 143.
2 s.c.R. SUPREME COURT REPORTS
639
as the income of the family, had no application. It
z960
was also observed that if the estate had been partible
--
d
· ·
ld h
t k
l
h
The Commissioner
an
.Pa~·tit10n cou
ave a en pace, t e payment to of Income-ta#,
the Jumor member out of the coparcenary funds would n~mbav City II
have stood on a different footing. In that case, the
·v.
payment to the junior member was a kind of a charge
Shri Silaldas
which diverted a portion of the income from the
Tirathdas
assessee to the juni9r member in such a way that it
could not be said that it became the income of the Hidayatul/ah f.
asses see.
In Oommis.sioner of Income-tax, Bombay v. Makanji
Lalji (1 ), it was stated that in computing the income of
a Hindu undivided family monies paid to the widow
of a deceased coparcener of the family as maintenance
could not be deducted, even though the amount of
maintenance had been decreed by the Court and had
been made a charge on the properties belonging to the
family. This case is open to serious doubt, because it
falls within the rule stated in Bejoy Singh Dudhurid's
case e); and though the High Court distinguished the
case of the Judicial Committee, it appears that it was
distinguished on a ground not truly relevant, namely,
that in Bejoy Singh Dudhuria's case (2) the AdvocateGeneral had abandoned the plea that the stepmother
was still a member of the undivided Hindu family.
It was also pointed out that this was a case of asse.ssment as an individual and not an assessment of a
Hindu undivided family.
.
In Commissioner of Income-tax, Bombay v. D.R.
Naik (3), the assessee was the sole surviving member
of a Hindu undivided family.
There \Vas a decree of
Co'1rt by which the assessee was entitled to receive
properties as a residuary legatee, subject, however, to
certain payments of maintenance to widows.
The
widows continued to be members of the family. It
was held that though s. 9 of the Income-tax Act did
not apply, the assessee's assessable income was only
the balance left after payment of the maintenance
charges. It appears from t.he facts of the case, however, that there was a charge for the maintenance
(1) (1937) 5 I.T.R. 539·
(z) (1933) 1 l.T.R. 135.
(3) (1939) 7 I. T.R. 362.
640
SUPREME COURT REPORTS
[1961)
1960
upon the properties of the assessee.
This case also
T • c-· .
brings out correctly the principles laid down by the
"'
ommmionerJ d' · 1 C
'tt
th t 'f th
b
'd'
of Incom•-tax
u ima
omm1 ee
a
l
ere
e an overr1 mg
Bombay City i 1 obligation which creates a charge and diverts the inv.
come to some one else, a deduction can be made of the
Shri Sitaldas amounts SO paid.
r .. athdas
The last case may be contrasted with the case rellidayatulluh J. ported in P. C. Mullick and D. C. Aich, In re (1).
There, under a will certain payments had to be made
to the beneficiaries. These payments were to be made
gradually together with certain other annuities. It
was held that the payments could only be made out
of the income received by the executors and trustees
from the property, and the sum was assessable to
income. tax in the hands of the executors. It was
pointed out that under the will it was stated that the
amounts were to be paid "out of the income of my
property", and thus, what had been charged was the
income of the assessees, the executors.
The case is
in line with the decision of the Privy Council in
P. C. Mullick v. Commissioner of Income-tax, Bengal(').
In Hira Lat, In re, (3 ) there was a joint Hindu
family, and under two awards made by arbitrators
which were made into a rule of the Court, certain
maintenance allowances were payable to the widows.
These payments were also made a charge upon the
property. It was held that inasmuch as the payments
were obligatory and subject to an overriding charge
they must be excluded. Here too, the amount payable
to the widows was diverted from the family to them
by an overriding obligation in the nature of a charge,
and the incom; could not be said to accrue to the joint
Hindu family at all.
In Prince Khanderao Gaekwar v. Commissioner of
Income-tax('), there was a family trust out of which
two grandsons of the settlor had to be paid a portion
of the income. It was provided that if their mother
. lived separately, then the trustees were to pay her
Rs. 18,000 per year. The mother lived separately,
and two deeds were executed by which the two grandsons agreed to pay Rs. 15,000 per year to the mother,
(1) (1940) 8 I.T.R. 236.
(3) (1945) 13 I.T.R. 5u.
(2) (1938) 6 I.T.R. 206.
(4) (1948) 16 I.T. R. 29<·
2 S.C.R. SUPREME COURT REPORTS
641
and created a oharge on the property. The sons havr960
ing paid Rds. d6,000 hin e::,ccess off theirh . obligatiobn1s, The Commission"
sought to
e uct t e amount rom t e1r assessa e •/ Income-I,.,,
income, and it was allowed by the Bombay High Bombay City ir
Court, observing that though the payment was a
v.
voluntary payment, it was subject to a valid and legal
S/Jri Sitaldas
charge which could be enforced in a Court of law and
Tiralhdas
the amount was thus deductible under s. 9(l)(iv). n·a 7;1 ,. J
There is no distinction between a charge created by a
• "Y"" " ·
decree of Court and one created by agreement of parties, provided that by that charge the income from
property can be said to be diverted so as to bring the
matter withins. 9(l)(iv) of the Act. The case was one
of application -0f the particular section of the Act and
not one of an obligation created by a money deoree,
whether income accrued or not. The case is, therefore,
distinguishable from the present, anQ. we need not consider whether in the special circu:mstanoes of that case
it was correctly decided.
In V . .M. Raghavrilu Naidu & Sons v. Oommissioner
of Income-tax (1), the assessees were the executors and
trustees of a will, who were required to pay maintenance allowances to the mother and widow of the
testator. The amount of these allowances was sought
to be deducted, but the claim was disallowed; Satyanarayana Rao and Viswanatha Sastri, JJ. distinguished the case from that of the Privy Council in Bejoy
Singh Dudhuria(2). Viswanatha Sastri, J. observed
that the testator was under a personal obligation
under the Hindu law to maintain his wife and mother,
and if he had· spent a portion of his income on such
maintenance, he could not have deducted the amount
from his assessable income, and that the position of
the executor was no better.
Satyan~ra.yana Rao, J.
added that· the amount was not an allowance which
was charged upon the estate by a decree of Court or
otherwise and which the testator himself had no right
or title to receive. The income which was received
by the executors included the amount paid as maintenance, and a portion of it was thus applied in discharging the obligation.
(2) (1933) 1 I.T.R. 135.
••
642
SUPREME COURT REPORTS
[1961]
1960
The last cited case is again of the Bombay High
1.h c
. .
Court, which seems to have influenced the decision in
e
om11nsstoner h
,
.
,
c•f Income-tax
t e mstant case. That IS reported in Seth M otilal
Jfombay City i1 Manekchand v. Commissioner of Income-tax('). In that
v.
case, there was a managing agency, which belonged
Shri Sitaldus
to a Hindu joint family consisting of A, his son B and
Tirathdas
A's wife.
A partition took place, and it was agreed
Hidayatullah 1. that the managing agency should be divided, A and
B taking a moiety each of the managing agency
remuneration but each Of them paying A's wife 2 as.
8 pies out of their respective 8 as. share in the managing agency remuneration. Chagla, C. J. and Tendolkar,
J. held that under the deed of partition A and B had
really intended that they were to receive only a portion of the managing agency commission and that the
amount paid to A's wife was diverted before it became
the income of A and B and could be deducted. The
learned Judge observed at p. 741 as follows:
"We are inclined to accept the submission of
Mr. Kolah that it does constitute a charge, but in our
opinion, it is unnecessary to decide this question
because this question can only have relevance and
significance if we were considering a claim made for
deduction under section 9(1)(iv) of the Income-tax Act
where a claim is made in respect of immovable property where the immovable property is charged or
mortgaged to pay a certain amount.. It is sufficient
for the purpose of this reference if we come to the conclusion that Bhagirathibai had a legal enforceable
right against the partner in respect of her 2 annas and
8 pies share and that the partner was under a legal
obligation to pay that amount."
These arc the cases which have considered the problem from various angles. Some of them appear to
have a pp lied the principle correctly and some, not.
But we do not propose to examine the correctness of
the decisions in the light of the facts in them. In our
opinion, the true test is whether the amount sought to
be deducted, in truth, never reaches the assessee as ·his
income. Obligations, no doubt, there are in every case,
but it is the nature of the obligation which is the
(1) (1957) 31 l.T.R. 735·
2 S.C.R. SUPREME COURT REPORTS
643
decisive fact. There is a difference between an amount
L96o
which a person is obliged to apply out of his income Th c -. .
d
h. h b
h
f h
bl'
.
e
ommissioner
an an amount w IC
y t e natu:e o t e o igat1on
of Income-ta#,
cannot be said to be a part of the mcome of the assesBombay City 11
see. Where by the obligation income is diverted before
v.
it reaches the assessee, it is deductible; but where the
Shri Si1aldas
income is required to be applied to discharge an obligaTirathllas
tion after such income reaches the assessee, the same
consequence, in law, does not follow. It is the first
kind of payment which can truly be excused and not
the second. The second payment is merely an obligation to pay another a portion of one's own income,
which has been received and is since applied. The
first is a case in which the income never reaches the
assessee, who even if he were to collect it, does so, not
a.s part of his income, but. for and on behalf of the person to whom it is payable. In our opinion, the present case is one in which the wife and children of the
assessee who continued to be members of the family
received a portion of the income of the assessee, after
the assessee had received the income as his own. The
case is one of application of a portion of the income to
discharge an obligation and not a case in which by an
overriding charge the assessee became only a collector
of another's income. The matter in the present case
would have been different, if such an overriding charge
had existed eithe~ upon the property or . upon its
income, which is not the case. In our opinion, the
case falls outside the rule in Bejoy Singh Dudhurw's
case(1) and rather falls within the rule stated by the
Judicial Committee in P. O. Mullick's case (
11).
For these .reasons, we hold that the question referred to the High Court ought to have been answered in
the negative. We, accordingly, discharge the answer
given by the High Court, and the question will be
answered in the negative. The appeal is thus allowed
with costs here and in the High Court.
Appeal allowed.
(1) (1933) I I.T.R; 135.
(2) (\938) 6 I.T.R. 2o6.
Hidayalullah ].