# ' • THE SUPREME COURT REPORTS THE COMMISSIONER OF INCOME-TAX; MADHYA PRADESH AND BHOPAL v. SODRA DEVI

- **Citation:** [1958] 1 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 1957-05-17
- **Case number:** Civil Appeals Nos. 322 and 25 of 1955
- **Bench:** Bhagwati, S. K. Das, J. L. Kapur
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-supreme-court-reports-the-commissioner-of-income-tax-madhya-pradesh-and-1442
- **Pages:** 37

## Headnote

Income-tax-Computation of total lncome-'individual', Meaning of-Indian Income-tax Act, 1922 (X of 1922), as amended by the
Indian Income-tax (Amendment) Act, 1937 (IV of 1937), s. 16(3) .
The common question of Jaw for determination in these two
appeals was whether the word 'individual' in s. 16(3) of the
Indian Income-tax Act, 1922, as amended by Act IV of 1937,
includes a female and whether the income of minor sons from a
partnership, to the benefits of which they were admitted, was
liable to be included in computing the total income of the mother
who was a member of the partnership.
..
Held, (Per Bhagwati and Kapur JJ., S. K. Das J. dissenting}
..
that the question must be answered in the negative.
The word 'individual' oc«urring in s. 16(3) of the Indian
Income-tax Act, as amended by Act IV of 1937, means only a male
and does not include a female.
Shrimati Chanda Devi v. The Commissioner of Income-tax,
(1950) 18 J.T.R. 1944 and Musta Quima Begum, In re, 1(953) 23
I.T.R. 345, disapproved.
.
Where the Legislature uses ambiguous language in enacting
a statute, as. it has undoubtedly done in the instant case, recourse
must necessarily be had, for a clarification of such ambiguity, to
the pre-existing state of the Jaw in order to see what defect or
mischief therein was being sought to be remedied, the remedy that
was prescribed by the statute and the reason for it.
Bengal Immunity Company Limited v. The State of Bihar,
(1955) 2 S.C.R. 603, Thomson v. Lord C/anmorris, (1900) I Cb. D.
718 and Eastman Photographic Materials Company v. Comptroller
General of Patents, Designs and Trade Marks, (1898) A.C.
571,
relied on.
A reference to the Income-Tax Enquiry Report, 1936, and the
Statement of objects and reasons that led to the passing of the
Indian Income-tax (Amendment) Act -IV of 1937 makes it clear
beyond doubt that the mischief the Legislature was seeking to
remedy was one that resulted from a husband entering into a
1957
May 17
1957
The Commissioner
of Income-tax,
MadhFtJ Pardesh
and Bhopal
v.
Sodra Devi
Bhagwati J.
2
SUPREME COURT REPORTS
[1958]
nominal partnership with his wife or a father admitting his minor
children to the benefits of a partnership, and the possibility of a
mother doing so was not even thought of.
·
Per S. K. Das J.-There is no ambiguity in s. 16(3) of the
Indian Income-Tax Act, as amended by Act JV of 1937, and, read
in the context of the other provisions of the Act and construed as
a whole, it clearly indicates that the Legislature used the word
'individual' in that sub-section in its ordinary connotation to
mean both a male and a fema1e person.
Even if, on the assumption that there is ambiguity in the
phraseology used in the sub-section, reference is made to the
Income-Tax Enquiry Report, 1936, and the Statement of objects
and reasons of the Amending Act IV of 1937 for the limited
purpose for which it is permissible to do so, they disclose nothing
concerning the policy adopted by the Legislature or the object
the statute was intended to accomplish
that makes any other
meaning inevitable. The recommendations made by the Report
were not fully
accepted by the Legislature and it cannot be a
reliable guide and the use of the word 'parent' in the Statement
clearly shows that the mischief envisaged was not confined to the
father alone.

## Text

_Characters 0–39,878 of 83,504. This is a partial read: ask again with offset=39878 for what follows._

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THE SUPREME COURT REPORTS
THE COMMISSIONER OF INCOME-TAX;
MADHYA PRADESH AND BHOPAL
v.
SODRA DEVI
(with connected appeal)
(BHAGWATI, S. K. DAS and J. L. KAPUR JJ.)
Income-tax-Computation of total lncome-'individual', Meaning of-Indian Income-tax Act, 1922 (X of 1922), as amended by the
Indian Income-tax (Amendment) Act, 1937 (IV of 1937), s. 16(3) .
The common question of Jaw for determination in these two
appeals was whether the word 'individual' in s. 16(3) of the
Indian Income-tax Act, 1922, as amended by Act IV of 1937,
includes a female and whether the income of minor sons from a
partnership, to the benefits of which they were admitted, was
liable to be included in computing the total income of the mother
who was a member of the partnership.
..
Held, (Per Bhagwati and Kapur JJ., S. K. Das J. dissenting}
..
that the question must be answered in the negative.
The word 'individual' oc«urring in s. 16(3) of the Indian
Income-tax Act, as amended by Act IV of 1937, means only a male
and does not include a female.
Shrimati Chanda Devi v. The Commissioner of Income-tax,
(1950) 18 J.T.R. 1944 and Musta Quima Begum, In re, 1(953) 23
I.T.R. 345, disapproved.
.
Where the Legislature uses ambiguous language in enacting
a statute, as. it has undoubtedly done in the instant case, recourse
must necessarily be had, for a clarification of such ambiguity, to
the pre-existing state of the Jaw in order to see what defect or
mischief therein was being sought to be remedied, the remedy that
was prescribed by the statute and the reason for it.
Bengal Immunity Company Limited v. The State of Bihar,
(1955) 2 S.C.R. 603, Thomson v. Lord C/anmorris, (1900) I Cb. D.
718 and Eastman Photographic Materials Company v. Comptroller
General of Patents, Designs and Trade Marks, (1898) A.C.
571,
relied on.
A reference to the Income-Tax Enquiry Report, 1936, and the
Statement of objects and reasons that led to the passing of the
Indian Income-tax (Amendment) Act -IV of 1937 makes it clear
beyond doubt that the mischief the Legislature was seeking to
remedy was one that resulted from a husband entering into a
1957
May 17
1957
The Commissioner
of Income-tax,
MadhFtJ Pardesh
and Bhopal
v.
Sodra Devi
Bhagwati J.
2
SUPREME COURT REPORTS
[1958]
nominal partnership with his wife or a father admitting his minor
children to the benefits of a partnership, and the possibility of a
mother doing so was not even thought of.
·
Per S. K. Das J.-There is no ambiguity in s. 16(3) of the
Indian Income-Tax Act, as amended by Act JV of 1937, and, read
in the context of the other provisions of the Act and construed as
a whole, it clearly indicates that the Legislature used the word
'individual' in that sub-section in its ordinary connotation to
mean both a male and a fema1e person.
Even if, on the assumption that there is ambiguity in the
phraseology used in the sub-section, reference is made to the
Income-Tax Enquiry Report, 1936, and the Statement of objects
and reasons of the Amending Act IV of 1937 for the limited
purpose for which it is permissible to do so, they disclose nothing
concerning the policy adopted by the Legislature or the object
the statute was intended to accomplish
that makes any other
meaning inevitable. The recommendations made by the Report
were not fully
accepted by the Legislature and it cannot be a
reliable guide and the use of the word 'parent' in the Statement
clearly shows that the mischief envisaged was not confined to the
father alone.
CIVIL APPELLATE JURISDICTION :
Civil Appeals
Nos. 322 and 25 of 1955.
Appeal from the judgment and order dated April 13,
1954, of the Nagpur High Court in Miscellaneous Civil
Case No. 71 of 1956 and appeal from the judgment
and order dated August 26, 1952, of the Punjab High
Court in Civil Reference No. 11 of 1952.
C. K. Daphtary, Solicitor-General of India, G. N.
Joshi and R. H. Dhebar, for the appellant in C.A. No.
322 of 1955 and respondent in C.A. No. 25 of 1955.
R. J. Kolah, J. B. Dadachanji, S. N. Andley and
Rameshwar Nath, for the respondent in C.A. No. 322
of 1955.
G. S. Pathak and M. L. Kapur, for the appellant in
C.A. No. 25 of 1955.
1957. May 17.
The Judgment of Bhagwati and
J. L. Kapur JJ. was delivered by Bhagwati J. S. K.
Das J. derlivered a separate judgment.
BHAGWATI J.-These two appeals with certificates
under Section 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.
'
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S.C.R.
SUPREME COURT REPORTS
3
The facts leading up to these appeals may be shortly
1957
Stated as under.
The Commissioner
Prior to October 18, 1944, one Rai Bahadur Narsingof Income-1ax,
das Daga (since deceased), his wife Shrimati Sodradevi M"'/!:,~
0
8t,';/js"
(the assessee), and his three major and three minor sons
v.
constituted a joint and undivided Hindu family. There
Sodra Devi
wa:s a severance of joint status between the erstwhile
Bhagwati !·
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
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 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
s. 16(3)(a)(ii) of the Act,
the Tribunal held that
the income falling to the shares of the three minor
son:> 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 the High
Court :
"Whether en a true construction of the provisions
of section 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."
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 benefit
of partnership of a firm
in which the mother is a
4
SUPREME COURT REPORTS
[1958]
19s7
partner and accordingly answered the referred ques-
'f1ie co,,;mi.rsionc" ti on in the negative. The High Court, however.
;1,iI,~:;·r;;;:;h grhanAted the neccessary.
~ertificafte under s. 66A(2)h of
and Bhopol
t e
ct to the
omm1ss1oner o Income-tax, Mad ya
s drv,D ,
Pradesh and Bhopal, and hence Civil Appeal No. 322
0 a
el'/
of 1955 before us.
RhngwaUJ,
One lshwardas 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 asses~ee on the grou1;d
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 assessec wherever that
occurred in s. 16(3) and directed the deletion from
the asscssce's income of the shares of her minor sons in
the rrofits of the firm.
At the instance of the Commisswner of Income-tax, Delhi, the Tribunal referred
to the High Court of Punjab at Simla the question of
Jaw 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 Section 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
reconstituted firm of Messrs.
Ishwardas Shani and
Brothers should be included in the income of Shrirnati
Damayanti Sahni in assessing her income, profits and
gains."
The High Court heard the reference and following
the decision given by the High Court of Allahabad in
Shrimati Chanda Devi v. The Commissioner of Incometax('), answered the referred question in the aflirmati\'e.
(1) [1~;10} 18 l.T.R. !'144·
•
1
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...--r
J
.>
S.C.R.
SUPREME COURT REPORTS
5
The assessee obtained the requisite certificate under
s. 66(A) of the Act from the High Court and that is
how Civil Appeal No. 25 of 1955 is before us.
The common question of law which · we have to
determine in these appeals is whether the word
"individual" in s. 16(3)(a)(ii) of the Act includes also
a female and the income of the minor sons derived
from a partnership to the benefits of which they have
been admitted is hable to be included in the income of
the mother who is a member of that partnership.
Section 16(3) of the Act provides :
"In computing the total income of any individual
for the purpose of assessment, there shall be included-
( a) so much of the income of a wife or minor child of
such individual as arises directly or indirectly:
(i) from the membership of the wife in a firm
of which her husband is a partner;
(ii) from the admission of the minor to the
benefits of the partnership in a firm of which such
individual is a partner;
(iii) from assets transferred directly or indirectly
to the wife by the husband otherwise than for adequate
consideration or in connection with an agreement to
live apart; or
(iv) from assets transferred directly or indirectly
to the minor child, not being a married daughter, by
such individual otherwise than
for adequate
consideration ; and
(b) so much of the income of any person or association of persons as arises from assets · transferred
otherwise than for adequate consideration to the person or association by such individual for the benefit of
his wife or a minor child or both."
Section 3 ·of the Act may also be referred to in this
context and it rims as follows :
Section 3. Charge of Income Tax :
"Where any Central Act enacts that income-tax
shall be charged for any year at any rate or rates, tax
at that rate or those rates shall be charged for that
year in accordance with, and subject to the provisions
of this Act in respect of the total income of the pre·
vious year of every individual, Hindu undivided
1957
The Commissioner
of Income-tax,
Madhya Pradesh
and Bhopal
·V.
Sodra Devi
Bhagwati J.
6
SUPREME COURT REPORTS
(1958}
1957
family, company and local authority, and of every firm
The c.;;;;;;;issio11cr and other association of persons or the partners of the
of j,•come-tax,h firm or the members of the association individually."
M"a,,':/'
0 Bf;a;:,•,s
The same description of the assessee is also to be
v.
.
found in s. 4A, which deals with residence in the taxSodra Dm
able territories, s. 48 dealing with refund and s. 58
Bhacwa11 J.
dealing with the charge of super-tax.
The word assessee is wide enough to cover not only
an "individual" but also a Hindu undivided family,
company and local authority and every firm and other
association of persons or the partners of the firm or
the members of the association individually. Whereas
the word "individual" is narrower in its connotatiOn
being one of the units for the purposes of taxation
than the word "assessee", the word "individual"
has not been defined in the Act and there is authority
for the proposition that the word "individual" does
not mean only a human being but is wide enough to
include a group of persons forming a unit. It has been
held that the word "individual" includes a Corporation created by a statute, e.g., a University or a Bar
Council, or the trustees of a baronetcy trust incorporated by a Baronetcy Act. It would also include a
minor or a person of unsound mind. If this is the
connotation of the word "individual" it follows that
when s. 16(3) talks of an "individual" it is only in a
restricted sense that the word has been used.
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.
The Revenue urges before us that the word "individual" as used qua human beings is capable of including within its connotation a male as well as a
female of the species and having regard to the context
in which the word has been used in s. 16(3), it should
be construed as meaning a male of the species when
used in juxtaposition with "a wife" and as meaning
both a male and a female when used in juxtaposition
with "minor child" so that when s. 16(3) talks of
'
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S.C.R.
SUPREME COURT REPORTS
7
"such individual" in sub-els. (ii) and (iv) of cl. (a)
1957
thereof it refers to both a male and a female of the The Commissio11e1
species so as to include within its compass not only a t[
j,,11co~e-'d,xl
father of the minor child but also a mother.
~n'Jah:;ar'
The assessees, on the other hand contend that ·the
s cJ. v. D .
word "individual" used in s. 16(3) is not used in its
0 ra
en
generic sense but is used in a restricted and narrower
Bhagwati J.
sense as connoting only human being and if it is thus
restricted there is ample justification for restricting it
still further to the male of the species when regarded
in the context of s. 16(3). Sub-clauses (i) to (iv) of cl.
(a) arc specific cases where the income of a wife or a
minor child of "such individual" arising directly or
indirectly from the several sources therein indicated is
to be included in computing the total income of the
"individual" for the purpose-of assessment and the
word could not have been used in a different sense for
the purposes of sub-cls.(i) and (iii) and sub-els. (ii) and
(iv) of cl. (a). The word "such individual" as used
in sub-cl. (a) can only have been used in one sense and
one sense only ;i_nd if that is the sense in which it
could have been used "such individual" should be
one who is capable of having a wife or minor child or
both and that individual can only be a male of the
~pecies and not a female.
,
The question for our determination is a very narrow
one and it turns on the constuction of s. 16(3) of the
Act. The High Court of Madhya Pradesh plunged
headlong into a discussion of the reasons which motivated the Legislature into enacting s. 16(3) by Act IV
of 1937, and took into consideration the recommendations made in the Income Tax Enquiry Report
1936 and also the statement of objects and reasons for
the enactment of the same, without considering in the
first instance whether there was any ambiguity in the
word "individual" as used therein. It is clear that unless
there is any such ambiguity it would not be open to
the court to depart from the normal rule of construction which is that the intention of the Legislature
should be primarily gathered from the words which
are used. It is only when the words used are ambiguous that they would stand to be examined and
8
SUPREME COURT REPORTS
[1958)
!957
construed in the light of surrounding circumstances
rhe C;;;;;;;;issioner and constitutional .principle and practice [Per Lord
X{.JJ.~C:"J;,:/,%;, AI shbhou1rne in Nairnhv.,. u.
1
n
1
ive!siy of St . .:J.ndrewfsL(')]d.
and Bhopal
n t e atter event t e 1 o owmg observabons o
or
v.
Lindley M. R. in Thomson v. Lord Clanmorris (')
SOdra Devi
would be apposite :
BhagwatiJ.
"In construing any statutory enactment, regard
must be had not only to the words used, but to tbe
history pf the Act and the reasons which led to its
being passed. You must look at the mischief which
had to be cured as well as at the cure provided" (See
also the observations of Goddard C. J. in R. v. Paddington and St. Marylel>one Rent Tribunal (').
The position in law has been thus enunciated in the
judgment of Das, Actg. C. J. (as he then was) in the
Bengal Immunity Company Limited v. The State of
Bihar (4) :
"It is a sound rule of construction of a statute
firmly established in England as far back as 1584 when
Heydon's Case (') was decided that-
" ........ for the sure and true interpretation of
all statutes in general (be they ·penal or beneficial,
restrictive or enlarging of the common law) four things
are to be discerned and considered :
!st. What was the common law before the making of the Act.
·2nd. What was the mischief and defect for which
the common law did not provide.
3rd. W'hat remedy the Parliament hath resolved
and appointed to cure the disease of the Commonwealth., and
4th. The true reason of the remedy; and then
the office of all judges is always to make such construction as shall suppress the mischief, and advance the
remedy, and to suppress subtle inventions and evasions
for continuance of the mischief, and pro privato commodo, and to add force and life to the cure and remedy,
according to the true intent of the makers of the Act
pro bono publico."
(1) (1909) A.O. 147.
(3) (1949) 65 T.L.R. 200, 203.
(2) (1900) I Ch. D. 718, 725
(4) (1955) 2 S.C.R. 6o3, 632.
(5) (1584) 3 Co. Rep. 7a; 76 E.R 637.
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S.C.R.
SUPREME COURT REPORTS
9
In Jn re Mayfair Property Company (1) Lindley M. R.
1957
in 1898 found the rule "as necessary now as it was TheCommissio11er
when Lord Coke reported Heydon's case". In Eastman °1 Income-tax,
•
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/''
/ Madhya Pradesh
Photographic M aterzals Company v. Comptro ier Genera
and Bhopal
of Patents, Designs and Trade Marks (2)
Earl of
s d v.D .
Halsbury re-affirmed the rule as follows :
0
ra
el'l
"My Lords, it appears to me that to construe the
Bhagwati J.
statute now in question, it is not only legitimate but
highly convenient to refer both to the former Act and
to the ascertained evils to, which the former Act and
given· rise, and to the later Act which provided the
remedy. These three things being compared, I cannot
doubt the eonclusion."
The High Court of Punjab based -its conclusion
primarily on the use of the word "or" between the
word "wife" and the words "minor child" in s. 16(3)(a)
of the Act and it was of opinion that these words were
used disjuntively and the "individual" referred .to in
s. 16(3)(a) of the Act may have a wife and minor child
or may not have a wife but have a "minor child1'. If
the individual assessed to income tax is a female that
individual will have no wife but she may have a minor
child and therefore s. 16(3)(a) of the Act does not
imply that the individual must necessarily be a male.
The argument based on the disjunctive user of the
word "wife" and the words "minor child" is capable of
being summarily disposed of. Even if the words "such
individual" in s. 16(3)(a) of the Act meant only a male
of the species the words "wife" and the words "minor
child" could only have been used with the word "or" in
between. A male of the species may not necessarily
have both a wife and a minor child. He may have a
wife but no "minor child". He may have a minor
child but may have no wife at the relevant period. If
therefore provision had to be made for the inclusion of
the income of a wife or minor child or both in the
total income of a male of the species the word "or" was
absolutely necessary to be interposed between the word
"wife" and the words "minor child". To construe the
word "or" as disjunctive between the word "wife" and
(1) L.R .. (1898) 2 Ch. 28, 35
(2) (1898) A.C. 571, 576
10
SUPREME COURT REPORTS
[1958]
1957
the words "minor child" does not necessarily lead to
nie c;;;;m1issioner the conclusion that the words "such individual" were
~[ //co~,,./:t;n used for both a male and a female of the species and
•
0
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were necessarily inconsistent with the user of those
v.
words for the male of the species if the context otherSodra De1·i
wise lead to that conclusion. The reasoning adopted
Bhag.-a1iJ.
by the learned Judges of the High Court of Punjab
therefore does not clinch the matter.
We have therefore got to examine whether the use
of the word "individual" in s. 16(3)(a) of the Act is in
any manner ambiguous. The opening words of s. 16(3)
talk of "any individual" whose total income has got to
be computed for the purpose of assessment and the
words "such individual" used in section 16(3)(a) have
reference only to that individual.
That individual
must be an assessee and it is in the computation of his
total income for the purpose of assessment that the
income of the persons mentioned in els. (a) and (b) have
got to be included. Sub-clause (a) refers to two distinct
sets of persons bearing a relationship with "such
individual", the assessee. One is a wife and the other
is a minor child. The case of the wife is dealt with in
sub-els. (i) and (iii) and the case of a minor child is
dealt in sub-els. (ii) and (iv). Sub-clauses (i) and (iii)
use the word "her husband" or "the husband" in place
of the words "such individual" with reference to the
income derived by the wife in the circumstances
therein mentioned, though, it may. be observed that
the user of the words "such individual" would not have
made the slightest difference to the position. Subclauses (ii) and (iv) which deal with a "minor child"'
use the words "such individual" in relation to the
minor child whose income under the circumstances
therein mentioned has to be included in computing the
total income of "such individual" for the purpose of
assessment. Whereas the words used in sub-els. (i)
and (iii) are specific and refer only to "her husband'"
and "the husband" as "such individual", the words
used in sub-els. (ii) and (iv) leave it indefinite as to
which is meant by the words
"such individual"
whether a male and/or a female of the species.
If the
words used in all these four sub-clauses were to be
....
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S.C.R.
SUPREME COURT REPORTS
I 1
harmoniously read and the two cases which are
mentioned in sub-els. (i) and (iii) are not to be read
differently from the cases mentioned in sub~els. (ii)
and (iv) the only way in which the words
"such
individual" as used in sub-els. (ii) and (iv) could be
understood would be to read them as confined to a
male of the species and not including the female.
If
these words "such individual" as used in sub-els. (ii)
and (iv) are thus read restricted to a male of the
species, all these sub-clauses would have reference
only to the male of the species irrespective of the fact
that the words "her husband" and "the husband" have
been used in sub-els. (i) and (iii) instead of the wqrds
"such individual". If the words "such individual" had
been used in sub:..cls. (i) and (iii) as they have been
used in sub-els. (ii) and (iv) the position would have
been just the same because in that event also we would
have had to determine whether there was any justification for reading the words "such individual" used with
reference to sub-els. (i) and (iii) in any different sense
from the same words "such individual" as used in subcls. (ii) and (iv). The crux of the question, therefore,
is whether the words "such individual" used in the
opening part of s. 16(3)(a) are used to mean a male of
the species when they are read in juxtaposition with
the words "a wife" and are used to mean both a male
as well as female of the species, as the case may be,
when used in juxtaposition with the words "minor
child".
If that was the intention of the Legislature there
was nothing to prevent it from dividing cl. (a) into two
sut>-clauses whether they were numbered (a) and (ai)
or (a) and (b) respectively. The Legislature could as
well have enacted the provisions in the manner
following :
(a) : so much of the income of a wife of such
individual as arises directly or indirectly;
(i) from the membership of the wife in a firm
of which her husband (or such individual) is a partner;
or
(ii) from assets transferred directly or indirectly
to the wife by the husband (or such individual)
1957
The Commissioi:er
of !~come-tax.
!vfadi1ya Pradesh
and Bhopal
v.
Sodra Dei·i
B/zagwati J.
12
SUPREM.E COURT REPORTS
[1958)
19s1
otherwise than for adequate consideration or in
The c;;;;;;.isstoner connection with an agreement to live part;
of Income-tax,h
(ai) or (b) : so much of the income of a minor
Madhya/'°"" child of such individual as arises directly or indirectly
Sodra Devi
(i) from the admission of the minor to the
Bhagwati 1.
benefits of the partnership in a firm of which such
individual is a partner; or
(ii) from assets transferred directly or indirectly
to, the minor child, not being a married daughter by such
individual otherwise than for adequate consideration.
If these provisions had been enacted in the manner
aforesaid it would have been possible to urge, as has
been urged before us by the Revenue, that cl. (a)
referred only to a male of the species who only could
have a wife and cl. (ai) or (b) referred to male and/or
a female of the species.
The Legislature however chose to adopt a peculiar
mode of enactment either for the purpose of economy
of words or structural beauty and mixed up both these
sets of provisions into the enactment of cl. (a) of s.16(3)
of the Act as it stands at present. It rolled in both
these sets of cases and used the words "a wife" or
"minor child" of "such individual" raising thus the
question of construction which has got to be determined
by us.
"Such individual" as is talked of in s. 16(3Xa)
may have a wife, may have a minor child or may have
both a wife and a minor child. When "such individual"
is thought of in connection with a wife, it can only be
a male of the species, but when "such individual" is
thought of in connection, with a minor child it can be
both a male as well as a female of the species, though,
of course, when "such individual" is thought of in
connection with "both" then again it would have to
be a male of the species and certainly not a female.
Such an interpretation would lead to the interpretation
of the same words "such individual" as meaning two
different things in two different contexts. They would
mean one thing when used in relation to "a wife" and
would mean another thing when used in relation to a
"minor child". They would be capable of being
understood in a narrower sense when used in connection with a "wife" and would be capable of being
.
·•
4 -
..
-
S.C.R.
SUPREME COURT REPORTS
13
understood in a wider sense when used in connection
19S7
with a "minor child". One may as well question the TheCommission .. --
elegance or the property of such user of the words
01 Income-tax,
Madhya Pradesh.
"such individual" where the words "as the case may
and Bhopal
be" are necessarily to be imported in order to under-
.v.
Sodra De•·i
stand the true import of these words, when again they
are used not in different parts of the same section but
Bhagwati 1.
at one place only.
If one turns to s. I 6(3)(b) the 1words used therein
are "transferred ...... by "such individual'" for the
benefit of his wife or a minor child or both." There is
the indefinite article "a" used before the words "minor
child". If that indefinite article "a" had not been
used, the expression would have run "for the benefit of
his wife or minor child or both" thus leaving no doubt
at all that in cl. (b) at least the words "such individual"
meant only a male of the species. It is urged however
that the use of the indefinite article "a" shows that
the words "his wife" and "minor child" and "both"
have been used disjunctively and should be read in
the same manner as in s.16(3)(a) of the Act. The words
"his wife" would appropriately go with a male of the
species but the words "a minor child" would appropriately go with a male as well as a female of the
species, though the word "both" could only be appropriate in relation to a male of the species and not a
female who can have a minor child but not both a
wife and a minor child. The same want of elegance
or propriety can be predicated of this expression also
and the use of such expressions both in s. l 6(3)(a) and
s. 16(3)(b) raise questions of construction whether
what wasmeant by the Legislature was only a male
of the species in both these contexts or a male and/or
female of the species, as the case may be, applying
one or the other in accordance with the circumstances
attendant upon the computation of the total income
~f "any individual" for the purpose of assessment.
We are of opinion that the very' manner in which all
the four sub-clauses have been grouped together in
s. J6(3)(a) and the manner in which the expression
"for the benefit of his wife, a minor child or both" is
used in s. 16(3)(b) renders the words "any individual''
14
SUPREME COURT REPORTS
[1958]
1957
or "such individual" ambiguous. There is no knowThe Commissioner ing with certainty as to whether the Legislature meant
:[ j,nc0n;-::;:·h to enact these provisions with reference only to a male
aan~Bho;al s of the species using the words "any individual" or
s dr v.D .
"such individual" in the narrower sense of the term
0
a
•••
indicated above or intended to include within the
Bhagwati J.
connotation of the words "any individual" or "such
individual" also a female of the species, wherever
appropriate which woμld of course only be possible in
the cases contemplated in sub-els. (ii) and (iv) of
s. 16(3)(a) and in one of the three cases contemplated
in s. 16(3)(b). The Legislature certaintly was guilty
of using an ambiguous term in enacting s. 16(3) of the
Act as it did. In order to resolve
this ambiguity
therefore we must of necessity have resort to the state
of the law before the enactment of the provisions; the
mischief and defect for which the law did not provide;
the remedy which the. Legislature
resolved and
appointed to cure the defect and; the true reason of
the remedy within the meaning of the authorities
referred to above.
Before the enactment of s. 16(3) of the Act by the
Indian Income-tax (Amendment) Act, 1937 (IV of 1937),
there was no provision at all for the inclusion of the
income of a wife or a minor child in the computation
of the total income of "any individual" for the purpose of assessment. Whatever may have been the
income of a wife from her membership in a firm of
which her husband was a partner or from assets
transferred directly or indirectly to her by her husband
otherwise than for adequate consideration or in connection with an agreement to live apart, her income was
not included in the income of her husband in computing the total income of the husband for the purpose of
assessment. Similar was the position in the case of
income derived by a minor child from the admission of
the minor to the benefits of partnership in a firm of
which "such individual" was a partner or from assets
transferred directly or indirectly to the minor child,
not being a married daughter, by "such individual"
otherwise than for adequate consideration. The income
derived by such minor child could not be added to the
•
S.C.R.
SUPREME COURT REPORTS
15
income of the father· for the purpose of assessment.
1957
The income derived by the wife or minor child could The commissioner
only be included in computing his or its total income of Income-tax,,,
for tlte purposes of assessment and neithet the husband
~~,,:p~lade&
nor the fath~r could be made liable for income-tax in
s~v.D 1
respect of such income, whatever may be the reason
a ev
which actuated them in providing such income for the
BhagwatlJ.
wife or the minor child.
The position was pregnan,t with difficulties for the
Revenue. There were no doubt genuine cases where a
wife or the minor child as the case may be,
was
provided with such income on bona fide severance of
joint status between the erstwhile members of a joint
and undivided Hindu family and where after such
partition the adult member of the family entered into
a bona fide partnership admitting the minors to the
benefits of the partnership. There were, on the other
hand, innumerable cases were such severance of joint
status was resorted to mainly with a view to evade a
higher incidence of income tax. There were also cases
where husbands and fathers provided shares for their
wives and minor sons and thus evaded payment of
income tax in regard to their shares in the profits of
such partnerships. This evil was so rampant that the
Income Tax Enquiry Report, 1936, recognised the
same and made tq.e following recommendations for
remedying the situation (vide pp. 19 & 20 of the
Report).
CHAPTER 111-Assessees
Section I-Individuals.
(a) Wife's Income. Our attention has been drawn
to the extent to which taxation is avoided by nominal
partnerships between husband and wife and minor
children. In some parts of the country, avoidance of
taxation by this means has attained very serieus
dimensions. The obvious remedy for this state of
affairs so far as husband and wife were concerned is the
aggregation for assessment of their incomes, but such
a course would involve aggregation in a quite different
class of cases i.e., where the wife's income arises from
sources unconnected with the husband ............. .
•
•
•
•
•
•
•
•
•
•
•
•
•
•
.. •
•
•
•
•
4" ........ ·• ............................. .
M2SC(61)-2
16
SUPREME COURT REPORTS
[1958J
1957
We recommended, therefore, that the incomes of a wife
17,. Commissioner should be deemed to be, for income tax purposes, the
01 Income-tax, income of her husband but that where the income of
Madh)'a Pradesh h
"fi . d . d f
' h
l
.
d .
and Bhopal
t e WI e 1s enve
rom er persona exertions an 1s
s d v.D .
unconnected with any business of her husband, her
0 ra
''"'
income from her personal exertions upto a certain
Bhagwati J.
limit, say Rs. 500, should not be so included ....... .
(b) Income of Minor children. There is also a
growing and serious tendency to avoid taxation by the
admission of minor children to the benefits of partner·
ship in the father's business. Moreover, the admission
is, as a rule, merely nominal, but being supported by
entries in the firm's books, the Income-Tax Officer is
rarely in a position to prove that the alleged participation in the benefits of partnership is unreal.
We suggest that the income of a minor
should be
deemed to be the income of the father (i) if it arises from
the benefits of partnership in a business in which the
father is a partner or (ii) if, being the income of a
minor other than a married daughter, it is derived
from assets transferred directly or indirectly to the
minor by his or her father or mother, (iii) if it is
derived from assets apportioned to him in the partition
of a Hindu Undivided Family.
It may be noted that the recommendations of the
Enquiry Committee even in the cases hereinbefore
mentioned went· to the length of including the income
of the wife or the minor child as the case may be in
the income of the husband or the father in the compu•
tation of his total income for the purpose of assessment.
The mischief which the Enquiry Report sought to
remedy by its recommendations was one which wa~
the result of husbands entering into nominal partnerships between themselves and their wives and fathers
admitting their minor children to the benefits of such
partnerships. The mischief, if any, resulting from the
mothers admitting their minor children to the benefits
of partnerships in which they were members was
farthest from the thoughts of the Enquiry Committee
and was nowhere sought to be remedied~ Having
-
..
•
S.C.R.
SUPREME COURT REPORTS·
17
regard to the circumstances which prevailed at the
1957
time when the Enquiry Committee made its report, The commission"'
the only mischief which they sought to remedy by of Income-tax,
their recommendations was the one resulting from the Ma;:Ja Bho1;gtsh
male assessees indulging in such tactics for the evasion
v
•
of income tax by creating nominal partnerships between
Sodra Devi
themselves and their wives on . the one hand and their
Bhagwati J.
minor children on the other.
These recommendations were duly considered by the
Government and as a result thereof Act IV of 1937
"was enacted introducing s. 16(3) in the Act. What was
intended to be done by the Legislature in enacting
this amendment may be gleaned to a certain extent
from the) statement of objects and reasons appended
to the Bill which eventually became the amending Act.
Though it is not legitimate to refer to the stateipent
of objects and reasons as an aid to the construction or
for as certaining the meaning of any particular word
used in the Act or Statute (See Aswani Kumar Gohse v.
Arabinda Bose(1)), nevertheless, this Court in
The
State of West Bengalv. Subodh Gopal Bose(2) referred
to the same "for the limited purpose of ascertaining
the conditions prevailing at the time which actuated
the sponsor of the Bill to introduce the same and the
extent and urgency of evil which he sought to remedy".
The statement of objects and reasons which led to
the passing of Act IV of 1937 ran as follows :
"Reference is made in sections 1 and 4 of Chapter
III of the Income Tax Enquiry Report, 1936, to the
practice of avoiding taxation by means of nominal
partnerships between husband and wife or parent and
minor child or by the nominal transfer of assets to a
wife or minor child (or to an "association" consisting
of husband and wife) when there is no substantial
separation of the interests of the assessee and the wjfe
or child. These practices are reported to have become
very widespread already, with considerable detriment
to the revenue, and there is little doubt that if they
are not checked there will be progressive deterioration.
The proposals in the Report regarding the aggregation
of the incomes of husband and wife go beyond the
(1) (1953) S.C.R. I.
(2) (1954) S.C.R. 587, 628.
18
SUPREME COURT REPORTS
[1958]
1957
immediate necessities of the case and to that extent
The Commissioner their adoption would involve the admission of a new
M°f1.•c0n;;/,,i":·,, principle which the Government of India do not desire
an':!
0
shopat s
to establish in advance of the general public discussion
Sodr v. D 1
of the Report which has been arranged; and the
0
ev
present Bill has been· so drafted as to deal only with
Bhagwati J.
the abuses to which I have referred".
It is clear from the above extracts that the evil
which was sought to be remedied was the one resulting
from the widespread practice of husbands entering
into nominal partnerships with their wives and fathers
admitting their minor children to the benefits of the
partnerships of which they w.ere members. This evil
was sought to be remedied by the enactment of s.16(3)
in the Act. If this background of the enactment of
s. 16(3) is borne in mind, there is no room for any
doubt that howsoever that mischief was sought to be
remedied by the amending Act, the only intention of
the Legislature in doing so was ~o include the income
derived by the wife or a minor child, in the computation of the total income of the male assessee,
the
husband or the father, as the case may be, for the
purpose of assessment. If that was the position, howsoever wide the words "any indvidual" or "such
individual" as used in s. 16(3) and s. 16(3)(a) may
api)ear be so as to include within their connotation the
male as well as the female of the species taken by
themselves, these words in the context could only have ·
been meant as restricted to the male and not including
the female of the species. If these words are used as
referring only to the male of the species the whole of
the s.