T. S. Srinivasan Vs. Commissioner of
Income Tax, Madras  INSC 267 (29 November 1965)
29/11/1965 SIKRI, S.M.
CITATION: 1966 AIR 984 1966 SCR (2) 755
D 1970 SC 14 (10)
Income Tax Act, 1922, s. 3-Hindu undivided
familyWhether comes into being on conception of son or on birth.
A son was born to the assessee, a Hindu, on December 11, 1952, and' it was common ground that the conception of the child must have
taken' place sometime in March 1952.
For the assessment year 1953-54 (accounting
year April 1, 1952 to March 31. 1953) the assessee claimed that certain income
received by him should be assessed as the income, of a Hindu undivided family,
which, according to him had come into existence in or about March 1952 when the
son was conceived. The Income Tax Officer however recognised the family as a
Hindu undivided family only from the date of the birth of the child. This view
was upheld by the appellate authorities and the High Court, upon a reference also
answered the question against the assessee.
It was contended on behalf of the assessee
that under the Income-tax Act, a Hindu undivided family is a separate unit and
in determining whether a Hindu undivided family exists or not, and if it
exists, from what date it has come into being, regard must be had to the
principles of Hindu Law, for the Act does not lay down any principles on this point;
that it is well settled and it is a substantive rule of Hindu Law that a son
conceived has the same rights of property as a living son and that a joint
Hindu family comes into existence from the date the son is conceived.
HELD: The doctrine of Hindu Law that a son
conceived is equal in, many respects to a son actually in existence is not of
universal application and it applies mainly for the purpose of determining the
rights of property and safeguarding such rights of the son. This doctrine does
not fit in with the scheme of the Income Tax Act and it could not have between
the intention of the legislature to have incorporated this special' doctrine
into the Act. [758 F-G] In the present case,' no rights of the son would be
affected by not recognising his existence for the purposes of s. 3 of the Act
till he was actually born. Income-tax is a liability and it could not have been
the intention of the legislature to impose a liability on unborn persons.
[760 B] C.B.C. Deshmukh v. I. Mallapa
(1964) S.C. 510; referred to.
Even if a Hindu undivided family was in
existence towards the end' of the accounting year, the whole income received or
accrued in the accounting year did not thereby become the assessable income of
the Hindu undivided family;
till the child was born, the income was the
assessee's income. [760 D]
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 853 of 1964.
756 Appeal from the Judgment and Order dated
the 9th August, 1961 of the Madras High Court in Case Referred No. 86 of 1957.
A. V. Viswanatha Sastri, S. Swaminathan and
R. Gopalakrishnan, for the appellant.
C. K. Daphtary, Attorney-General, Gopal
Singh, B. R.
G. K. Achar and R. N. Sachthey, for the
The Judgment of the Court was delivered by
Sikri, J. This appeal, by certificate of the High Court of Madras, is directed
against its judgment in a reference made to it under S. 66(1) of the Indian
Income Tax Act, 1922, hereinafter referred to as the Act, by the Income Tax
Appellate Tribunal, Madras. The question referred to was "whether the
assessment of the income of the assessee, other than his salary in the hands of
the assessee, as an individual and not as a Hindu undivided family till 11th
December, 1952, for the assessment year 1953-54 is valid." The question
arose out of the following facts. The appellant, hereinafter referred to as the
assessee, is the youngest son of T. V. Sundaram Ayyangar, who was the Karta of
a Hindu undivided family consisting of a number of persons. There was a partial
partition of the above family and 150 shares of Rs. 1,000 each in T. V.
Sundaram Iyengar and sons Limited, a private limited company, were divided
equally among the coparceners, the assessee getting 25 shares of the value of
25,000. With the aforesaid shares as nucleus, the assessee acquired
houseproperties, shares and deposits up to March 31, 1952. As the assessee was
also the Service Manager of the aforesaid private limited company, he also
received substantial remuneration.
The first son, named Venugopal, was born to
the assessee on December 11, 1952, and it is common ground that the conception
of the child must have taken place sometime in March, 1952.
For the assessment year 1952-53, the assessee
was assessed as an individual with reference to all his sources of income. For
the assessment year 1953-54 (accounting year April 1, 1952 to March 31, 1953) the
assessee claimed that income from all sources, except salary, should be
assessed in the hands of H.U.F., consisting of himself and his son Venugopal,
which according to him had come into existence in or about March 1-952 when
Venugopal was conceived.
757 The Income Tax Officer, while admitting
that a male child acquires coparcenary rights in the family even from the date
of his conception, considered that this proposition applied only as far as the
minor's rights inter se other members were concerned, and as far as the claims
of the State or outsiders were concerned, he thought that an unborn son would
not come into the picture. 'therefore, he recognised the family only from the
date of the birth of the child, viz., December 11, 1952. The Appellate Assistant
Commissioner upheld his view and the assessee also failed before the Appellate
Tribunal. The High Court answered the question against the assessee.
Mr. A. V. Viswanatha Sastri, the learned
counsel for the assessee, contends that under the Act Hindu undivided family is
a separate unit and in determining whether a Hindu undivided family exists or
not, and if it exists, from what date it has come into being, regard must be
had to the principles of Hindu Law for the Act does not lay down any principles
regarding this matter. He then urges that it is well-settled that according to
Hindu Law, a son conceived has the same rights of property as a living son, and
this rule, he says, is not a matter of fiction but a substantive rule of Hindu
Law. He further says that it is wellsettled according to Hindu Law that joint
Hindu family comes into existence from the date a son is conceived, and as in
this case the son was conceived in March 1952, the Hindu undivided family was
in existence from the beginning of the accounting year 1952-53.
The learned Attorney-General, who appears on
behalf of the Revenue, does not dispute the existence of the doctrine of Hindu
Law relied on by Mr. Sastri, but says that this doctrine applies only for a
special purpose,, the purpose being to safeguard the rights of the son to
property, and that Hindu Law itself recognises that this doctrine is not of
universal application. He urges, in the alternative, that at any rate the Act
is concerned with realities; under the Act the person to whom income accrues
must be a visible reality, and, he says, the only visible person who existed up
to December 11, 1952, was the assessee. He further says that we would be
introducing anomalies in the working of the Act if this fiction is applied to
the instant case. In addition he relies on the form of return of income tax
which he says would be difficult to fill if the return is filed before the
birth of the son.
In C. B. C. Deshmukh v. l. Mallappa
Chahbasappa(1) this Court 'had occasion to consider the scope of the doctrine
that (1) A.I.R. 1964 S.C. 510.
758 under Hindu Law a son conceived or in his
mother's womb is equal in many respects to a son actually in existence in the
matter of inheritance, partition, survivorship and the right to impeach an
alienation made by his father. But this Court refused to extend it to adoption.
Subba Rao, J., speaking for the Court,observed "But there is an essential
distinction between an alienation, partition and inheritance on the one hand
and adoption on the other : his right to set aside an alienation hinges on his
secular right to secure his share in the property belonging to the family, as
he has a right by birth in the joint family property and transactions effected
by the father in excess of his power when he was in the embryo are voidable at
his instance; but, in the case of adoption, it secures mainly spiritual benefit
to the father and the power to adopt is conferred on him to achieve that
object. The doctrine evolved wholly for a secular purpose would be inappropriate
to a case of adoption. We should be very reluctant to extend it to adoption, as
it would lead to many anomalies and in some events defeat the object of the
conferment of the power itself. The scope of the power must be reasonably
construed so as to enable the donee of the power to discharge his religious
duty. We, therefore, hold that the existence of a son in embryo does not
invalidate an adoption." The question that arises is whether this doctrine
of Hindu Law can be applied for the purpose of determining the coming into
being of a Hindu undivided family as an assessable entity. As this Court held
in C. B. C. Deshmukh v. l. Mallappa Chanbasappa(1), the doctrine is not of
universal application and it applies mainly for the purpose of determining rights
to property and safeguarding such rights of the son. It seems to us that this
doctrine does not fit in with the scheme of the Act, and it could not have been
the intention of the Legislature to have incorporated the special doctrine into
the Act. Section 3 of the Act charges the total income of the previous year of
every individual, Hindu undivided family, company and local authority, and of
every firm and other association of persons or the partners of the firm or the
members of the association individually. Section 4 includes in the total income
of any person all income, profits and gains, inter alia, if such person is
resident, which (1) A.I.R. 1964 S.C. 510.
759 accrue or arise or are deemed to accrue
or arise to him in the taxable territories during such year. Income can accrue
or arise day-to-day or at the end of the year, and it would be surprising to
say that for the purpose of the Act it is not known at a particular time to
which entity income is accruing or arising. At the relevant time, under s. 22
of, the Act, the Income Tax Officer was required to give notice by publication
in the press and by publication in the prescribed manner, requiring every
person whose total income in the previous year exceeded the maximum amount
which is not chargeable to income tax to furnish within such period not being
less than sixty days as may be specified in the notice, a return in the
prescribed form and verified in the prescribed manner, setting forth his total
income and total world income during that year. Under sub-s. (2), the Income
Tax Officer could serve a notice upon a particular person requiring him to
furnish within a period not less than 30 days a return In the prescribed form.
The person had then to file a return. If the contention of Mr. Sastri is right,
in many cases an assessee would not have been able to file a return. Suppose
the wife of an assessee conceived in February, 1954, and his accounting year
was the year ending March 31, 1954. By June/July, 1954, the assessee would not
know whether he should file the return as an individual or as Hindu undivided
family because he would not know whether the child was going to be a son or a
daughter. However, if a conditional return was filed, the Income Tax Officer
would have to hold his hands and not assess till the child was delivered. Part
IIIA of the prescribed form required the following particulars to be filled up
in the case of a Hindu undivided family
----------------------------------------------------------Serial Name of
members of the Relationship Age at Remarks No. family at the end of the end
previous year who were of the entitled to claim partition previous. year
-----------------------------------------------------------This form clearly
proceeds on the basis that all members were in existence at the end of the
previous year. Has a son in the womb at the end of the previous year and born
in the assessment year any age at the end of the previous year ? Would it have
a name at the end of the previous year? We find it extremely difficult to
reconcile this doctrine of Hindu Law with the aforesaid provisions of the Act.
We would not be justified in introducing uncertainties and anomalies in the
working of the Act by introducing this doctrine for the purpose of s. 3 of the
L8SupCI/66-2 760 Apart from the difficulty of
reconciling this doctrine with the scheme of the Act, Mr. Sastri has not been
able to satisfy us that any rights of the son are being affected by not
recognising his existence for the purposes of s. 3 of the Act till he is
actually born. Income-tax is a liability and it could not have been the
intention of the legislature to impose a liability on persons yet unborn.
Mr. Sastri contends in the alternative that
what we are concerned with is the status at the end of the accounting year and
that at least in this case where the child was in existence at the end of the
accounting year, the status would be that of Hindu undivided family. This point
was not raised before and the learned Attorney-General rightly objected to it being
raised at this stage. But even if a Hindu undivided family was in existence
towards the end of the accounting year, still the whole income received or
accrued in the accounting year did not thereby become the assessable income of
the Hindu undivided family. Till the child was born the income which accrued
to, or arose to, or was received by the assessee was his income. The Act disregards
subsequent application of income and profits once they have arisen. When the
income and profits arose, they belonged to the assessee, as no Hindu undivided
family was then in existence. This position cannot be displaced by the birth of
the son, which brought into existence a Hindu undivided family.
In the result we agree with the High Court
that the answer to the question must be in favour of the revenue.
The appeal fails and is dismissed with costs.