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PETITIONER: T. S. SRINIVASAN

       Vs.

RESPONDENT: COMMISSIONER OF INCOME TAX, MADRAS

DATE OF JUDGMENT: 29/11/1965

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. SUBBARAO, K. SHAH, J.C.

CITATION:  1966 AIR  984            1966 SCR  (2) 755  CITATOR INFO :  D          1970 SC  14  (10)

ACT:      Income  Tax  Act, 1922, s.  3-Hindu  undivided  family- Whether comes into being on conception of son or on birth.

HEADNOTE:      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

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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  Chanbassappa  A.I.R. (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]

JUDGMENT:       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 respondent.      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

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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

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             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 indi- vidual, 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              the end

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       previous year who were                of the         entitled to claim parti-              previous         tion.                                  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 Act. 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  dis- regards  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.                              Appeal dismissed. 761