LexV. VENUGOPALA VARMA RAJAH versus COMMISSIONER AGRICULTURAL INCOME TAX, TRIVANDRUM, KERALA
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l 000 V. VENUGOPALA VARMA RAJAH 1' COMMISSIONER, AGRICULTURAL INCOME t'AX, TRIVANDRUM, KERAL\ October 6, 1971 [K. S. HEGDE, A. N. GROVER AND H. R. KHANNA. JJ.] Kero/a Agric11lt11ral /11co111cMtax Act, 1950, s. 9(1)-Property allot1c,1 to a n1en1ber of fcuni/y-Inco111e lltilised for discllarging oh/igations of assess<'e-When deerned to be inco111c of fa111i/y as assessee. The asscssce \Vas a Hindu undivided family of \vhich the ;,ippellant '"''1~ ll the Karnavan. It possessed agricultural properties. There ~·as a family C :-.cttlcm1:nt a1nong all the members of the family then living. The sctth> mcnt allotted some properties to some of the n1alc members but did not provide for their devolution. Also the joint status of the mcmhL"rs wa~ not disrupted an<l the properties allotted for the enjoyment of the variou~ members of the family continu,,d to be the properties of the family. The liability to maintain the other male members and the responsibility of performing the marriages of- the female men1bers continued to he that ;)f the Karnavan. He was also responsible for the payment of lanJ D rL'venuc in respect of the family properties excepting some items. On the question \\.rhethcr the income of the properties put in po..,ses.:;io1i of the male members under the settle1nent continued to be the incon1c ol the famny and therefore liahlc to tax undc'r the Kerala Agricultural Income-tax Act, 1950, the department. Trihunal :-ind the High Co11r1 on reference, held against the assessee. Dismissing the appeal to this Court, HELD : Section 9(1) of the Act is simi!Jr to s. 16( I) (c) of the lncome-tax Act, 1921. Under the latter section the test is that ii the income iD dispute is considered as having been applied to discharge an ohligation of the asscsscc, the same is liable to he included in the ;1sscssuble income of the assessee. but if on the other hand the same had hecn diverted by an ove'rriding charge then it is not liable to lie so included, as it ceases to be the assessee's incon1i:. [1006 A-Bl In the present case, the arrangen1cnt only provided for maintenance and did not give any absolute right in any portion of the family proper~ ties to any one. It thus conferred benefit on the family inasmuch us it was absolved of the responsibility of n1aintaining its men1bers. [1005 B-· -C. G-HJ Further, it was not even a permanent arrangement and was revocable if there was any substantial change in the circumstances of the 1 amily. The properties would go back to thi:: possession of the Karnavan on the death of the member to whom the property was allotted. [1005 C. D, El E F G The n1embers of the family received the income of thte variciuc, pro~ perties allotted to them on behalf of the family, and applied the s•mc in II discharge of an obligation of the family. Therefore, the income I<''""" reached the hands of the family as soon as it rcachcJ the hand" ._-,, ;:nv of its members. [1008 F-HJ A v. v. VARMA v. COMMR. A.I.T. (Hegde, l.) 1001 Hence, under s. 9(1) of the Act, the income should be deemed to be that of the assessee. [1005 F-GJ Raja Bejoy Singh Dudhuria v. C.l.T., Bengal, 1 l.T.R. 135 and Mullick v. C.l.T., Bengal, 6 LT.R. 206, explained and applied. C.l.T., Bombay City v. Sitddas Tirathdas, 41 I.T.R. 367, followed. B C.l.T., Bomba,v v. Makanii Lalji, 5 I.T.R. 539 and C./.T., Bombay City v. Ratilal Natlwlal, 25 l.T.R. 426, referred to. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 266 of 1969. Appeal by special leave from the judgment and order dated C August 16, 1967 of the Kerala High Court in Income-tax Referred Case No. 44 of 1966. D C. K. Viswanatha Iyer and K. Jayaram, for the appellant. V. A. Seyid Muhammad and A.G. Pudissery, for the respo,n- dent. The Judgment of the Court was delivered by . Hegde,. J. The appellant, Venugopala Varma Rajah is the present Ra1ah of t~e Vengunad Swaroopan in Palghat District, Kerala State. He 1s the Karnavan of his Tarwad. He will be lliireinafter referred to as 1he assessee. The predecessor of the E appellant, as the then Karnavan of the family, submitted the return for the assessment year 1959-60 under the Kerala Agricul- tural Income-tax Act (which will hereinafter be referred to as the Act) showing a gross income of Rs. 1,21,912/- and a net income of Rs. 84,065/60 P. That represented the income from the properties held by him under the family Karar dated May 29, F 1909. T
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