JUDGMENT. - This is a Reference by the Commissioner of Income Tax under Section 66 of the Income Tax Act. The assessee is Maharaj Kumar of Vizianagaram, the younger brother of the present Maharaja of that estate and the second son of the late Maharaja who died in 1922. The question that has been submitted for decision by this Court is as follows :-
"Where on the facts of the case, the amount of Rs. 1,20,000 received annually by the assessee from the Vizianagaram Raj is liable to income-tax and super-tax or is exempt either under Section 14 (1) of the Act or Section 4 (3) (viii) thereof as being agricultural income ?"
The facts to which of reference has been made in question are as follows :-
The late Maharaja of Vizianagaram executed a deed of trust on October 28, 1912. The deed provided that the trustee, Mr. Flower, who was to take over the possession and management of the estate in praesenti should pay off the debts then due from the Maharaja, that the heir-apparent should become the immediate beneficiary for whom the trustee was to manage the estate and that the estate should be made over to the beneficiary on his attaining the age of 21. The deed reserved a sum of Rs. 25,000 a month, besides certain other benefits which need not be mentioned, for the Maharaja himself. It also provided that the younger son, the present assessee, should receive an allowance of Rs. 5,000 a month on attaining majority. The deed of trust was given effect to, and so far as the record shows the Maharaja Kumar was in receipt of the allowance fixed for him by the deed. The assessee attained majority in 1924 or 1925. By a deed dated February 11, 1928, the present Maharaja, the elder brother of the assessee, enhanced the amount of maintenance of the assessee to Rs. 10,000 a month. The Maharaja Kumar has since settled down in Benares in these provinces and owns certain other properties besides his allowance. He was required by the Income Tax Department to make a return of his income for the year 1931-32. The return which he made showed a sum of Rs. 20,317, as his total assessable income. He did not include the sum of Rs. 1,20,000 received by him in that year as his allowance under the deed of trust and the deed of settlement to which reference has already been made. The Income Tax Officer sent back the return asking him to include the sum as part of his assessable income. He complied with the demand for making a fresh return but objected to the inclusion of his allowance as part of his assessable income. The Income Tax Officer made an assessment on his total income including the Rs. 1,20,000. His appeal to the Assistant Commissioner was unsuccessful. The Commissioner of Income Tax has made the present reference at his instance The question which the Commissioner was required by the assessee to refer to this Court for decision were four. The Commissioner thought they had been inartistically framed and did not adopt them for reference to this Court. He framed the question which we have quoted above and which he thought covered all the points which the assessee desired to raise. As will appear from a subsequent part of our judgment the question framed by the Commissioner does not include an important aspect of the case which was the subject-matter of question No. 2 framed by the assessee. Taking the question framed by the Commissioner it will appear that it can be divided into two distinct issues : (1) Whether the assessee is exempt from payment of income-tax on the sum of Rs. 1,20,300 received by him as his allowance from the Vizianagaram estate under Section 14 (1) of the Income Tax Act and (2) whether that sum, being part of the agricultural income of estate, is exempt from taxation under Section 4 (3) (viii) ? Section 14 (1) of the Income Tax referred to in the first issue runs as follows :
"The tax shall not be payable by an assessee in respect of any sum which he receives as a member of Hindu undivided family."
The case put forward on behalf of the assessee is that he and the Maharaja are members of undivided Hindu family and that the allowance of Rs. 10,000 a month received by him is paid to him as a member of that family. The Commissioner of Income Tax, on the other hand, maintains that the assessee can in no sense be considered to be a member of a joint Hindu family with the present Maharaja as, firstly he is separate in food and residence, and secondly, the Vizianagaram estate is an impartible estate which descends on a single heir, who is, in this case the present Maharaja. The Commissioner has not expressed any opinion on the further question whether, assuming that the assessee is a member of an undivided Hindu family, the allowance received by him is payment made to him as a member of that family. This is set out in the assessees second question but is not covered in the question framed by the Commissioner. In the course of the arguments before us that point assumed considerable importance and was discussed by learned counsel on both sides at length.
It is clear to us that Section 14 (1) can apply only if two conditions are made out. The assessee should establish that he is a member of a Hindu undivided family and further that the sum in question has been received by him as such. It seems to us that the relation of cause and effect must exist between the position of the assessee as a member of a Hindu undivided family and the receipt by him of the sum which is in question for the purpose of assessment. If a person who is a member of Hindu undivided family received an allowance not because he is such a member but wholly apart from that position Section 14 (1) does not apply. It is only if the assessee has received the sum in question by virtue of his position as a member of the undivided family to which he claims to belong, that the application of Section 14 (1) is attracted.
The Commissioner disposed of the whole controversy on the short ground that the assessee "lives separately at Benares" and "messes separately." We are clearly of opinion that the question arising in the case cannot be decided solely with reference to the manner in which the assessee and the Maharaja are leading their lives. The fact that one lives in Vizianagaram and the other lives in Benares is not inconsistent with their being members of an undivided Hindu family. It is not disputed by the assessee that the Vizianagaram Raj is an impartible estate which descends upon a single heir. It is, on the other hand, not disputed by the Income Tax Department that it is an ancestral estate which has been in the family for several generations. The characteristics of such an estate have been the subject of numerous judicial decisions including a number of ruling of their Lordships of the Privy Council. We may refer to the latest case on the point in Siva Prasad Singh v. Prayag Kumari. After referring to the well-known dictum the custom supersedes the general law so far as it goes but the latter prevails for all purposes outside the custom, their Lordships observe as follows :-
"Impartibility is essentially a creature of custom. In the case of ordinary joint family property, the members of the family have (1) the right of partition, (2) the right to restrain alienations by the head of the family except for necessity, (3) the right of maintenance and (4) the right of survivorship. The first of these rights cannot exist in the case of an impartible estate though ancestral, from the very nature of the estate. The second is incompatible with the custom of impartibility as laid down in Sartaj Kuari v. Deoraj Kuari and Sri Raja Rao Venkata Surya Mahipati Ramkrishna Rao v. Court of Words; and so also the third as held in Gangadhara Rama Rao v. Rajah of Pittapore. To this extent the general law of Mitakshara has been superseded by custom and the impartible estate, though ancestral, is clothed with the incidence of self-acquired and separate property. But the right of survivorship is not inconsistent with the custom of impartibility. The right, therefore, still remains and this is what was held in Baijnath Prasad Singh v. Tej Bali Singh. To this extent the estate still retains its character of joint family property and its devolution is governed by the general Mitakshara law applicable to such property. Though the other rights, which a coparcener acquires by birth in joint family property no longer exist, the birth-right of the senior member to take by survivorship still remains. Nor is this right a mere spes succession is similar to that of a reversioner succeeding on the death of a Hindu widow to her husbands estate. It is a right which is capable of being renounced and surrendered. Such being their Lordships view, it follows that in order to establish that a family governed by the Mitakshara in which there is an ancestral impartible estate, has ceased to be joint it is necessary to prove an intention, express or implied, on the part of the junior members of the family to renounce their right of succession to the estate. It is not sufficient to show a separation merely in good and worship."
According to this theory of rights of junior members of a family possessed of an ancestral impartible Raj every son acquires by birth a right to the estate and becomes the member of a joint Hindu family with the holder of the estate. But for the custom of impartibility he would be entitled to all the rights of a member of a joint family which the Hindu law gives him including the right to demand partition and to participate in the enjoyment of the income of the estate. The custom has superseded the Hindu law to the extent indicated by their Lordships. The junior members remain members of an undivided family and the custom does not supersede the general law as far as their status is concerned though their rights to demand partition and to participate in the income of the estate is taken away. Where any one of them is entitled by custom to maintenance out of the income of the estate he is to that extent entitled to participate in the enjoyment of the undivided estate.
In the estates which are governed by the Madras Impartible Estates Act, 1904 (Madras Act No. II of 1904), the legislature has imposed certain limitations on the power of the holder of an impartible estate. Vizianagaram Raj is one of the estates to which that Act applies. Section 2 (3) defines the proprietor of an impartible estate as meaning a "person who is entitled to possession thereof as single heir under the special custom of the family or locality in which the estate is situated or, if there be no such family or local custom, under the general custom regulating the succession to impartible estates in Southern India." Section 4 provides : "The proprietor of an impartible estate shall be incapable of alienating or binding by his debts, such estate or any part thereof beyond his own lifetime unless the alienation shall be made, or the debts incurred under circumstances which would entitle the managing member of a joint Hindu family not being the father or grandfather of other coparceners, to make an alienation of the joint property or incur a debt binding on the shares of the other coparceners independently of their consent." Taking the attributes of an impartible Raj with the provisions of the Madras Impartible Estates Act of 1904, it will appear that junior members in the Vizianagaram family have not only a right to succeed by survivorship as declared by their Lordships of the Privy Council in the case to which reference has already been made, but have a right to control the actions of the ruling Maharaja in making alienations and incurring debts. In so far as Section 4 imposes certain limitations on the powers of the proprietors of impartible estates to which it applies, it improves the position of the junior members of the family. In case of improper alienations the junior members can sue for setting aside such alienations. The proprietor of the impartible estate cannot incur debts except within the limits allowed to a karta of a joint Hindu family subject to the Mitakshara law. It follows that unless a disruption of the Vizianagaram family has taken place, the assessee, as a member of that family having acquired a right in the ancestral property by birth cannot but be considered to be a member of a Hindu undivided family within the meaning of Section 14 (1) of the Income Tax Act. The learned Advocate for the Income Tax Commissioner strongly relied upon certain observations occurring in cases which are all referred to in the latest judgment of the Privy Council mentioned above. It is argued that in family possessing impartible properties the right of a junior member as a member of an undivided Hindu family is recognised for one solitary purpose, namely, that he has a chance to succeed by survivorship. It is pointed out that the proprietor of the estate has full power to deal with the income arising therefrom in any manner, he can likewise divert the succession to the property by will and can otherwise alienate and that junior members of the family cannot of right claim separate maintenance. In the first place all these attributes are not possessed by impartible estates which though ancestral are subject to the Madras Impartible Estates Act, 1904. In the second place the question before us is one of status and not one of the extent to which a junior member is entitled to participate in the income accruing from the ancestral property and to challenge the acts of the holder thereof. Even in an ordinary joint Hindu family governed by Mitakshara the rights of junior members are somewhat limited, though having regard to his right to claim partition he can insist on enjoyment of the joint family property to a far greater extent than a member of a joint Hindu family possess of impartible property. It cannot be disputed that since a younger son of the proprietor of an impartible Raj acquires an interest by birth he acquires the position of a member of an undivided family, even though his rights do not extend to a power to claim partition and to restrain the actions of the proprietors. He will cease to be a member of such an undivided family only if, to use the words of their Lordships of the Privy Council already quoted, he "renounces his right of succession to the estate." It is not suggested that the present assessee has ever indicated expressly or by necessary implication that he renounced his right as a member of the undivided Hindu family to which he undoubtedly belonged when he was born. Separate residence and separate messing to which great importance has been attached by the Income Tax Commissioner may be some of the indicia by which the joint character or otherwise of a family may be ascertained but in case of members of wealthy families they are not only inconclusive but of little evidential value. For these reasons we hold that the assessee must be considered to be a member of a Hindu undivided family, of which the other member is the present Maharaja of Vizianagaram.
The next question is whether the amount of Rs. 10,000 a month which assessee is in receipt of can be considered to be income received by him as a member of the undivided family to which he belongs. As already mentioned, if the sum be considered to be in the nature of a gift, pure and simple, by the assessees father and brother it cannot be characterised as income received by member of a Hindu undivided family as such. The Commissioner of Income Tax has not addressed himself to this aspect of the case though it was contemplated in the second question formulated by the assessee. It seems to us that if the assessee was, by custom applicable to the Vizianagaram estate, entitled to be maintained with the revenue of the estate and if the allowance fixed for him by his father and brother is in satisfaction of his right to be so maintained he should be considered to have received it as a member of a Hindu undivided family. Ordinarily every junior member of an undivided family possessed of impartible property is not of right entitled to claim maintenance in the absence of custom to the contrary. In each case a junior member claiming to be entitled must establish a custom to that effect. The quantum of proof will however, vary with the position of the claimant. In the case of a younger son, his right of maintenance from the holder of the impartible Raj has been so often asserted and recognised that a Court is entitled to presume that such a right exists. In Gangadhara Rama Rao v. Rajah of Pittapore, which was a case in which the son of the adopted son of the last proprietor of an impartible estate claimed maintenance from the succeeding holder of the estate under a will, their Lordships of the Privy Council observed as follows :-
"This proposition, it must be noted, does not negative the doctrine that there are members of the family entitled to maintenance in the case of an impartible zemindari. Just as the impartibility is the creature of custom, so custom may and does affirm a right to maintenance in certain members of the family. No attempt has been, as already stated, made by the plaintiff to prove any special custom in this zemindari. That by itself in the case of some claims would not be fatal. When a custom or usage whether in regard to a tenure or a contract or a family right, is repeatedly brought to the notice of the Courts of a country the Courts may hold that custom or usage to be introduced into the law without the necessity of proof in each individual case. It becomes in the end truly a matter of process and pleading. Analogy may be found in instances in the law merchant or in certain customs in copyhold tenure. In the matter in hand their Lordships do not doubt that the right of sons to maintenance in an impartible zemindari has been so often recognised that it would not be necessary to prove the custom in each case."
In the case before their Lordships the right of maintenance was negatived for two reasons namely, firstly, because the plaintiff did not claim a right of maintenance on the ground of relationship with the holder of the impartible Raj and secondly that he was not the son or such near relation of the holder of the impartible Raj in whose favour a customary right of maintenance could have been presumed, having regard to the notoriety of such usage. In the case before us the general observation made by their Lordships of the Privy Council and quoted above fully applies. Prima facie and in the absence of proof to the contrary the younger son of the late Maharaja, as the assessee is, was of right entitled to be maintained out of the income of the impartible property. The assessee is not receiving any other allowance for maintenance. It is permissible to infer that the Maharaja recognised his right and fixed it in the then circumstances of the estate at Rs. 5,000 a month. Subsequently his brother raised it to Rs. 10,000, probably in view of the improved resources of the estate on which the amount must necessarily depend.
The learned Advocate for the Income Tax Commissioner relied on certain cases in which allowances paid to widows were held to be separately taxable. This class of cases is quite different from the case before us, as widows cannot be regarded as members of an undivided Hindu family within the meaning of Section 14 (1), Income Tax Act. On the same ground the case of Kishen Kishore v. Commissioner of Income Tax, Punjab, is distinguishable. The learned Judges who decided that case definitely held that the assessee was separate. In their view the assessee had accepted the allowance and severed himself from the family. The allowance could not be considered as part of the family property so as to make the holder of the impartible property liable for the income-tax. In the case before us the allowance is part of the income of the Raj and the tax is payable at the source.
For these reasons we answer the first part of the question referred to us as follows :-
The amount of Rs. 1,20,000 received annually by the assessee from the Vizianagaram Raj is not liable to income-tax and super-tax unless it is shown by the Income Tax Department that the assessee was not entitled by custom to any maintenance out of the income of the Raj.
We have added a qualification to the answer which we propose to give to the reference because the right of the assessee to receive maintenance from the income of the Raj depends upon proof of custom applicable to the estate. As already held, the custom is of such notoriety that it should be presumed in case of a younger son. The presumption, however, is not conclusive but can be rebutted. It is open to the Income Tax Department to offer proof that such a custom does not exist in this family. As this aspect of the case was not present to the mind of the Income Tax Officer or the Assistant Commissioner we reserve to the department the liberty of proving if they can, the absence of the custom, which we have presumed in favour of the assessee.
As to whether the allowance received by the assessee is exempt under Section 4 (3) (viii) said to be part of the agricultural income of the estate, our answer is in the negative. If the allowance is not received by the assessee as a member of an undivided Hindu family his source is not the original source through which the Vizianagaram estate received the money. His immediate source is the bounty or gift by the estate in which case it cannot be considered to be agricultural income and cannot be exempt from income-tax under Section 4 (3) (viii).
For the reasons stated above we answer the question referred to us in the manner indicated above. The assessee shall have his costs of this reference. We fix counsels fees on each side at Rs. 5,000.
Order accordingly.