Supreme Court Dismisses State's Appeals over Orissa Agricultural Income-tax Act Classification of Hindu Undivided Family; Holds Sons of Deceased Brothers Constitute 'Brothers Only' Under Schedule Clause B. Interpretation of Explanation to Schedule Extends Artificial Meaning of 'Brother' to Include Sons and Grandsons of a Brother, Making Joint Family Eligible for Concessional Tax Rate.

Case Note & Summary

The Supreme Court heard three civil appeals by special leave filed by the State of Orissa against a judgment of the Orissa High Court dated August 20, 1962. The appeals arose from proceedings for assessment of agricultural income-tax under the Orissa Agricultural Income-tax Act, 1947, for the assessment years 1950-51, 1951-52 and 1952-53. The respondent, Shyam Sundar Patnaik, represented a Hindu undivided family consisting of four surviving male members: Binod Behari and Puran Chandra (sons of Biswamber Patnaik) and Shyam Sundar and Laxmidhar (sons of Bhagaban Patnaik). The original male ancestors Jadimani, Biswambar and Bhagaban had all died before the relevant years of account. The joint family owned agricultural lands, cows and buffaloes. The assessing officer determined the family's income at Rs. 11,949, Rs. 10,850 and Rs. 9,549 for the three years respectively, including in each year Rs. 200 as income derived from sale of milk of cows and buffaloes maintained by the family. The assessments were confirmed by the Assistant Collector of Agricultural Income-tax. On appeal, the Agricultural Income-tax Tribunal excluded the Rs. 200 milk income each year from assessment and also allowed the family the benefit of concessional rates prescribed in the Schedule to the Act as a Hindu undivided family consisting of brothers only. At the instance of the State, two questions were referred to the High Court under Section 29(2) of the Act: first, whether income from milk derived from much cows maintained by the opposite party was not agricultural income; and second, whether the Hindu undivided family represented by the respondent was a Hindu undivided family consisting of brothers only. The High Court answered both questions in the affirmative. In the Supreme Court, the State did not challenge the correctness of the answer to the first question because it was concluded by the decision in Commissioner of Income-tax, West Bengal, Calcutta v. Raja Benoy Kumar Sahas Roy, [1958] S.C.R. 101. The only issue for determination was the interpretation of Clause B of the Schedule read with the Explanation. Section 10 of the Act provided that the total agricultural income of a Hindu undivided family shall be treated as the income of one individual and assessed as such, with a proviso that if a Hindu undivided family consists of brothers only as explained in the Schedule, the total agricultural income shall be assessed at the rate specified in the Schedule. Clause B prescribed concessional rates for every Hindu undivided family consisting of brothers only. The Explanation to the Schedule stated that for the purpose of the Schedule, 'brother' includes the son and the son of a son of a brother and the widow of a brother, and the 'share of a brother' means the portion of total agricultural income which would have been allotted to a brother if partition had been made. The Solicitor-General for the State conceded that if the original brothers Biswambar and Bhagaban had been alive, or even if one had died and the family consisted of a surviving brother and the sons of the deceased brother, the benefit of Clause B would be available. However, he argued that after both original brothers died, the family could not be regarded as consisting of brothers only because the surviving members were cousins, not brothers in the ordinary sense. The Supreme Court rejected this argument. It held that the Explanation gave an artificial meaning to the expression 'brother' as inclusive of the son and the son of a son of a brother. For the purpose of interpreting Clause B, the Explanation (i) had to be incorporated into the expression 'consisting of brothers only'. On doing so, the conclusion was inevitable that an undivided family consisting of sons of the deceased brothers would be regarded as one consisting of 'brothers only' for the purpose of taxation under the Orissa Agricultural Income-tax Act. Accordingly, the Court dismissed the appeals and upheld the High Court's decision. No order was made as to costs.

Headnote

Issue of Consideration

Final Decision

Supreme Court dismissed the appeals, upheld the High Court, holding that Explanation (i) to the Schedule must be incorporated into the expression 'consisting of brothers only'; thus family consisting of sons of deceased brothers is 'brothers only' for concessional assessment. No order as to costs.

Law Points