Case: V. Venugopala Ravi Varma Rajah Vs. Union Of India &amp; Anr

1. Rajah Padmanabha Ravi Varma was the karta of a Hindu undivided family governed by the Marumakkattayam law. On his death in 1961 the appellant - his brother - became the karta of the family. In 1909 the members of the family, while remaining joint, had entered into an arrangement for separate enjoyment of certain properties of the family by different members. For the assessment year 1958-59 Rajah Padmanabha filed, in the status of a Hindu undivided family, a return under the Expenditure Tax Act of the taxable expenditure incurred by him in respect of the property under his "personal control and direct enjoyment." The Expenditure-tax Officer added thereto the expenditure incurred by the other members of the family in respect of properties set apart for their use and enjoyment. The Expenditure-tax Officer also served a notice of assessment under Section 15 (2) calling for a return of expenditure by the Hindu undivided family for the assessment year 1959-60.2. The appellant then moved petitions before the High Court of Kerala under Article 126 of the Constitution for writs quashing the assessment and the notice of demand for the year 1958-59 and the notice calling for a return for the assessment year 1959-60 contending, inter alia, that he was not liable to be assessed to tax on expenditure incurred in respect of property not "under his personal control and direct enjoyment". A single Judge of the High Court of Kerala upheld the contention. In appeal a Division Bench of the High Court set aside the order of the Single Judge.

Reasoning: 17. The Parliament has declared for the purpose of theAct an undivided family of Hindus as a unit of taxation and imposed tax at the rates prescribed. To fall within the description the unit must be an undivided family of Hindus. Within the expression "Hindu undivided family" will fall an undivided family of Hindus governed by the Marumakkattayam law. Even though the basic scheme of a Hindu undivided family governed by the Mitakshara law and the Marumakkattayam law is different in two important respects viz., the descent is through females and children both males and females have equal rights to propertythese families are still Hindu undivided families. The law applicable to Hindu Undivided Family governed by the Marumakkattayam law, and to the Mappilla tarwad in North Malabar has the same characteristies in two principal respects(a) descent is traced through females; and (b) there is community of interest and unity of possession in respect of the family property. But the laws applicable to those families in other respects widely differ.18. The Mappilla families governed by the Marumakkattayam law reside in a small part of the country and form numerically a small community. The Parliament has again been accustomed in enacting tax law to make a distinction between a Hindu Undivided Family consisting of Hindu and undivided families of Mappillas. By the taxing Acts the Parliament could have treated Mappilla tarwads as units of taxation. But the mere fact that the law could have been extended to another class of persons who have certain characteristics similar to a Section of the Hindus but have not been so included is not a ground for striking down the law. In treating a Hindu Undivided Family as a unit of taxation under theAct and not aUndivided Family, the Parliament has not attempted "obvious inequality".19. Under the taxing Acts the scheme of treating a Hindu Undivided Family has been adopted for a long time, e.g., the IndianAct IX of 1869, IndianAct IX of 1870, Indian Incometax Act XII of 1871, Act VIII of 1872, Act II of 1886, Act VII of 1918, Act XI of 1922, Act 48 of 1961 have treated a Hindu Undivided Family as a distinct taxable entity. Similarly under theAct 27 of 1957 and theAct 18 of 1958, the Hindu Undivided Family is made a unit of taxation. Under the Business Profits Tax Act 21 of 1947 and the Excess Profits Tax Act, 1940 also the Hindu Undivided Family was made a unit of taxation. For the purposes of these Acts Mappilla tarwads governed by the Marumakkattayam law have been regarded as individuals.20. This long course of legislative history in matters of taxing income, wealth, gifts, capital gains an business profits clearly indicates that the legislature regarded undivided families of Hindus as a class to which the legislation may appropriately be applied. An intention to effectively administer the taxing Acts and not to discriminate on the ground of religion may be attributed to the Legislature.21.The Parliament in the present case having made theAct applicable to Hindus governed by the law of the joint family, but not including Map pilla families who are governed by the Mappilla Marumakkattayam Act has not made any discrimination and the charging Section is not liable to be struck down on the ground that the Mappilla family may have to pay tax at a lower rate, whereas a Hindu Undivided Family, by reason of the amalgamation of the expenditure of all the members of the family, may have to pay tax at a higher rate.