dedol-hf/india-case-legal-rag huggingface dataset:
make the position clear.  It makes the distinction of  legal
and beneficial ownership irrelevant. The contention that the
business was to be carried on by the executors as such, as a
going concern or that it was being carried on for the  bene-
fit or loss of the testator's estate is not relevant for the
present  discussion.  The only relevant question under  sec-
tion  25  (4)  of the Indian Income-tax Act  is  whether  in
respect  of  the business there is a succession  to  another
person. This is a provision to give relief and the scope  of
the  relief must be governed by the words used in  the  Act.
In our opinion the answer to this question, on the facts  of
the  present case, must be in the affirmative and the.  date
of such succession must be considered to be the death of the
testator,  which was on the 9th of April, 1942.  The  result
is that the appeal fails and is dismissed with costs.
PATANJALI  SASTRI  J.--I  agree that  this  appealshould  be
rejected.
The  material facts have been set out in  the  judgment
which  has just been delivered.  The only question  now  re-
maining  for decision is:on what date was the testator,  who
was  carrying  on the business of shipping  agent  and  land
contractor  "succeeded in such capacity by  another  person"
within the meaning of section 25 (4) of the Act--on the  9th
April,  1942, when the testator died and the  appellants  as
the executors took over the business and carried it on or on
the 1st January, 1943, when the business was sold by them as
a going concern ?
     The  business being admittedly one  which  was  charged
to  tax  under  the Income-tax Act, 1918, if  there  was  no
succession  within the meaning of section 25 (4)  until  the
sale took place, as the appellants contend, the profits  and
gains  of the period from 1st April, 1942, to  1st  January,
1943,  would not be liable to tax, whereas. if the  testator
could be said to have been "succeeded"
   975
by  the appellants, the profits of the much  shorter  period
between 1st April, 1942, and 8th April, 1942, alone would be
exempt  from taxation.  The reason for this relief is to  be
found in the change of the basis of taxation when the Act of
1922  was passed which resulted in the profits of  the  year
1921-22 being assessed twice over, once in that year as  the
income thereof on adjustment" under the Act of 1918 and once
in the next year as the income of the "previous year"  under
the  Act  of 1922 [see Commissioner  of  Income-tax,  Bombay
v.P.E.  Poison(1)].   The relief was, however,  confined  to
discontinued  businesses,  as, in cases of  succession  till
1938 the successor alone was assessed to tax on the whole of
the  profits of the previous year including those earned  by
his  predecessor before the succession  occurred.   But  the
Indian   Income-tax  (Amendment)  Act,  1939,   (hereinafter
referred to as the amending Act), having amended section  26
(2)  so as to provide, in the case of a succession in  busi-
ness,  prolession  or vocation, for the  assessment  of  the
predecessor and the successor, each in respect of his actual
share  of the profits of the previous year, the  relief  was
extended,  by enacting section 25 (4), to  cases of  succes-
sion occurring after the commencement of that Act, with  the
same  object as in the case of discontinuance,  namely,   to
redress   the hardship of the business having  been  Charged
twice  over on the income of 1921-22.  In other  words,  the
predecessor is given the same relief as if he had discontin-
ued the business on the date of succession.  It will thus be
seen  that the enactment of section 25 (4) is  consequential
on  the  amendment  of section 26(2),  and  the   scope  and
meaning  of  the expression "succeeded in such  capacity  by
another  person" in section 26 (2) must determine  also  its
scope and meaning in section 25 (4).
    The  first question which arises on the language of  the
amended section 26 (2), which speaks of "the person succeed-
ed" being "assessed" and of his not being "found", is wheth-
er the sub-section should be construed as applicable only to
cases of succession
976
inter  vivos.   Whatever force there may have been  in   the
suggestion that the sub-section could not have  contemplated
cases  of  testamentary  or  intestate succession  if  there
was no provision for the assessment     of profits earned by
a deceased person in the hands    his representatives, there
seems  to be no sufficient    reason for excluding from  the
scope of the sub-section   cases  of  succession on death in
view  of the provision in section 24B.  On the  other  hand,
proviso  (c)  to section 24(9), which refers to a  person  '
'succeeded in such capacity by another person otherwise than
by inheritance ", would seem to imply that "succession",  as
that term is used in the Act, includes devolution on death.
      The  next  question is what is the meaning to  be  at-
tributed  to the phrase "in such capacity"? A Full Bench  of
the  Madras High Court in Jupudi Kesava Rao v.  Commissioner
of Income tax. Madras(1), held that the expression meant "in
the  capacity as owner ", so that "the person  who  succeeds
another  must, by such succession, become the owner  of  the
business which his predecessor was carrying on and which he,
after the succession, carries on in such capacity, that  is.
the capacity as owner ".  Applying that test they held  that
the  sole surviving member of a Hindu undivided  family  did
not succeed to the business of the family within the meaning
of  section 26(2), as he was previously a part-owner of  the
business' and there was no transfer of ownership.  While  it
is  undoubtedly true that a transfer of ownership  is  ordi-
narily  involved in cases of succession failing within  sec-
tion 26 (2)  or section 25(4), it cannot, in my opinion,  be
regarded  as an essential element of succession  within  the
meaning of those provisions. The Income-tax Act directs  its
attention  primarily to the person who receives the  income,
profits  or gains rather than to the ownership or  enjoyment
thereof.  The  assessee is defined in section 2 (2)  as  the
person  by whom the income-tax is payable and by section  10
the  tax is payable by an assessee who carries on the  busi-
ness, profession or
(1) I.L.R 59 Mad 377
977
vocation. The statute thus fastens on the person who carries
on  the business, etc., the liability to pay the tax on  the
profits  earned  by him regardless of their  destination  or
enjoyment.  It is also worthy of note that in  serviral  in-
stances  person who have no  proprietory or other  right  in
the income charged to tax are made liable to pay the tax for
no  other  reason  than the convenience  of  assessment  and
collection. Such instances are to be found in section  26(2)
proviso, section 18 (7),  section 23-A (3), section 25-A and
section  42(1).  As  observed by Lord Cave  in  Williams  v.
Singer & Others(1) "the fact is that, if the Income-tax Acts
are examined, it will be found that the person charged  with
tax is neither the trustee nor the beneficiary as such,  but
the  person  in actual receipt and control  of  the  income,
which it is sought to reach".
    There seems to be no warrant, therefore, to insist on  a
transfer  of ownership as the decisive test of  'succession'
within  the  meaning of section 26(2) or section  25(4)  any
more than for insisting on the ownership of the business  by
the  person  carrying  on a business, for  the  purposes  of
section 10.  I do not of course wish to be understood to say
that  a clerk or an agent in management of a business  would
be an assessee liable to be taxed in respect of its  profits
and -gains.  Some kind of title there must be, though not of
a  beneficial character. Nor need it be of the same  quality
in the predecessor and the successor.  The question in  each
case must be: Is the person who has come in carrying on  the
business  as a principal ?  If so, the Revenue looks to  him
and makes him liable for payment of the tax.  The words  "in
such  capacity" in sections 25 (4) and 26 (2)  mean  nothing
more than the capacity of a person who carries on the  busi-
ness  as the predecessor was carrying it on that is, with  a
liability to be taxed on its profits and gains.
    Applying  these  principles to the present  case,  I  am
clearly of opinion that the testator who was carrying on the
business in question was succeeded in such
(1) [1921] 1 A.C. 65
125
978
capacity  by  the  appellants when the former  died  on  9th
April,  1942,  and his estate vested in  them.   As  already
stated,  the testator expressly authorised the    appellants
to  carry on the business as a going concern  for  one  year
after  his  death and gave them power to  enter  into  fresh
contracts  and to discharge liabilities   past  and  future.
They  are  thus an "association of    persons"  carrying  on
business, and, being assessable as   such in respect of  the
profits and gains of the business   carriedon by them  under
section  10 read with section 3 of the Act, they are  liable
to  be  taxed on the   profits earned after the  9th  April,
1942.
It was objected that the appellants being assessable  as
the  representatives of the testator under section  24-B  in
respect  of  the profits earned by him in    the  accounting
year,  they  could not be treated as  successors  assessable
under  section  26  (2)in respect of    the  profits  earned
during the rest of that year, as such   apportionment  would
be meaningless, the same interest,   namely, the  testator's
estate,  having to bear the incidence of the tax  in  either
case.  It was accordingly   suggested that unless there  was
a break in the continuity of the interest represented by the
executors, there   could be no real apportionment such as is
contemplated   by section 26 (2) and, therefore, no  succes-
sion  within   the meaning of that section or of section  25
(4)  where   the same expression is used.  The argument  is,
in  my   opinion,  fallacious.  It  overlooks the   distinc-
tion    between the position of the executors visa  vis  the
Revenue and their position visa vis the testator's   estate.
As already pointed out, their liability to pay   the tax  on
the profits earned after the testator's death   arises under
section  10 (1) and, being that of assessees    carrying  on
the  business,  is personal to them, although    as  between
them and the estate they would be entitled   to be  indemni-
fied in respect of the tax paid; while their   liability  to
pay  tax  on  the profits earned  during  the     testator's
life-time  arises  under section 24-B and, being    that  of
legal representatives of the testator, is limited   "to  the
extent to which the testator's estate is capable   of  meet-
ing the charge".  It is therefore not correct to
    979
say  that  an apportionment under section 26  (2)  would  be
meaningless,  though,  if the testator's estate  was  suffi-
ciently  solvent,  it  would have    no  practical  signifi-
cance.
DAS J.--I agree with the Chief Justice.
Appeal dismissed.
Agent for the appellant: R.S. Narula.
Agent for the respondent:P. A. Mehta.
PETITIONER:
DHIYAN SINGH AND ANOTHER
        Vs.
RESPONDENT:
JUGAL KISHORE AND ANOTHER.
DATE OF JUDGMENT:
22/02/1950
BENCH:
BOSE, VIVIAN
BENCH:
BOSE, VIVIAN
FAZAL ALI, SAIYID
CITATION:
 1952 AIR  145            1952 SCR  478
 CITATOR INFO :
 F          1953 SC  98  (22)
 F          1955 SC 481  (58,62)
 RF         1961 SC 797  (11)
 R          1971 SC1041  (4,5,6)
 F          1976 SC 794  (16)
 F          1976 SC 807  (39,41)
ACT:
Arbitration--Award--"Malik Mustaqil ",  meaning  of--Whether
conveys absolute estate--Award acted upon--Estoppel  against
contesting its validity.
HEADNOTE:
    S and B were sons of two brothers respectively.  S  died
in  1884 leaving a daughter M, surviving him.  On the  death
of  S  dispute arose between B and M. B claimed  the  entire
estate  by survivorship, alleging that S died in a state  of
jointness  with him and that all the properties  were  joint
family  properties and M was entitled only  to  maintenance.
The  dispute  was referred to arbitration and an  award  was
delivered.  Under it the suit properties were given to M and
the  rest of the estate then in dispute was given to B.  The
operative part of the award stated inter alia that B,  first
party, and M, the second party, were held entitled to speci-
fied  shares  in  the properties in  dispute  and  each  had
become permanent owner (Malik Mustaqil) of his or her share.
A division was effected and ever since the date of the award
in  1884 each branch continued in possession of the  proper-
ties  allotted to it and each had been dealing with them  as
absolute  owner. The defendants claimed that the  plaintiffs
were bound by the award and were in any event estopped  from
challenging it.
     In  1941 B's grandsons instituted a suit claiming   the
properties allotted to M claiming that on the death of S his
daughter  M  succeeded  to a limited  estate  and  reversion
opened  out  on her death in 1929 and the plain  tiffs  were
entitled  as next reversioners, as M's son  had  predeceased
her. The defendants (Ms grandsons) alleged that the property
possessed  by M consisted partly of property which  belonged
to her and partly of property which belonged exclusively  to
her father to which she succeeded as daughter.
    Held, that the award gave an absolute estate to M as the
words  "Malik Mustaqil" were strong. clear  and  unambiguous
and  were  not qualified by. other words  and  circumstances
appearing in the same document in the present case.
    Held  further. that even if the award be assumed  to  be
invalid  the  plaintiffs' claim was barred by  the  plea  of
estoppel.   There  was  estoppel against B  because  by  his
conduct  he  induced M to believe that the decision  of  the
arbitrator  was  fair and reasonable and  both  the  parties
would  be bound by it and he induced her to act  greatly  to
her  detriment  and to alter her position by  accepting  the
award and never attempting to go behind it as long
479
as he lived; there was estoppel against B's sons because  it
descended  to them as they stepped into his shoes, and  fur-
ther there was independent estoppel against B's son K by his
acts  and  conduct  as evidenced in this  case..  There  was
estoppel against plaintiffs who claimed through their father
K.
JUDGMENT:
    CIVIL  APPELLATE   JURISDICTION:Civil Appeal  No.  8  of
1951.
     Appeal from the judgment and decree dated 12th October,
1944,  of the High Court of Judicature at Allahabad  (Allsop
and Malik JJ.)in First Appeal No. 374 of 1941 arising out of
a  Decree dated 31st July, 1941, of the Court of  the  Civil
Judge, Moradabad, in Original Suit No. 9 of 1941.
    Bakshi Tek Chand (S. K. Kapoor, with him) for the appel-
lant.
Achhru Ram  (Jwala Prasad, with him) for the respondent.
    1952. February 22. The judgment of the Court was  deliv-
ered by
BoSE J.--This is a litigation between two branches of  a
family  whose  common ancestor was one Megh Raj  Singh   The
family tree is as follows:
           Megh Raj Singh
Jawahar Singh              Madan Singh
Shankar Lal(d- 1884)       Brijlal (d. 1889 or (1890)
Daughter: Met. Mohan Dei
(d.  Oct 1929)                Kishan Lal     Mahabir  Prasad
Husband: Narain Das         (d. 21-5-1940)    (d. 1921)
  Shri Kishan Das   Mst. Deoki  Jugal Kishore Amar Nath
(d.march 1929)         (d. 1894)    Plff. 1      Plff.2.
Dhiyan Singh      Jai Bhagwan Singh
Deft.  1            Deft.  2           Ghas  Ram       Onkar
Prasad
    The  dispute is about property which, according  to  the
plaintiffs, formed part of Shanker Lal's estate. The  plain-
tiffs  state that the two branches of the family were  sepa-
rate at all material times; that on
480
Shanker Lal's death in 1884 his daughter Mst. Mohan Dei (the
defendants'  grandmother)  succeeded to a   limited  estate.
The  reversion opened out on her death in October  1929  and
the  plaintiffs are entitled as the next  reversioners,  for
Mst. Mohan Dei's son Shri Kishan Das predeceased her.
   The  defendants admit that Shanker Lal was separate  from
the  other branch of the family.  They divide  the  property
which  their grandmother Mst. Mohan Dei  possessed into  two
categories.   First, there was property which they  say  be-
longed  to  her. These are properties  which,  according  to
them,  she purchased or obtained under mortgages in her  own
right.   Next, there were properties which  belonged  exclu-
sively to her father and to which she succeeded as daughter.
On Shanker Lal's death disputes arose between Shanker  Lal's
father's  brother's son Brijlal (the  plaintiffs'   grandfa-
ther)   and   the defendants' grandmother  Mst.  Mohan  Dei.
Brijlal  claimed  the  entire estate  by  survivorship,  his
allegation being that Shanker Lal died in a state of  joint-
ness with him and that all the properties were joint  family
properties. This dispute was referred to arbitration and  an
award was delivered.  Under it Mst. Mohan Dei was given  the
suit properties as absolute owner and the rest of the estate
then  in dispute was given to Brijlal,  A division  was  ef-
fected accordingly and ever since, that is to say, from  21-
12-1884, the date of the award, down to 26-3-1941, the  date
of  the suit, each branch has been in separate and  uninter-
rupted possession of the properties respectively allotted to
it  and each has been dealing with them as  absolute  owner.
The  defendants claim that the plaintiffs are bound by  this
award and are in any event estopped.
      The plaintiffs lost in the first Court but won in  the
High Court.  The defendants appeal.
       The first question is about the nature of the  award.
The  defendants say that it gave Mst. Mohan Dei an  absolute
estate.. The plaintiffs deny this and say she obtained  only
a limited estate.  In our opinion, the defendants are right.
481
The  question at issue is a simple one of construction.  The
award is Ex. A-1.  The operative portion runs thus:
   "Having  regard  to the specifications give  above,  Brij
Lal,  first party, and Musammat Mohan Devi,  the  deceased's
female  issue,  second  party, have been held  entitled   to
shares,  worth  Rs.  28,500  and Rs. 42,482-10-0 respective-
ly  in the said properties; and accordingly...two lots  have
been  made and the first lot is allotted to the first  party
and  the second lot to the second party; and henceforth  the
parties shall have no claim or liability against each other;
and each party has become permanent owner (malikmustaqil) of
his or her share; and each party should enter in proprietary
possession   and  occupation  of  his  or   her   respective
share......  "
The underlining is ours.
     We do not think the words admit of any doubt,  particu-
larly as the words "malik mustaqil" have been used: see  Ram
Gopal  v.  Nand  Lal and Others (1)  and  Bishunath   Prasad
Singh   v.  Chandika   Prasad Kumari (2).  But it was argued
that  the award must be viewed as a whole and  that  certain
earlier  passages  show that this could not  have  been  the
intention.  ]he  passages relied on are these.   First,  the
finding that the properties claimed by Mst. Mohan Dei as her
own  really belonged to Shanker Lal.  He had purchased  some
and  acquired others through mortgages in her name  but  she
was only a benamidar and had no title to them. Second,  that
some  of  the properties in dispute were ancestral  and  the
rest  sell acquired, though whether with the help of  ances-
tral  funds or not the arbitrator was unable to   determine.
Third, the arbitrator's view of the Hindu law, namely that-
   "the brother should be the owner of the joint  ancestral
property  and  the daughter who has a male issue  should  be
owner of the self-acquired property."
And lastly, this passage--
(1)  [1950] S.C.R. 766 at 773.(2)(1933) 60 I.A. 56 at  61  &
62.
482
     "Furthermore, when the 2nd party (Mohan Dei) has inher-
ited  no property from her husband, she, in case of  getting
this  share, will certainly settle down in Amroha  and  will
make  her father's haveli as her abode and thus  the  haveli
shall  remain a bad as heretofore,  and in this way the  de-
ceased's name will be perpetuated; and it is positive  that,
after the Musammat, this property shall devolve on her  son,
who  will  be the malik (owner) thereof, and later  the  de-
scendant of this son will become the owner thereof."
     We  do not think these passages qualify  the  operative
portion  of  the  award and are unable  to  agree  with  the
learned  Judges of the High Court who hold they do.  In  our
opinion,  the  arbitrator was confused in his mind  both  as
regards  the facts as well as regards the law.  His view  of
the  law may have been wrong but the words used are, in  our
opinion,  clear and, in the absence of anything which  would
unambiguously qualify them, we must interpret them in  their
usual sense.
      Some  cases were cited in which the word "malik",  and
in one case the words "malik mustaqil" were held to import a
limited  estate  because of  qualifying  circumstances.   We
think  it would be pointless to examine them because we  are
concerned here with the document before us and even if it be
conceded  that words which would ordinarily mean  one  thing
can be qualified by other words and circumstances  appearing
in  the same document, we are of opinion that  the  passages
and circumstances relied on in this case do not qualify  the
strong,  clear and unambiguous words used in this  document.
The  learned counsel for the plaintiffs-respondents  had  to
search diligently for the meaning for which he contended  in
other passages and had to make several assumptions which  do
not appear on the face of the award as to what the  arbitra-
tor  must have thought and must have intended.  We  are  not
prepared  to  qualify  clear  and  unambiguous  language  by
phrases of dubious import which can be made to coincide with
either  view  by calling in aid assumptions  of  fact  about
whose existence we can only guess
483
    The  award was attacked on other grounds also.   It  was
urged, among other things, that the arbitrator had travelled
beyond the terms of his reference in awarding Mst. Mohan Dei
an absolute interest.  It was also urged that even if  Brij-
lal was bound his son Kishan Lal, who did not claim  through
him  but  who  had an independent title  as  reversioner  to
Shanker  Lal, would not be bound, and it was contended  that
if  Kishan  Lal was not bound the plaintiffs  would  not  be
either.  But we need not examine these points because we  do
not  need  to proceed on the binding nature  of  the  award.
Even  if  the award be invalid we are of  opinion  that  the
plaintiffs'  claim  is completely answered by  the  plea  of
estoppel.
    Now  it  can  be conceded that before  an  estoppel  can
arise, there must be, first, a representation of an existing
fact  as distinct from a mere promise de futuro made by  one
party to the other; second, that the other party,  believing
it,  must have been induced to act on the faith of  it;  and
third, that he must have so acted to his detriment.
     It  will be necessary to deal with this in  stages  and
first  we  will  consider whether  there  was  any  estoppel
against  Brijlal. It is beyond dispute that he laid  serious
claim to the property in 1884. He claimed that he was  joint
with  Shanker Lal and so, on Shanker Lal's death  he  became
entitled to the whole of the estate and that Mst. Mohan  Dei
had only a right of maintenance.  Whether he would have  had
difficulty  in establishing such a claim, or indeed  whether
it  would have been impossible for him to do so,  is  wholly
immaterial.  The fact remains that he pressed his claim  and
was  serious about it, so much so that he was able  to  per-
suade the arbitrator that he had an immediate right to  part
of the estate.  Mst. Mohan Dei, on the other hand,  resisted
this  claim and contended that she was entitled to  separate
and  exclusive  possession, and in any event, that  she  was
entitled  in absolute right to a part of the  property.   On
the facts which now emerge it is evident that Brijlal had no
right and that his hopes of one day succeeding as
484