Madras High Court
Case BriefsHigh Courts

Madras High Court: B Pugalendhi J. allowed the family pension to be given to the daughter ‘petitioner’ arising out of the employment of her deceased mother. The family pension was rejected by The Senior Accounts Officer, Officer of the Principal Accountant General as she was already in receipt of Freedom Fighters’ Pension, thus making the total income above the eligible ceiling for granting family pension. The Court however held that freedom fighter pension is not considered as an income and hence not to be calculated for total income to deny family pension.

The petitioner is the unmarried daughter of a freedom fighter, namely, S. T. Sivasamy who was getting a freedom fighter’s pension. Her mother was a government servant and a pensioner too. After the death of the petitioner’s mother, father, was drawing the family pension arising out of the deceased mother’s employment. The petitioner started getting freedom fighter’s pension, after the death of the petitioner’s father and at present she is getting a sum of Rs.13,390/- as pension. She has also been sanctioned with family pension arising out of her mother’s employment and it was subsequently cancelled for the following three reasons:

i. The Government Letter No.43105/Pen/2013 dated 02-12-2013, clarifies that all incomes are to be considered as income for fixation of the ceiling limit of Rs.7,850/-.

ii. The petitioner is drawing pension, which is exceeding the income limit fixed vide the G.O.Ms.No.327 Finance Department dated 30-08-2001 and G.O.Ms.No.337 Finance Department dated 14-11-2017.

iii. G.O.Ms.No.290 Public (Ex-Servicemen) Department dated 05-04-2017 does not permit granting of dual pension.

The Court in light of the first two grounds of cancellation relied on judgments K Arumugam v. The Secretary to Government in 2006 SCC OnLine Mad 297 and Vellithyammal v. The Secretary to Government in WP (MD) No. 1457 of 2008, decided on 27-04-2009 to observe that the main objective of Freedom Fighters Pension Scheme (Swatantrata Sainik Samman Yojana) is to honour the services and the sacrifices rendered by the freedom fighters for the nation in the freedom struggle and also in recognition of the services and sacrifices and it is not a charity.

Therefore, the Court noted that the pension received by the petitioner in respect of the freedom fighters’ pension cannot be brought under the meaning of income, as it has been held to be in honour for and in recognition of the services and the sacrifices of the freedom fighters. As such the pension received by the petitioner arising out of the Freedom Fighters Pension, cannot be taken as an income for grant of family pension.

Thus, the first and second reason for denying the family pension to the petitioner cannot be sustained in the eyes of law.

In regard to the third reason regarding not permitting the grant of dual pension as per G.O.Ms.No.290 Public (Ex-Servicemen) Department dated 05-04-2017 is concerned, there is no such denial of grant of dual pension to the pensioner on perusal of the said government order. The Court however noted that, vide this government order, the government ordered for sanction of dual family pension to those families of Ex-Servicemen, who have been re-employed in civil (i.e.) State Government Service and earned a pension out of the re-employment prior to 01-04-2003 (i.e) before the introduction of Contributory Pension Scheme, in addition to Military Family Pension already drawn by them.

Thus, the Court is of the view that citing this government order can have no relevance to deny the family pension arising out the employment of the petitioner’s mother.

The Court directed the respondents to grant family pension to the petitioner arising out of the state government civil service of the petitioner’s deceased mother in addition to the freedom fighters’ pension within a period of eight weeks from the date of receipt of the order.

[S. Jeevalakshmi v. The Principal Accountant General, 2022 SCC OnLine Mad 3810, decided on 14-07-2022]


Advocates who appeared in this case :

Mr. Mohmmed Imran, for M/s. Ajmal Associates, Advocate,for the Petitioner;

Mr. P Gunasekaran, Advocate, for the Respondents 1 and 2;

Mr. S. Saji Bino, Advocate, for the Respondent 3.


*Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Chhattisgarh High Court: A Division Bench of Goutam Bhaduri and Deepak Kumar Tiwari JJ. entitled father-in-law to pay maintenance to widowed daughter-in-law from the estate of the deceased husband which is held under the hands of father-in-law. The maintenance was increased from Rs 2500 to Rs 4000.

The respondent- daughter in law (‘DIL’) was married to the son of the appellant-father-in-law (‘FIL’). After the death of the husband , she was almost deserted in the family and the bank passbook and ATM card, which belong to her husband were kept by the in-laws. It was further pleaded that at village Haretikala, Tahsil Jaijaipur ancestral property of 11.78 acres and at village Jaijaipur 3.97 acres of agricultural land are held by the appellant. In addition, three shops and houses situated in different places of Korba wherein the right of late husband of the respondent is also vested.

According to the respondent, she has no source of income to maintain herself, as such, an amount of Rs.7,000/- per month was claimed towards maintenance which was opposed by FIL contending that in order to treat the ailment of his son , a considerable amount was spent, as such, the appellant does not have any source of income and, therefore, he is unable to pay the maintenance. Thus, the Family Court, after evaluating the evidence by the order impugned, directed the appellant to pay an amount of Rs.2,500/- per month towards maintenance of the respondent. Assailing this, a present appeal was filed.

The Court noted that in order to ensure the maintenance to the daughter-in-law, Section 19 of the Hindu Adoptions and Maintenance Act, 1956 is to be perused.

Placing reliance on Dayali Sukhlal Sahu v. Anju Bai Santosh Sahu, 2010 (3) CGLJ 459 and Parwati v. Danpatra Singh, 2021 (1) CGLJ 328 wherein it was held that the daughter-in-law is required to specifically plead and prove by leading cogent, reliable and clinching evidence that all other sources of income as stated in sub-section (1) of Section 19 Hindu Adoptions and Maintenance Act, 1956 are not available to her, then only the subsequent provisions of subsection (2) of Section 19 Hindu Adoptions and Maintenance Act, 1956 can be pressed into.

The Court observed that as per the provisions enumerated under Section 19 of the Act, 1956, the right to claim maintenance by widowed daughter-in-law is conditional. The father-in-law having in possession of coparcenary property out of which widowed daughter-in-law has not obtained any share, therefore, the right to receive maintenance from the father-in-law would be limited to the share of coparcenary property held by the father-in-law in his hand in which the widowed daughter-in-law has not taken any share.

The preferential right when is considered under Section 19 (1) (a) would show that the widowed daughter-in-law would be entitled to claim maintenance firstly from the estate of her husband and thereafter, claim can be made from her father or mother. Though the word in Section ‘or‘ is used, which gives the right to a widow to claim from either of the people enumerated in Section, yet the Section is sub divided into part (a) & (b). So, the preferential precedents exist giving an option to widow. Thus, it is crystal clear that the estate of husband comes first to claim maintenance by widow. It is the well settled proposition of law that the manager of a joint Mitakshara family is under a legal obligation to maintain all male members of the family, their wives and their children, and on the death of one of the male members he is bound to maintain his widow and his children.

The Court in view of the facts and circumstances pointed out that when the estate of the husband is held in the hands of the father-in-law; the daughter-in-law cannot be forced to leave the estate of her husband and to follow the estate of her father or mother. Thus, the estate of husband can be preferred to claim over the father or mother of the daughter-in-law.

The Court enhanced the maintenance amount from Rs.2,500/- to Rs.4,000/- per month taking into the consolidated share in the property and estimated proposed income.

[Nand Kishore Lal v. Shrimati Chanchala Lal, 2022 SCC OnLine Chh 1280, decided on 04-07-2022]


Advocates who appeared in this case :

Mr. Sanjay Patel, Advocate, for the Appellant;

Mr. Sourabh Sahu, Advocate, for the Respondent.


*Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Orissa High Court: A Division Bench of S. Muralidhar CJ and R. K. Pattanaik J. dismissed the appeal filed by the assessee and upheld AO’s decision to disallow part of the payment towards commission.

The background facts are that the Appellant during the AY in question was engaged in the business of manufacturing and sale of P.P. woven sacks meant for packing of fertilizer and cement etc. It filed its return of income and while examining the claims, the AO raised a query regarding payment of commission and asked the Appellant to justify it. It was claimed that the commission was entirely paid through banking channels after deducting Tax at Source (TDS). Each of the commission agents had disclosed the said commission amount in their respective returns and paid tax thereon. In the assessment order dated 8-03-2013, the AO partly allowed the commission expenses to the tune of Rs.23,41,245/- and disallowed Rs.30,08,545/- which was then added to the returned income of the Appellant. The Appellant filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] which was dismissed as the persons to whom the commission was paid were Directors of the appellant or the relatives of such Directors. Thereafter, the Appellant went before ITAT. The Appellant failed to bring on record their expertise to render services and also what services had in fact been rendered to enhance the business of the Appellant. Merely because TDS had been deducted, would not justify allowing the entire amount as claimed towards commission. Accordingly, the appeal was dismissed, and the instant appeal was filed.

Counsel for the appellants Mr. RP Kar submitted that the commission paid could not be termed as excessive or unreasonable and had been duly accounted for. He insisted that with the TDS having been deducted at the time of paying such commission, and with the recipients of commission having disclosed it in their respective tax returns and having paid tax thereon, again subjecting such payment at the hands of the Appellant would amount to double taxation, which is impermissible in law.

Counsel for respondents Mr. RS Chimanka and A Kedia submitted that the concurrent orders of the AO, the CIT (A) and the ITAT and submits that they call for no interference.

The Court observed that in the given case claiming that each of the seven persons to whom commission was paid actually had the expertise to help the Appellant procuring the IOF from different sources appears to be stretching things a bit too far, and hence the AO appears to be justified in disallowing the commission insofar as it was paid to the said seven persons.

The Court relied on J.K. Woollen Manufacturing v. Commissioner of Income Tax (1969) 72 ITR 612 (SC) and observed that there was the test of commercial expediency. In other words, whether the payment made to the General Manager of the company as commission was an expenditure wholly and exclusively for the purpose of the business? It was concluded that the reasonableness of the expenditure had to be adjudged from the point of view of the businessman and not the Income Tax Department. In the circumstances, the entire amount paid to the General Manager as commission was allowed as expenditure.

The Court observed that all the persons to whom commission was paid were either Directors of the Company or their relatives. None of them is shown to have any expertise in procuring IOF from the Indian markets for enabling the Appellant to meet the purchase order placed on it for IOF. The amounts paid as commission were also not insubstantial. Even from the point of view of a businessman, it does appear to this Court that the commission amount which was disallowed by the AO cannot be said to be for the purpose of business of the Appellant.

The Court held “Thus, it cannot be said that the AO’s decision to disallow part of the payment towards commission was unreasonably arrived at.” [Oripol Industries Ltd. v. Joint Commissioner of IT, ITA No.41 of 2017, decided on 12-05-2022]


Arunima Bose, Editorial Assistant ahs reported this brief.

Case BriefsHigh Courts

Allahabad High Court: Brij Raj Singh, J., while discussing the matter with regard to providing maintenance to a wife, noted that the Court below had made observations on being influenced by factual aspects which were not proved.

The instant revision was preferred to set aside the decision of the Family Court in a criminal case under Section 125 of the Criminal Procedure Code and to direct the OP to pay at least Rs 10,000 as monthly maintenance.

Background

The wife submitted that she was married to OP 1 prior to 40 years and out of the wedlock three children were born. The OP 2 had provided maintenance to her till 1983, but thereafter it was stopped by him. Further, she stated that she was dependent on her brother who used to provide financial assistance but suddenly had gone missing. She had filed the application as she has no source of income, and hence needed maintenance from her husband.

Point Wise Discussion

  • Revisionist stated that the OP 2 had performed second marriage and had deserted her, but the said fact was not dealt with by the lower Court and the finding had been recorded that she was unable to show why she was living separately.
  • The fact that some property was sold by the revisionist and out of that money she was maintaining her children, could not be inferred that the revisionist had lost her opportunity for grant of maintenance under Section 125 CrPC.
  • The finding that revisionist was unable to state as to whether her children were literate or illiterate or how much they were educated, would be a perverse finding for determination of maintenance under Section 125 CrPC.
  • The court below has further recorded a finding that all the three children were settled by her; thus, she was having means to sustain herself. If some income was received by her out of sold property, it does not mean that she would sustain throughout life.
  • The court below has further recorded a finding that the opposite party 2 stated the fact that revisionist had illicit relation with Ram Singh @ Manjeet Singh and the said fact was not denied by her. The said finding is also perverse because statement of fact cannot be relied on because it will have serious repercussions unless it is proved.

In Court’s opinion, the lower Court had rejected the application without application of mind, hence the matter was remanded to the Court below to take a fresh decision. [Krishna Devi v. State of U.P., 2022 SCC OnLine All 303, decided on 4-5-2022]

Saket Court
Case BriefsDistrict Court

Saket Courts, Delhi: While addressing a maintenance matter, Anuj Agrawal, Additional Sessions Judge-05, expressed that, it can not be believed that a person who was capable of supporting a family by getting married, would all of a sudden become devoid of all sources of income.

A complaint under Section 12 of the Protection of Women from Domestic Violence Act, 2005 was filed by the respondent/wife against the appellant/husband on the ground that she had been subjected to domestic violence by the husband and his father. The said complaint was accompanied with an application under Section 23 of the DV Act seeking interim maintenance, which was disposed of by the Trial Court.

Analysis, Law and Decision

The Court stated that while fixing interim maintenance, Court has to take a prima facie view of the matter and need not critically examine the claims of parties regarding their incomes and assets because for deciding the same, the evidence would be required.

“…an aggrieved person cannot be rendered to lead a life of a destitute till completion of trial.” 

The Bench expressed that for computing the maintenance, a test had been laid by the Supreme Court in Jasbir Kaur Sehgal v. District Judge, Dehradun, (1997) 7 SCC 7.

Wife Well Qualified

The Court while citing the Supreme Court decision in Rajnesh v. Neha, 2020 SCC OnLine SC 903 reiterated that,

The Courts have held that if the wife is earning, it cannot operate as a bar from being awarded maintenance by the husband.

Husband’s Income

In the present matter, the respondent/wife claimed that the monthly income of the respondent was Rs 1.5 lakhs, however, the said claim of the respondent/wife was not supported by any material on record.

The Bench stated that it came on record that the appellant/husband was a well-qualified person having qualification of BUMS and was in the profession of ‘Hakim’, hence even is his income was NIL, but his earning capacity could not be lost sight of.

Further, the Court added that, it could not be believed that a person who was capable of supporting a family by getting married, would all of a sudden become devoid of all sources of income. Hence, the Trial Court’s approach while assessing the monthly income of the husband was correct.

Settled Law

A wife is entitled to the same status and lifestyle that she was enjoying prior to severing the relationship.

Therefore, interim maintenance has to be commensurate with her needs as well as the income of her husband.

On finding no impropriety in the impugned order, the appeal filed by the husband stood dismissed. [Amjad Ali v. Sufia Chaudhary, 2022 SCC OnLine Dis Crt (Del) 13, decided on 5-5-2022]

Saket Court
Case BriefsDistrict Court

Saket Courts, New Delhi: Anuj Agrawal, Additional Sessions Judge –05 while addressing case wherein the maintenance sought by wife, held that,

“It cannot be believed that a person who was capable of supporting a family by getting married, would all of a sudden become devoid of all sources of income.”

Factual Background

The Complaint under Section 12 of the Domestic Violence Act was filed by the respondent stating that she was the legally wedded wife of the appellant and was not working. Respondent was a divorcee and her second marriage got solemnized with the appellant. As per the respondent/wife due to physical, verbal, emotional, economic and domestic violence committed by the appellant and his mother, she had been living separately from him since November 2017.

Respondent/wife is stated to be living in rented accommodation and sustaining herself with great hardship as she was having no source of income.

Hence the complaint under Section 12 of the Protection of Women from Domestic Violence Act, 2005 was filed.

Trial Court assessed the monthly income of the appellant as Rs 1 lakh per month and awarded monthly interim maintenance o Rs 30,000 including rent for alternate accommodation in favour of the complainant.

Appellant/husband was aggrieved with the impugned order and assailed the same.

Analysis, Law and Decision

Firstly, the Court observed that while fixing an interim maintenance court has to take a prima facie view of the matter and need not critically examine the respective claims of the parties regarding their respective incomes and assets because for deciding the same the evidence would be required.

Adding to the above, Court stated that an aggrieved person cannot be rendered to lead a life of a destitute till completion of the trial.

Further, Court cited the decision of the Supreme Court in Jasbir Kaur Sehgal v. District Judge, Dehradun, (1997) 7 SCC 7, wherein the test for computing maintenance was laid down.

Plea of the husband that the complainant was a well-qualified woman and was capable of earning and rather she was earning by running a high-end fashion clothing company in the name and style of ‘Allure’ in partnership with her mother as well as from her consultation job.

Court reiterated the settled law that simply because the wife was earning, her claim for maintenance cannot be rejected. Point to be considered is whether the amount the wife is earning sufficient to meet her creature comforts; to keep her body soul together; to keep the wolf from the door; and to keep the pot boiling.  

Supreme Court’s decision in Rajnesh v. Neha,(2021) 2 SCC 324 was also considered in the present matter.

Therefore, the plea of the appellant/husband that respondent/wife was earning was without any merit.

With regard to the territorial jurisdiction of the trial court, the present appeal is barred by limitation.

Further, since the domestic violence report is already on record, the same as an important bearing as far as the question of territorial jurisdiction of the trial court and summoning of appellant/husband was concerned.

Bench opined that the plea of appellant/husband that trial court had no territorial jurisdiction to entertain the complaint filed by respondent/wife was without merit and the same stood rejected.

Husband before the trial court claimed to be a Businessman but having NIL monthly income and sustaining himself on charity and borrowing from relatives and friends. Further, he claimed that his monthly expenditure was Rs 27,360 ad had no resources and was surviving on loans and charity.

Bench on perusal of record noted that the appellant was a qualified person having qualification of MBA as well as having directorship of various companies and even if the income of the appellant was assumed to be NIL on the date of filing of his income affidavit before the trial court, but his earning capacity could not be lost sight of.

Further, it was found that the appellant/husband had concealed certain entries from his bank statement, and he had no explanation for the same.

In Court’s opinion, appellant opted not to file the bank statement for the period 2018 and thereby leaving no doubt that he was not coming up and with full truth with respect to his economic capacity.

Court also took judicial notice of the fact that appellant/husband’s company was one of the manufacturers of the brand ‘Too Yum’ and the brand ambassador of the said brand was ‘Virat Kohli’, hence it looked highly improbable that a company which is running into great losses was in a position to afford a celebrity of such stature for the advertisement of its product.

Hence,

“…appellant/husband is a man of means having vast business and appears to be impersonating himself as a ‘pauper’ so as to defeat the legitimate claim of the respondent/wife for the maintenance.”

Concluding the matter, Court held that the trial court’s assessment of the maintenance was fully justifiable and could not be faulted with. [Rebala Sudhir Reddy v. State, Criminal Appeal No. 151 of 2020, decided on 3-1-2022]

Case BriefsHigh Courts

Delhi High Court: The Division Bench of Vipin Sanghi and Jasmeet Singh, JJ., expressed that,

Kanya Daan is a solemn and pious obligation of a Hindu Father, from which he cannot renege.

An unmarried daughter, even if employed and earning, cannot be assumed to have sufficient resources to meet her matrimonial expenses.

Instant appeal had been filed under Section 28(2) of the Hindu Marriage Act, 1955 read with Section 19(2) of the Family Courts Act, 1984 against the decision of Poonam Sethi v. Sanjay Sethi, HMA No. 39 of 2017.

In the above-said impugned judgment, the Family Court had allowed the petition filed by the appellant wife under Section 13(1)(ia) of the Hindu Marriage Act, 1955 for dissolution of marriage by a decree of divorce on the ground of cruelty and had dissolved the marriage between the parties.

Appellant was aggrieved by the non-grant of maintenance allowance for herself and two major daughters of the parties.

Appellant’s Counsel argued that the appellant-wife had been supporting all three children for more than a decade, taking care of all their expenses and needs, further he submitted that under the Hindu Adoption and Maintenance Act, 1956 it is the obligation of the husband to maintain his wife and unmarried daughters. Since the appellant-wife had been maintaining the daughters, she was entitled to claim maintenance for herself and her unmarried daughters.

Question for Consideration:

Whether unmarried daughters who have attained majority and are earning their own income are entitled for maintenance and expenses towards their marriage?

Analysis, Law and Decision

High Court noted that under Section 20 of the Hindu Adoption and Maintenance Act, maintenance will only be paid to children or infirm parents if they are unable to maintain themselves.

There is no section which states that the inability to maintain themselves (both with regard to children and parents) is equivalent to not earning an income.

Court added that an individual could be earning an income, but still not necessarily be able to maintain herself/himself.

As per catena of decisions, Bench observed that be it under Section 24 of the HMA Act, 1955 or Section 20(3) of the Hindu Adoption and Maintenance Act, 1956, a father cannot abdicate his responsibility of looking after his unmarried daughters.

A father has a duty and an obligation to maintain his daughters and to take care of their expenses, including towards their education and marriage.

 The above-said is a legal obligation and absolute in character and arises from the very existence of the relationship between the parties.

Family Court without adverting to the evidence and documents on record, in a cryptic manner held that Section 20 of the Hindu Adoption and Maintenance Act, 1956 cannot be used to expand the provisions of Section 26 and hence major daughters of the parties were not entitled to maintenance. Regarding maintenance to son, Family Court had granted maintenance at the rate of Rs 25,000 per month from 19.03.2015 till 11.07.2015, i.e., the date of attaining majority by the son.

The purpose of Section 24 and 26 is not to equalize the incomes of the parties.

Family Court observed that the petitioner herself was not entitled to any maintenance allowance or permanent alimony, as she was doing well professionally and earning substantial sums of money. As far as the finding vis-à-vis the appellant wife was concerned, Bench upheld the decision of Family Court and was of the view that there was sufficient material on record as well as income affidavit of the appellant which showed her to be engaged in the profession of tarot reading.

In Court’s opinion, the Family Court’s observation that as the daughters were majors on the date of filing the application, they were not entitled to any maintenance. High Court held that the daughters may be of majority age today, however, the respondent was still their father. It was added that he cannot simply resile from that relationship and the accompanying legal and moral obligation, and state that he will not take care of them.

Father’s duty to maintain his unmarried daughters, including his duty to provide for their marriage is clearly recognized by the law.

To analyse the provisions of the Hindu Adoption and Maintenance Act, Court relied on the Bombay High Court decision on Kusum v. Krishnaji, 2008 SCC OnLine Bom 28 and Jasmeet Kaur Talwar v. Gurjit Singh Talwar, 2014 SCC OnLine Del 6576.

In light of the above decisions, Court noted that the two daughters – who have attained majority, are also entitled to maintenance amount for their wedding expenditures.

Quantum of Maintenance

The simple fact that the respondent could travel, drive expensive cars, place expensive advertisements to promote his business, amongst others, and make no expenditure on his 3 children who were being raised solely by the Appellant-wife, shows his poor conduct and role as a father.

Simply stating that the daughters are major and earning an income, without adducing how, and how much, is a non sequitur.

High Court elaborated stating that for the last 11 odd years, the Appellant-wife had been providing for the children. Simply because she has done so and is presently also presumably doing so, cannot relieve the Respondent- husband from his obligations as a father.

Therefore, Bench directed that an amount of Rs 35 lakhs be paid towards marriage expenses of the elder daughter, 50 lakhs for the marriage of younger daughter as she was not earning any income and was dependent on her parents for the expenses of her marriage, that was already scheduled.

Court’s interaction with the Respondent in Chamber:

Bench observed that he carried within himself some amount of hurt and anger in relation to his daughters. During our interaction, he also claimed that he did not receive the respect that he was entitled to as a father. We could observe that his reluctance to provide for his unmarried daughters stemmed from his anger and ego, more than anything else.

High Court sincerely hoped that the Respondent and his daughters would make the required effort to restore their relationship, even if their parents have fallen apart.

We are hopeful that the appellant would also play a positive role in bridging the gap between the Respondent and his daughters – who are now grown-up, and there is no reason for her to come in the way of the relationship of his daughters and their father. We, therefore, expect that as and when the daughters of the parties get married, the Respondent would happily participate in the functions, and the appellant, the children and other family members would respectfully and gracefully, with love & affection, welcome him to the functions and facilitate his participation in the functions wholeheartedly.

[Poonam Sethi v. Sanjay Sethi, 2022 SCC OnLine Del 69, decided on 7-1-2022]


Advocates before the Court:

For the appellant: Bhuvan Mishra, Advocate with Appellant-in-person

For the respondent: Anshul Narayan and Sourabh Pahwa, Advocates with respondent-in-person

Income Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Income Tax Appellate Tribunal (ITAT): The Bench of Inturi Rama Rao (Accountant Member) and Partha Sarathi Chaudhary (Judicial Member), decided whether registration under Section 12 AA can be denied for non-payment of taxes on donations received.

Instant appeal emanated from the Order of the CIT (Exemption), Pune passed under Section 12AA (1)(b)(ii) of the Income Tax Act, 1961 on the following grounds:

  • CIT (E) erred in rejecting the registration under Section 12 AA of the Income Tax Act.
  • Further, CIT (E) erred in law and on facts that voluntary contributions received by the charitable trust are not income as defined vide Section 2(24) (iia) of the Act.
  • CIT (E) erred in not giving a reasonable opportunity of being heard while rejecting the application made under Section 12AA (1)(b)(ii) of the Act.
  • Assessee craves right to add, alter or modify any grounds of appeal before or at the time of hearing of the appeal.

Factual Matrix

Assessee made online application form for approval of the Trust/Institution under Section 12 AA of the Act under the category of Religious cum Charitable trust/Institution. The said application was rejected by CIT (E).

CIT (E) opined that the voluntary contributions collected by the assessee trust formed a part of the corpus funds of the trust and hence, it is an income of the assessee. Thus, on the said income, the assessee trust was liable to pay tax as per law. Since the requisite taxes were not paid by the assessee, the CIT (E) opined that the requirement of Section 12 AA of the Act i.e. satisfaction of the Commissioner about objects of the Trust and the genuineness of the activities of the trust could not be determined and hence, the said application for registration under Section 12 AA of the Act of the assessee was rejected.

Analysis, Law and Decision

In Tribunal’s opinion, the provisions of Section 12AA of the Act provides that CIT(E) at the time of granting registration to assessee trust or society shall look into the objects of the trust/society and be satisfied with the genuineness of the activities carried out by such applicant trust/society at the time of granting registration under Section 12AA of the Act.

 Whether any tax had accrued to be paid or whether such taxes have been paid or not are to be looked into at the stage of assessment proceedings.

Allahabad High Court in Fifth Generation Education Society v. CIT, (1990) 185 ITR 634 (All) held that,

“the Commissioner is not to examine the application of income at the stage of application made by assessee for granting registration u/s.12AA of the Act. The Commissioner may examine whether the application was made in accordance with the requirements of Section 12AA r.w.r 17A and whether Form 10A has been properly filled up. He may also see whether the objects of the trust are charitable or not. At that stage, it is not proper to examine the application of income.”

In the case of Kai Shri Mahadebrao Naykude Dnyanvikas Prabhodhini Trust v. Commissioner of Income Tax (Exemption) (2020) 208 TTJ (Pune) 296, it was observed that,

when the objects of the trust were not disputed by the Department, nor they have disputed genuineness of activities of the assessee trust, then non filing of return u/s. 139(4A) of the Act cannot be the ground to deny registration u/s.12AA of the Act to the assessee. It is only at the assessment proceedings, the Assessing Officer can take appropriate steps as per law regarding the non-filing of return. However, at the time of granting registration, the object of the assessee trust has to be looked into and genuineness of the activities of the assessee trust should be considered.

In the present matter, registration was not granted under Section 12AA of the Act since taxes were not paid on the donations received by the assessee trust. It is always left to the Assessing Officer to take appropriate steps at the time of assessment proceedings with regard to payment of taxes and application of income of the trust/society.

Bombay High Court in the case of CIT v. Manekji Mota Charitable Trust (2019) 267 TAXMAN 0016 (Bombay) has held “at the time of the registration of the trust u/s.12A, the question of application of income of the trust is premature.” Thus, whether taxes are due to be paid on any income received that issue has to be looked into only at the time of assessment proceeding. 

In the instant case, the objects of the trust were not doubted by the Department, and they have also not disputed the charitable nature of the activities conducted by the assessee trust.

Therefore, Tribunal held that the present matter was not a fit case for rejection of application for registration under Section 12 AA of the Act and no findings were laid down stating the activities carried out by the assessee were not genuine.

“…just because, the taxes were not paid on the donations/voluntary contributions received cannot be the ground for rejection of application u/s.12AA of the Act. These things can be examined by the Department and scrutinized at the assessment stage. When all the requirements of registration u/s.12AA of the Act have been satisfied by the assessee trust, registration therein should be granted.”

Hence, the order of CIT (E) was set aside, and the Department was directed to grant registration under Section 12 AA of the Act to asseessee trust. [Shree Lakadipool Vitthal Mandir v. CIT (E), ITA No. 568/PUN/2020, decided on 25-5-2021]


Assessee by: Shri Abhay Shastri

Revenue by: Shri Deepak Garg

Case BriefsSupreme Court

Supreme Court: In an important ruling on taxation law, the bench of Sanjay Kishan Kaul and Hrishikesh Roy*, JJ has held that the proportionate disallowance of interest is not warranted, under Section 14A of Income Tax Act for investments made in tax free bonds/ securities which yield tax free dividend and interest to Assessee Banks in those situations where, interest free own funds available with the Assessee, exceeded their investments.

Issue

Whether Section 14A of the Income Tax Act, 1961, enables the Department to make disallowance on expenditure incurred for earning tax free income in cases where assessees like the present appellant, do not maintain separate accounts for the investments and other expenditures incurred for earning the tax-free income?

What does Section 14A state?

In Section 14, the various incomes are classified under Salaries, Income from house property, Profit & Gains of business or profession, Capital Gains & Income from other sources.

The Section 14A relates to expenditure incurred in relation to income which are not includable in Total Income and which are exempted from tax. No taxes are therefore levied on such exempted income. The Section 14A had been incorporated in the Income Tax Act to ensure that expenditure incurred in generating such tax exempted income is not allowed as a deduction while calculating total income for the concerned assessee.

Legislative history

Section 14A was introduced to the Income Tax Act by the Finance Act, 2001 with retrospective effect from 01.04.1962, in aftermath of judgment in the case of Rajasthan State Warehousing Corporation Vs. CIT, (2000) 3 SCC 126. The said Section provided for disallowance of expenditure incurred by the assessee in relation to income, which does not form part of their total income.

“As such if the assessee incurs any expenditure for earning tax free income such as interest paid for funds borrowed, for investment in any business which earns tax free income, the assessee is disentitled to deduction of such interest or other expenditure.”

Although the provision was introduced retrospectively from 01.04.1962, the retrospective effect was neutralized by a proviso later introduced by the Finance Act, 2002 with effect from 11.05.2001 whereunder, re-assessment, rectification of assessment was prohibited for any assessment year, up-to the assessment year 2000-2001, when the proviso was introduced, without making any disallowance under Section 14A. The earlier assessments were therefore permitted to attain finality. As such the disallowance under Section 14A was intended to cover pending assessments and for the assessment years commencing from 2001-2002.

Facts

  • In the case at hand, the Court was concerned with disallowances made under Section 14A for assessment years commencing from 2001-2002 onwards or for pending assessments.
  • The assessees are scheduled banks and in course of their banking business, they also engage in the business of investments in bonds, securities and shares which earn the assessees, interests from such securities and bonds as also dividend income on investments in shares of companies and from units of UTI etc. which are tax free.
  • None of the assessee banks amongst the appellants, maintained separate accounts for the investments made in bonds, securities and shares wherefrom the tax-free income is earned so that disallowances could be limited to the actual expenditure incurred by the assessee.
  • In absence of separate accounts for investment which earned tax free income, the Assessing Officer made proportionate disallowance of interest attributable to the funds invested to earn tax free income by referring to the average cost of deposit for the relevant year.
  • The CIT (A) had concurred with the view taken by the Assessing Officer.
  • The ITAT in Assessee’s appeal against CIT(A) considered the absence of separate identifiable funds utilized by assessee for making investments in tax free bonds and shares but found that assessee bank is having indivisible business and considering their nature of business, the investments made in tax free bonds and in shares would therefore be in nature of stock in trade. The ITAT then noticed that assessee bank is having surplus funds and reserves from which investments can be made. Accordingly, it accepted the assessee’s case that investments were not made out of interest or cost bearing funds alone and held that disallowance under Section 14A is not warranted, in absence of clear identity of funds.
  • The decision of the ITAT was reversed by the High Court.

Analysis

The Supreme Court took note of the fact that the CIT(A) and the High Court had based their decision on the fact that the assessee had not kept their interest free funds in separate account and as such had purchased the bonds/shares from mixed account. This is how a proportionate amount of the interest paid on the borrowings/deposits, was considered to have been incurred to earn the tax-free income on bonds/shares and such proportionate amount was disallowed applying Section 14A of the Act.

It, however, explained that

“In a situation where the assessee has mixed fund (made up partly of interest free funds and partly of interest-bearing funds) and payment is made out of that mixed fund, the investment must be considered to have been made out of the interest free fund. To put it another way, in respect of payment made out of mixed fund, it is the assessee who has such right of appropriation and also the right to assert from what part of the fund a particular investment is made and it may not be permissible for the Revenue to make an estimation of a proportionate figure.”

The Court, hence, held that if investments in securities is made out of common funds and the assessee has available, non-interest-bearing funds larger than the investments made in tax- free securities then in such cases, disallowance under Section 14A cannot be made.

[South Indian Bank v. CIT,  2021 SCC OnLine SC 692, decided on 09.09.2021]


*Judgment by: Justice Hrishikesh Roy

Know Thy Judge | Justice Hrishikesh Roy

Appearances before the Court by:

For Appellants: Senior Advocates S. Ganesh, S.K. Bagaria, Jehangir Mistri and Joseph Markose,

For Respondent/Revenue: ASG Vikramjit Banerjee and Senior Advocate Arijit Prasad

Case BriefsHigh Courts

Delhi High Court: Subramonium Prasad, J., while addressing a revision petition in regard to maintenance of wife, held that

Magazine covers are not sufficient evidence to demonstrate that the respondent /wife can sustain herself.

Instant revision petition is against the Family Court’s decision directing the husband to pay maintenance at the rate of Rs 17,000 per month to the wife.

The daughter of husband and wife in the present matter passed away in the year 2010 and at present, they have two major adult sons who are well settled.

Parties have been living separately since the year 2012. Wife filed the petition under Section 125 CrPC for grant of maintenance stating that she was treated with cruelty and was thrown out of the house in the year 2012 and she was unable to sustain herself, hence required maintenance from the husband.

It was stated that the husband was earning an income of Rs 50,000 from the post of Head Constable and also had some agricultural land from which he was earning an income.

Wife claimed Rs 25,000 per month as maintenance.

Husband submitted that the wife was a working lady earning handsomely. Adding to this he stated that she participates in Jagrans and does TV Serials and was in a position to take care of herself. Both the parties filed their respective affidavits of income.

Counsel for the petitioner submitted that as per the Statement filed by the wife under Section 165 of the Evidence Act, she herself stated that she was doing modelling and it was for her to establish that income earned by her was so less that she couldn’t maintain herself.

Petitioners counsel also presented certain magazine covers and newspaper articles to establish that the respondent was employed and capable of maintaining herself.

Bench stated that law laid down by Supreme Court decision in Rajnesh v. Neha, (2021) 2 SCC 324, indicates that proceedings under Section 125 CrPC have been enacted to remedy/reduce the financial suffering of a lady, who was forced to leave her matrimonial house, so that some arrangements could be made to enable her to sustain herself.

It is the duty of the husband to maintain his wife and to provide financial support to her and their children. A husband cannot avoid his obligation to maintain his wife and children except if any legally permissibly ground is contained in the statutes. 

Court noted that in the present matter, petitioner relied only on the statement given by the respondent/wife under Section 165 Indian Evidence Act. In the said statement she clearly mentioned her employment adding that her income was very low on which her sustenance was difficult.

In view of the above position, the onus to show how much the respondent/wife was earning shifts on the petitioner to show that it was enough for her sustenance. But petitioner failed to bring any evidence.

Court reiterated the Supreme Court’s position that newspaper clippings, etc. are not evidence.

 It was noted that the petitioner was working as an ASI and both the children were well settled, and he was not under any obligation to maintain his children but the wife.

On asking about divorce, it was stated that the petitioner’s children did not want him to take divorce from his wife, hence it becomes the moral and legal obligation of the husband to maintain his wife.

Bench while dismissing the revision petition held that no material was placed on record to show that respondent/wife was able to sustain herself. [Jaiveer Singh v. Sunita Chaudhary, 2021 SCC OnLine Del 1488, decided on 05-04-2021]


Advocates before the Court:

For the Petitioner: Neerad Pandey, Advocate

For the Respondent: D.K. Sharma, Advocate

Case BriefsHigh Courts

Calcutta High Court: Shampa Sarkar, J., expressed that Hindu Marriage Act is a gender-neutral provision and further expressed the scope of maintenance.

In the present revisional application, the issue was with respect to the wife being aggrieved with the quantum of maintenance.

Wife had filed an application under Section 24 of the Hindu Marriage Act and maintenance pendente lite @Rs 30,000 per month and Rs 75,000 as litigation cost was prayed.

Wife was aggrieved that the lower court allowed 1/5th of the husband’s income as maintenance pendente lite and considering the husband’s income as Rs 60,000, Court proceeded to grant an amount of Rs 12,000 as maintenance.

Hindu Marriage Act provides for the rights, liabilities and obligations arising from a marriage between two Hindus.

Sections 24 and 25 make provisions for providing maintenance to a party who has no independent income sufficient for his or her support and necessary expenses. This is a gender-neutral provision, where either the wife or the husband may claim maintenance. The pre-requisite is that the applicant did not have independent income which is sufficient for his or her support during the pendency of the lis.

Justice Krishna Iyer’s decision of Supreme Court in Captain Ramesh Chander Kaushal v. Veena Kaushal, (1978) 4 SCC 70 was referred to regarding the object of maintenance laws.

Supreme Court’s decision in Rajnesh v. Neha, (2021) 2 SCC 324 discussed the criteria for determining the quantum of maintenance and the relevant factors to be taken into consideration in order to quantify the amount. The object behind granting maintenance is to ensure that the dependent spouse was not reduced to destitution or vagrancy on account of failure of the marriage and not as a punishment to the other spouse.

In the instant case, wife’s potential to earn may exist as she had a post-graduate degree but as per the evidence, it appeared that she had been out of employment Since May, 2014. Records revealed that the husband had been appointed at a salary of Rs 23,000. It was expected that in the intervening period, husband’s income must have gone up by at least 3 times.

Supreme Court noted that some guesswork could not be ruled out estimating the income when the sources or correct sources are not disclosed. Hence, Trial Court rounded the figure at Rs 60,000 as the expected income of the husband at present.

Bench considered it prudent to award Rs 20,000 to the wife as maintenance pendente lite.

Bench dismissed Mr Chatterjee’s contention that wife should be directed to disclose her present income and file the affidavit of assets.

Further, the Court stated that in the absence of any evidence on the part of the husband, this Court is of the opinion that taking into consideration the criteria as laid down by several judicial precedents on the subject from time to time, Rs 20,000/- as maintenance pendete lite per month is just and proper.

High Court modified the impugned order to the above extent. It was directed that the current maintenance shall be paid with effect from April, 2021 within 20th of the month.  Thereafter on and from May 2021 the maintenance shall be paid within 15th of every month as directed by lower court.[Upanita Das v. Arunava Das, C.O. No. 4386 of 2019, decided on 09-04-2021]


Advocates before the Court:

For the Petitioner: Mr Srijib Chakraborty and Ms Sudeshna Basu Thakur

For the Opposite Party: Mr Aniruddha Chatterjee and Mr Sachit Talukdar

Case BriefsHigh Courts

Karnataka High Court: A Division Bench of Alok Aradhe and H. T. Narendra Prasad JJ., allowed the appeal and quashed the impugned order due to point of law favouring the assessee and not the revenue.

The facts of the case are such that the assessee is a software engineer who was employed with Aerospace Systems Pvt. Ltd., a company registered in India between the period from 1995-1998 and was deputed to SiRF Technology Inc., U.S. in the year 1995 by Aerospace Systems Pvt. Ltd., India as an independent consultant and worked in that capacity 1995-1998 and later as an employee of SiRF USA from 2001-2004. While on deputation to SiRF USA, the assessee was granted stock option by SiRF USA whereunder the assessee was given right to purchase 30,000 shares of SiRF USA at an exercise price of US $0.08 per share and he also had an option of cashless exercise of stock options. The assessee in assessment year 2006- 07 exercised his right under stock option plan by way of cashless exercise and received net consideration of US $ 283,606 and offered the gain as a long term capital gain as the stock options were held nearly for ten years. The assessee also claimed deduction under Section 54 F of the Act. The Assessing Officer vide order dated 26-12-2018 and as per Section 143 (3) of the Income Tax Act, 1961 i.e IT Act artificially split the transaction into two and brought to tax the difference between the market value of shares on the date of exercise and the exercise price as ‘income from salary’ and the difference between the sale price of shares and market value of shares on the date of exercise of ‘income from short term capital gains’. The claim for deduction under Section 54 F of IT Act was disallowed.  The Commissioner of Income Tax (Appeals) was approached who dismissed the appeal on merits which further went in appeal before Income Tax Appellate Tribunal which was thereby dismissed. Aggrieved by the said orders, instant appeal was filed before present High Court.

Counsel for the appellants submitted that the finding recorded by the tribunal that assesee was an employee of SiRF USA is perverse and therefore, the finding of the tribunal that consideration received on transfer of stock options is in the nature of income from salaries cannot be sustained in the eye of law. It was further submitted that stock option was granted to asssessee when he was an independent consultant with SiRF USA and therefore, cannot be treated to be an employee for the purposes of Sections 15 to 17 of the IT Act.

Counsel for the respondents submitted that as per clause 2(f) of the stock plan even a consultant who performs services for the company or a subsidiary shall be treated as an employee. Therefore, the assessee shall be treated as an employee of SiRF USA and amount received as income from salary.

The Court relied on judgment Dhun Dadabhoy Kapadia v. CIT, (1967) 63 ITR 651 (SC) and on perusing clause 2 (f) and 11 of the stock plan as well as the communication dated 03-08-2006 sent by the SiRF USA to the assessee, the Court observed that the assessee was an independent consultant to SiRF USA and was not an employee of SiRF USA at the relevant time.

The Court thus held that, there was no relationship of employer and employee between the SiRF USA and the assessee and therefore, the finding recorded between the SiRF USA and the assessee and therefore, the finding recorded by the tribunal that the income from the exercise of stock option has to be treated as income from salaries is perverse as it is trite law that unless the relationship of employer and employee exists, the income cannot be treated as salary.

In view of the above, impugned order was quashed and appeal was allowed.[Chittharanjan A. Dasannacharya v.  Commissioner of Income Tax, I.T.A. No. 153 of 2014, decided on 23-10-2020]


Arunima Bose, Editorial Assistant has put this story together

Hot Off The PressNews

Finance Bill, 2020 has proposed that an Indian citizen shall be deemed to be resident in India, if he is not liable to be taxed in any country or jurisdiction. This is an anti-abuse provision since it is noticed that some Indian citizens shift their stay in low or no tax jurisdiction to avoid payment of tax in India.

            The new provision is not intended to include in tax net those Indian citizens who are bonafide workers in other countries. In some section of the media, the new provision is being interpreted to create an impression that those Indians who are bonafide workers in other countries, including in the Middle East, and who are not liable to tax in these countries will be taxed in India on the income that they have earned there. This interpretation is not correct.

  In order to avoid any misinterpretation, it is clarified that in case of an Indian citizen who becomes deemed resident of India under this proposed provision, income earned outside India by him shall not be taxed in India unless it is derived from an Indian business or profession. Necessary clarification, if required, shall be incorporated in the relevant provision of the law.


Ministry Finance

[Press Release dt. 02-02-2020]

[Source: PIB]

Legislation UpdatesNotifications

In the context of Alternate Investment Funds (AIFs), references have been made to the Central Board of Direct Taxes (the Board) seeking clarity regarding taxability of income from investments made by the non-resident investor through these AIFs, outside India (off-shore investment).

The incidence of tax arising from the off-shore investment made by a non-resident investor through the AIFs would depend on determination of the status of income of non-resident investor as per provisions of Section 5(2) of the Income-Tax Act, 1961 (Act). As per Section 5(2) of the Act, the income of a person who is non-resident, is liable to be taxed in India if it is received or is deemed to be received in India in such year by or on behalf of such person; or accrues or arises or is deemed to accrue or arise to him in India.

Chapter XII-FB contains special provisions relating to tax on the income of investment funds and income received from such funds. Under Chapter XII-FB, Section 115 UB of the Act (‘Tax on income of investment fund and its unit holders‘) is the applicable provision to determine the income and tax-liability of investment funds & their investors. In this context, ‘Investment fund” is defined in Explanation 1 of Chapter XII-FB to mean any fund established or incorporated in India in the form of a trust or a company or a limited liability partnership or a body corporate which has been granted a certificate of registration as a Category I or Category II Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012, made under the Securities and Exchange Board of India Act, 1992 (15 of 1992). Thus, provisions of Section 115 UB apply only to Category I or Category II AIFs, as defined in SEBIs regulations.

By an overriding effect over other provisions of the Act, sub-section (1) of Section 115 UB of the Act provides that any income accruing or arising to, or received by, a person, being a unit holder of an investment fund, out of investments made in the investment fund, shall be chargeable to income-tax in the same manner as If it were the income accruing or arising, to or received by, such person had the investments made by the investment fund been made directly by him and not through the AIF.

The matter has been considered by the Board. As Section 115 UB(I) of the Act provides that the investments made by Category I or Category II AIFs are deemed to have been made by the investor directly, it is hereby clarified that any income in the hands of the non-resident investor from off-shore investments routed through the Category I or Category II AIF, being a deemed direct investment outside India by the non-resident investor, is not taxable in India under Section 5(2) of the Act.

It is further clarified that loss arising from the off-shore investment relating to a non-resident investor, being an exempt loss, shall not be allowed to be set-off or carried forward and set off against the income of the Category I or Category II AIF.


[Circular dt. 03-07-2019]

Central Board of Direct Taxes

Ministry of Finance

Case BriefsHigh Courts

Karnataka High Court: H.T. Narendra Prasad, J. dismissed the appeal filed by an Insurance Company against the order passed by Motor Accident Claims Tribunal (MACT).

In the instant case, Jyothi and Nagaraj were traveling on a motorcycle and a lorry came in a rash and negligent manner and dashed against the motorcycle. As a result, Jyothi fell on the road and the lorry ran over her and she died while shifting her to the hospital. Hence, the parents of the deceased filed the claim petition before the Tribunal. The Tribunal granted compensation of Rs 6,96,000 with interest at 6 percent per annum. Being aggrieved by the same, the Insurance Company filed the present appeal.

The learned counsel for the petitioner, Lingaraj H S submitted that the Tribunal had erred in taking the multiplier based on the age of the deceased instead of based on the age of the mother. Further, the Tribunal was unjustified in adding 50 percent of the income of the deceased towards loss of future prospects while calculating the “loss of dependency”. Further, the compensation of Rs 25,000 each awarded to the claimants in the category of “loss of love and affection” was on the higher side. Therefore, the counsel for the petitioner prayed for allowing the appeal by reducing the compensation.

The learned counsel for the claimants, Nataraj Ballal relied on the law laid down by the Supreme Court in the case of National Insurance Co. Ltd v. Pranay Sethi, 2017 SCC OnLine SC 1270, in which it was held that in case the deceased was having a permanent job and was below the age of 40 years, an addition of 50 percent of the established income should be made. Further, as per the said decision, while calculating the “loss of dependency”, the age of the deceased had to be taken into consideration. Hence, the counsel for the claimants submitted that there was no error in the finding of the Tribunal. Therefore, he prayed for dismissal of the appeal.

The Court relied on the decision of Supreme Court in the case of Pranay Sethi, and held that multiplier had to be applied based on the age of the deceased and not based on the age of the mother of the deceased. Moreover, the Court also relied on the case of Magma General Insurance Co. Ltd v. Nanu Ram, 2018 SCC OnLine SC 1546 in which it was held that the claimants were entitled to compensation under the head “loss of love and affection”. Therefore, the Insurance Company has erred in taking the multiplier based on the age of deceased instead of based on the age of the mother and that the Tribunal was unjustified in adding 50 percent of the income of the deceased towards loss of future prospects while calculating the “loss of dependency”. Hence, the appeal could not be accepted and was unsustainable.

The appeal was dismissed accordingly.[Oriental Insurance Co. Ltd. v. Rathna, 2019 SCC OnLine Kar 566, decided on 29-05-2019]

Gauhati High Court
Case BriefsHigh Courts

Gauhati High Court: Hitesh Kumar Sarma, J. dismissed a revision petition filed against the order of the family court whereby the petitioner was directed to pay a monthly sum of Rs 2000 each to his wife and child towards their maintenance under Section 125 CrPC.

The wife had left petitioner’s home due to alleged torture inflicted upon her and thereafter she filed an application under Section 125 claiming maintenance which was allowed by the family court in the terms above. The petitioner was a Government Servant earning a monthly salary of about Rs 22,000.

The High Court noted that while the wife was staying at her parental house, she was not provided maintenance which amounted to negligence in the sense that the petitioner was bound to maintain the wife and the child, which is a settled legal position. It was also noted that the allegation that the wife was working in a school and earning money could not be established by the petitioner and no specific evidence to that effect was laid by him. It was observed: “In the absence of any specific evidence, it cannot be held that the wife/respondent was earning sufficient amount to maintain herself. That being so, in the absence of any specific evidence as to the income of the respondent/wife, the petitioner/husband is bound to maintain his wife and the child fathered by him.”

In that view of the matter, the Court did not find any reason to interfere with the order of the family court. The revision petition was accordingly dismissed. [Jotirmoy Kalita v. Jonamoni Kalita, 2019 SCC OnLine Gau 2245, Order dated 07-05-2019]

Case BriefsHigh Courts

Delhi High Court: A Bench of Jyoti Singh and G.S. Sistani, JJ. dismissed an appeal filed against the order of the family court rejecting the appellant-wife’s application for grant of maintenance pendente lite under Section 24 of the Hindu Marriage Act, 1951.

The parties married to each-other in June 2012 and had been living separately since September of that year. The wife was living in Gurgaon and the husband was in Singapore. The husband sought a decree of nullity of marriage under Section 12(1)(a) and (c), pending which the wife filed the application under Section 24 claiming pendente lite maintenance of Rs 2.50 lakhs per month along with litigation expenses. The same was rejected by the family court. Aggrieved thereby, the wife filed the present appeal.

The High Court noted that the wife was well educated and earning a monthly salary of around Rs 1.25 lakhs. On the other hand, the husband was also at a senior position in a reputed company in Singapore and was earning about Rs 13 lakhs per month. Noting all the facts and discussing the law on the subject, the Court was of the view that the impugned order does not need interference. Observing that the cost of living as per the standards of the country where the husband is employed is to be considered, the Court stated, “We cannot agree with the contention of the appellant that merely because the respondent is earning in ‘dollars’ she is entitled to the maintenance claimed by converting his salary in dollars into Indian rupees. We agree with the respondent that his expenditure being in dollars, the salary being in dollars is a fact which cannot be overemphasized.”

Being satisfied that wife’s earnings were sufficient to maintain herself, it was stated, “The provisions of this section (Section 24) are not meant to equalize the income of the wife with that of the husband but are only to see that when divorce or other matrimonial proceedings are filed, either of the party should not suffer because of paucity of source of income and the maintenance is then granted to tie over the litigation expenses and to provide a comfortable life to the spouse. Where, however, both the spouses are earning and have a good salary, merely because there is some salary difference cannot be a reason for seeing maintenance.”

In light of the above discussion, the wife’s appeal was dismissed as being devoid of merits.[KN v. RG, 2019 SCC OnLine Del 7704, dated 12-02-2019]

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of Dr. AK Sikri, SA Nazeer and MR Shah, JJ decided an issue relating to interpretation of Section 80HH of the Income Tax Act, 1961 referred to it by a division bench in 2014 and that the decision of the Court in Motilal Pesticides (I) Pvt. Ltd. vs. Commissioner of Income Tax, Delhi-II, (2000) 9 SCC 63, was erroneous.

The issue before the Court was”

“while computing the deduction whether it is to be available out of ‘income’ as computed under the Income Tax Act, 1961 or out of ‘profits and gains’, without deducting therefrom ‘depreciation’ and ‘investment allowance’.”

The Court discussed the scheme of the Act at length and said:

“Reading of Section 80HH along with Section 80A would clearly signify that such a deduction has to be of gross profits and gains, i.e., before computing the income as specified in Sections 30 to 43D of the Act.”

It said that the scheme itself draws distinction between the concept ‘income’ on the one hand and ‘profits and gains’ on the other hand. Below is the point-wise summary of how the Court explained the scheme of the Act in order to reach the abovementioned conclusion:

  • Insofar as computation of income under the head ‘profits and gains’ from business or profession is concerned, Section 28 of the Act mentions various kinds of incomes which are chargeable under this head.
  • Section 29 mentions the method of arriving at ‘income’ which is to be computed in accordance with the provisions contained in Sections 30-43D of the Act.
  • Sections 30-43D contain deductions of various kinds which are in the nature of expenditure or the like nature.
  • After providing the deductions admissible in these provisions, one arrives at the figure of net profits which would become the net income under the head ‘profits and gains of business or profession’.
  • Under Chapter VI-A of the Act certain deductions are given by way of incentives. Assessees may earn these deductions on fulfilling the eligibility conditions contained therein, even when they are not in the nature of any expenditure incurred by the assessee.
  • Section 80A of the Act provides that in computing the total income of assessee, there shall be allowed from his gross total income, in accordance with the subject of the provisions of this Chapter, the deductions specified in Sections 80C to 80U.
  • Section 80A itself uses the expression ‘from his gross total income’ as it states that deduction is to be allowed to an assessee ‘from his gross total income’.
  • Section 80HH specifically mentions that deduction @ 20% of ‘profits and gains’.

The Court, hence, overruled the verdict in Motilal Pesticides as it missed the marked difference in the terms ‘Income’ and ‘Gross Total Income’

[Vijay Industries v. Commissioner of Income Tax, 2019 SCC OnLine SC 299, decided on 01.03.2019]

Legislation UpdatesRules & Regulations

S.O. 1023(E)—In the exercise of the powers conferred by Section 169 read with Section 33 of the Representation of People Act, 1951 (43 of 1951), the Central Government after consulting the Election Commission hereby makes the following rules further to amend the Conduct of Elections Rules, 1961, namely:––

1. (1) These rules may be called the Conduct of Elections (Amendment) Rules, 2019.
(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Conduct of Elections Rules, 1961 in FORM 26,––
I. in PART A—
(i) for paragraph (4) and the Table thereunder, the following shall be substituted, namely:—
“(4) Details of Permanent Account Number (PAN) and status of filing of income tax return:

[Refer link for detailed notification: Notification]

Ministry of Law and Justice


Note: In accordance to the amended Form 26, five years’ returns are to be furnished, along with details of offshore assets. Along with this,  it would also require details under various heads of the candidate’s spouse, members of the Hindu Undivided Family (if the candidate is a ‘karta’ or coparcener) and dependents.

Case BriefsHigh Courts

Delhi High Court: A Division Bench comprising of G.S. Sistani and Jyoti Singh, JJ. dismissed an appeal filed against the order of the Family Judge whereby the appellant-husband was directed to pay a sum of Rs 15, 000 per month as maintenance to his wife.

The respondent-wife had filed an application under Section 24 of the Hindu Marriage Act, 1955 seeking maintenance from her husband. The Family Judge decided the quantum of maintenance as above to be paid by the husband to the wife. Aggrieved thereby, the husband filed the instant appeal. It was contended by the appellant that the Family Court did not properly appraise the facts and documents as submitted by him. It was averred that he was barely earning Rs 10,000 per month and therefore the Family Judge was not right in awarding the abovementioned amount as maintenance.

The High Court perused the record and was of the view that the pleas taken by the appellant about his income were not believable. Similarly, for his plea regarding the salary earned by the respondent was not supported by evidence. The Court referred to Jasbir Kaur v. District Judge, Dehradun, (1997) 7 SCC 7 wherein it was held that “considering the diverse claims made by the parties one inflating the income and the other suppressing, an element of conjecture and guess work does enter for arriving at the income of the husband. It cannot be done by any mathematical precision.” It was observed that in family matters, there is a tendency of spouses no to disclose their correct and true income; the present case was no different. In such view of the matter, it was held that the quantum of maintenance as calculated by the Family Judge suffered from no infirmity. Therefore, the appeal was dismissed. [Bhuvneneshwar Sachdeva v. Kavita Sachdeva,2018 SCC OnLine Del 12415,dated 29-10-2018]