RASHID AKHTAR & SONS Versus COMMISSIONER OF INCOME-TAX, LAHORE

SHAFI-UR‑REHMAN,J. ‑‑At the instance of the assessees the Income‑tax Appellate Tribunal has referred under section 56(1) of the Income‑tax Act the following questions arising out of the assessment of three years.

(1) Whether on the facts and circumstances of the case income of the minors admitted to the benefits of the partnership was includible in the income of their mother under section 16 (3) (a) (ii) of the Income‑ tax Act, 1922?

(2) Whether the word "spouse" as used in section 16 (3) (a) as amended by Act V of 1965, is also applicable to a widow whose husband has died?

2. The facts in brief are that one Wazir Khan was a licensed dealer in liquor and on his death the licence was, under the relevant rules transferred in the name of his widow and children all of whom excepting one were a the relevant time minors. The widow and the major daughter formed a partnership to carry on this business and the minor children were admitted to the benefits of partnership. The income of the minors was clubbed 4 with the income of their mother under provisions of section 16(3)(a)(ii) of the Income‑tax Act. This was challenged and the Appellate Assistant Commissioner upheld the contention of the assessee that such clubbing was not in accordance with law. An appeal was preferred to the Tribunal which set aside the order of this Appellate Assistant Commissioner and restore that of Income‑tax Officer. Hence a question has been raised whether the Income of the minors was to be treated as the income of their mother.

3. The learned counsel for the petitioner has, in making out a case, relied on two decisions of the Supreme Court. In the case of Commissioner of Income‑tax, Karachi v. Khatija Begum 1965 P T D 540, the Supreme Court examined the meaning of the word `individual' in the context of sections 3 and 16(3) (a) (ii) and held that considered with the expression "wife" and "tier husband", it bad to be given a restricted meaning at variance with the meaning of the same expression to section 3 and the individual was held to mean the husband of the wife and the father of the minor child inducted into the partnership of which he was the member. It was immediately after this decision that an amendment was made in this provision of the income‑tax Act and the word "wife" was substituted by the word "spouse" and the expression "her husband" was substituted by the expression "he or she". The learned counsel for the petitioner contends that notwithstanding this change and the act that the change followed the handling down of the decision by the Supreme Court restricted meaning given to the individual for the purposes of this section should continue to be given as before. Such a contention cannot prevail for it attributes both redundancy and futility to the Legislative performance and for no good reason either.

4. In the case of Commissioner of Income‑tax v. Mst. Fatima Bibi (1968) 17 Taxation 115, the provision of the law under consideration was identical to the one that was considered in the earlier decision of Mst. Khatija Begum. It was section 16 (3) (a) (ii) before its amendment. Therefore, this decision does not advance the case of the petitioner any further.

5. For the purposes of the controversy before us the specific portion of section 16 which would be applicable after excluding every other which is inapplicable is as follows:-

"16. Exemptions and exclusions in determining the total income.

(3) in computing the total income of any individual for the purpose of assessment, there shall be included;-

(a) so much of the income of minor child of such individual as arises directly or indirectly-

(ii) from the admission of the minor to the benefits of partnership is a firm of which such individual is a partner."

6. There are in fact three reasons for giving to tire words "any individual" now a meaning different from the one that is urged by the learned counsel for the petitioner. Firstly, the word `individual' as held in the cast of Khatija Begum, in its ordinary meaning, and as it was then used in section 3 of the Income‑tax Act, implied both a male and a female. Unless, therefore, there was something compelling in the context or in the subject- matter the same meaning had to be given. The compelling features that were visibly in existence and were fully considered by the Supreme Court were done away with soon after that decision and, therefore, the ordinary rule of interpretation was available for giving the word `individual' its normal meaning. Secondly, and doubt in this respect has been further removed by the substitution of the expression 'her husband' by the expression "he or she" in clause (i). The context now is such that it positively indicates that the individual could be male or a female. The earlier restriction of the category to males only has been lay express words done away with. Thirdly, in clause (ii) the use of the expression 'such individual' takes us back to the individual mentioned in the opening words of subsection (3) of section 16. The scope of expression "such individual" is, wide as that of tire expression any individual". Therefore, our answer to the first question is in the affirmative.

7. As regards the second question, in view of the specific provision of law applicable to the case and reproduced earlier, it is clear that nothing in this case now tunas on the word `spouse' and the second question referred does not in fact arise out of the proceedings by which the petitioner is aggrieved. The matter would certainly on the meaning that has been, given 1 to the word "any individual" full within the category of "any individual" irrespective of the fact whether she is a spouse or not.

8. We answer the reference accordingly and burden the petitioner with the costs of the proceedings.

Reference answered accordingly.