JUDGMENT
Govindan Nair, C.J.
1. The question that has been referred to us for our opinion in regard to the assessments for the years 1968-69 and 1969-70 of the HUF reads as follows :
“Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in holding that the interest paid by the assessee on the moneys set apart by him on the partial partition of the family for the maintenance of his wife and maintenance and marriage expenses of his minor daughters and utilised for his business, is an allowable deduction under Sections 36(iii) and 37(i) of the Income-tax Act, 1961 ?”
2. The HUF, that was assessed, came into existence as a result of a partial partition effected in the family on January 21, 1967. The question referred depends for its answer on the interpretation of the earlier part of the partition deed. It is better to extract that part in the original language in which it has been written.
3. The relevant part of the above portion would mean that the wife of the karta, namely, Thulasi Ammal considered that, in the best interests of the family, all the minor sons should get separated from the family. This demand was accepted. She also demanded that for herself a provision must be made. Apart from that, she demanded, it is clear from the statements in the partition deed, that provision be made for the education and marriage expenses for her five minor daughters. These demands were also conceded and in accordance with these demands, allotments of amounts, as we read the terms of the partition deed, were made, allotting a sum of Rs. 15,000 to the wife and a sum of Rs. 7,500 to each of the minor daughters. The father took the business of the original HUF, part of the assets were divided and given to the minor sons, and to the wife and the daughters as mentioned above. It is the case of the karta of the family that the amounts allotted to the wife and the minor daughters were utilised in the business of the HUF, which was continued by the karta after the partial partition. The fact of partition has not been disputed ; nor was the bona fides of the partition questioned. There was no contention either that the allotments made were not justified in the circumstances of the family. It is a well recognised principle of Hindu law that a wife, though unable to claim partition, can, at the time of the partition, demand that a share be set apart for her and she has the right to get a share equal to that of a son and is entitled even to hold that and enjoy the sums separately from the husband. The daughters too, who have to be maintained by the family, the karta or the brothers, we conceive, can be allotted shares at the time of the partition for their marriage expenses and for their educational expenses as
has been shown in the partition deed. It is unnecessary to pursue this matter further, because no contention has been raised at any time that the provision made in the partition deed are against law and are invalid. The Tribunal understood the provisions as provisions for maintenance and in the order of the Tribunal, the Tribunal repeatedly used the words “set apart for the maintenance of the wife and minor daughters”. We have no hesitation whatever in understanding the partition deed as containing provisions for maintenance of the wife and the minor daughters. As we said earlier, the terms of the partition deed are clear and they indicate that separate allotments of property have been made in favour of the wife and each of the five minor daughters. We have no doubt, therefore, that the amounts allotted to the wife and the minor daughters belong to the wife and the minor daughters. They have been, admittedly, used in the business carried on by the karta of the family. It is his case that he paid interest for these amounts by crediting the same into the separate accounts of the wife and minor daughters. Those accounts also indicated that the credits have been given for the amounts mentioned in the partition deed in the capital account. In these circumstances, we have to come to the conclusion that the jural relationship between the karta of the family and the wife and the five minor daughters in relation to the amounts of Rs. 15,000 as far as the wife is concerned and Rs. 7,500 each as regards each of the five minor daughters is that of a debto and creditor. The payment of interest by crediting their accounts with me interest amounts is, therefore, perfectly justified and such interest is an allowable deduction in computing the profits and gains of the business under Section 36(1)(iii) of the I.T. Act, 1961.
4. In the light of the above, we answer the question referred to us in the affirmative, that is, in favour of the assessee and against the Department. The assessee will have his costs from the Revenue including advocate’s fee of Rs. 250.
