Gnanamma and ors. Vs. Devaki and ors. - Court Judgment

Excerpt:
indian succession act, 1925 - section 372-grant of succession certificate-proceedings relating to-finding given by the court with regard to validity of marriage-question of jurisdiction-pleaded against-held-the court has no power to give finding on the validity of the marriage in a summary proceeding under section 372 of the act.;appeals is allowed. - sections 49(b), 143(1)(a) & 143(3): [k.l. manjunath & b.v. nagarathna,jj] disallowance of payment of commission to agents held, though a tax payer may resort to a device to divert the income before it accrues or arises to him, the effectiveness of the device depends upon its genuineness. the substance of the transaction has to be assessed by applying the taxing statute so as to ascertain whether it is a sham or make believe transaction or one which is genuine and therefore is eligible for deduction under the act. hence, courts have to look into the form of the transaction to find out its substance so as to ensure that there is no avoidance of tax by a method impermissible in law. on facts held, the creation of m/s. r.m.c. as well as m/s. o.m.c (as agencies) was nothing but a device adopted by the appellant for siphoning of the profits of the appellants company in the form of commission as well as marketing and sales promotion expenses. the assessing officer was therefore, right in not allowing the said expenses. considering the nature of product manufactured by the assessee i.e., agarbathi and out of a sum of rs.21,91,867/- paid as commission to its agents by the appellant and a sum of rs.7,34,730/- was paid to m/s. r.m.c till october, 1991 and from october 1991 onwards a sum of rs.6,03,546/- was paid to m/s. o.m.c. i.e., more than fifty percent of the commission charges. the formation of m/s. o.m.c is for a sham and nominal purpose of receiving the profits of the appellant which is a device to avoid tax.anand byrareddy, j.1. the appellants, who were the petitioners before the trial court, had sought for succession certificate in respect of monies due to the estate of deceased m. sundaram.2. the appellants had claimed as the widow and children of the deceased. the respondent also claimed as the widow of the deceased and contested the petition of the appellants. the trial court has allowed the petition in favour of appellants 2 to 4 and the respondent by directing that the succession certificate be issued in favour of all the said parties. the trial court has found that the first appellant was not the legally wedded wife of the deceased-as she had admitted that she was a christian prior to her marriage and as there was no material to show that she had converted to hinduism-she could not be held to be the legally wedded wife of the deceased.3. the counsel for the appellant shri shaker shetty would submit that the finding of the trial court on the validity or otherwise of the marriage of the first appellant with the deceased was without jurisdiction in a summary proceeding under section 372 of the indian succession act, 1925 (hereinafter referred to as 'the act' for brevity).4. it is contended that the trial court was not justified in denying the succession certificate at the instance or the claim of the respondent. the first appellant was never entitled to an exclusive claim over the monies as a nominee and the first appellant having been named as the nominee of the deceased, the certificate could have been safely issued in her favour. any persons, including the respondents are not precluded from laying claim to the same in appropriate proceedings.5. the counsel also contends that the trial court has erred even on the finding as to the religion of the first appellant. the counsel points out that a woman takes the religion of her hindu husband by marriage-no document of conversion is contemplated.6. further, the trial court has palpably erred in granting a certificate in favour of respondent no. 1 and respondents 2 and 3, the latter who were not even parties before the trial court, and the former who was not even an applicant. such a grant was wholly without jurisdiction.7. per contra, the counsel for the respondent seeks to support the impugned order.8. on these rival contentions, i have no hesitation in holding that the finding of the trial court on the validity of the marriage of appellant no. l with the deceased was without jurisdiction and proceeded on an incorrect application of the law.9. secondly, the grant of succession certificate in favour of the respondents, who were not applicants before it, is wholly irregular and not permissible in law.10. hence, on these two short grounds, the order of the trial court warrants interference. the appeal is allowed. the order of the trial court in so far as it directs grant of a succession certificate in favour of the respondents is set aside, so also the findings as to the invalidity of the marriage of the first appellant. succession certificate shall be issued in favour of the appellants alone. the respondents are at liberty to set up any claim in respect of the monies and benefits, in respect of which the certificate is issued, in appropriate proceedings.