TMI Blog1989 (1) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... t be examined and pronounced upon. Even if the proviso is bad for discrimination, it would follow that the converse situation brought about by the later amendment, a discrimination as between gifts made as between the 31st of March, 1972 and on 1st April, 1972 might also become bad. It is true that we are required to notice the provision as it stood at the relevant time - the question referred is answered in the negative and in favour of the revenue. - 1118(NT) of 1975 - - - Dated:- 17-1-1989 - Venkatachaliah, J. REPRESENTED BY: Shri B.B. Ahuja, Advocates, for the Revenue. Shri Harish Salve and Shri Subba Rao, Advocates, for the Assessees. [Judgment per : Venkatachaliah. J.]. - Civil Appeal No. 1118/NT/1975, by special leave, by the Commissioner of Wealth-Tax, Andhra Pradesh, and CA Nos. 1226 1227/NT/1975, on a certificate, under Section 29(1) of the Wealth-Tax Act, 1957, [Act] by the assessee raise a question as to the proper construction of the proviso to Sec. 4(l)(a) of the Act, which provides for exemption respecting transferred assets which would otherwise be includible in the wealth of the assessee under Sec. 4(l)(a) of the Act. The condition for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68, that though the gifts were otherwise includible as belonging to the Nawab under Sec. 4(1)(a)(i), as the transfers made to the spouses otherwise than for adequate consideration, however, as the gifts were chargeable to gift-tax, the proviso to Sec. 5(1)(a) was attracted and that the assets so transferred were not includible in the net wealth of the Nawab for any assessment year commencing after the 31st day of March 1964". The Wealth-tax Officer rejected this claim. The Appellate Asstt. Commissioner, in the assessee s appeal, confirmed the assessment. In the assessee s further appeal before the Appellate Tribunal, the Tribunal, on a particular construction of the proviso, allowed the appeal and held that the assets transferred, which had attracted gift-tax, were not includible in the net wealth of the Nawab for the assessment year 1964-65 onwards. At the instance of the Revenue, the following question of law was referred to the High Court for its opinion: Whether, on the facts and in the circumstances of the case, the assessee was entitled to exclude, under the proviso to section 4(1) (a) of Wealth-tax Act, 1957, the value of the assets gifted to his wives in the Wealth-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on the point leading to the divergence of the judicial opinion on the point is attributable to the somewhat inelegant and inappropriate phraseology of the provision. To appreciate the relevant contentions it is necessary to notice the words of the proviso : Provided that where the transfer of such assets or any part thereof is either chargeable to gift-tax under the Gift-Tax Act, 1958 (18 of 1958), or is not chargeable under Section 5 of that Act, for any assessment year commencing after the 31st day of March, 1964, [but before the 1st day of April, 1972], the value of such assets or part thereof, as the case may be, shall not be included in computing the net wealth of the individual. The words but before the 1st day of April, 1972" was later introduced by the Finance (No. 2) Act, 1971 with effect from 1.4.1972. This was introduced by the amending Act of 1964, but given effect to from 1.4.1965 by the notification. Under the various clauses of Sec. 4(1)(a) certain transfers of assets made by an individual in favour or for the benefit of the spouse or a minor child, not being a married daughter,.of such individual, are required to be ignored and the transferred-assets in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed asset was chargeable to gift-tax or not chargeable to gift-tax. The proviso specifies the period of exemption upto 31st March, 1964. Irrespective of the year of the gifts when the assets were gifted, they will not be included in the computation of the net wealth of the individual till the assessment year 1964-65. We are, therefore, of the view that the intention of Parliament was to exempt transfers made under clauses (i) to (iv) of Section 4(1)(a) from being computed in the net wealth of the individual upto the wealth-tax assessment year commencing after 31st day of March, 1964... 7. Shri Ahuja submitted that the words for any assessment year commencing after the 31st day of 1964" could, in the context, only refer to the gift and gift-tax assessments. The proviso, he said, which was introduced by way of an amendment, was brought into force with effect from 1.4.1965 by a notification which specified the commencement of tlie operation of the proviso and that, quite obviously, it would be redundant to read the clause under consideration as again referring to the commencement of the operation of the proviso. While the clause under consideration related to and qualified the Gift ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, in the latter case it is exempt for all time to come thereafter. Learned counsel pointed out that the criterion of higher rates of Gift-tax as a justification supporting the classification also fails in view of the fact that under the proviso it is not only the gifts chargeable to tax but also those exempt under Sec. 5 that attract the exemption with the result that between two gifts which are both exempt under Sec. 5 of the Gift-tax Act, one is forever exempt from wealth-tax in the hands of the donor while the other is includible in his wealth for purposes of wealth-tax depending solely on the criterion of the date of gift - whether the gift was made prior to 31st March, 1963 or thereafter. Here the criterion of classification of gifts on the basis of the eligibility for higher rates of tax, says Shri Salve, collapses and the cut-off date determining the difference in consequences in the two different class of cases become wholly arbitrary. Shri Salve submitted that a construction which promotes its constitutionality has to be preferred to the one which, if accepted, would expose the provision to the vice of discrimination and unconstitutionality. The essential basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation, suggests that something more is being got out in the elucidation of the subject-matter than can be got by strict interpretation of the words used. In the very full sense of the word construction the judges have set themselves in this branch of the law to try to frame the law as they would like to have it... . [See: Samples of Law Making - Oxford University Press - pp. 70-71]. A statute says Max Radin is neither a literary text nor a divine revelation. Its effect is, therefore, neither an expression laid on immutable emotional over-tones nor a permanent creation of infallible wisdom. It is a statement of situation or rather a group of possible events within a situation and as such it is essentially ambiguous. [See Statutory Interpretation - 43, Har. L.R. 863 (868)]. The observations of Lord Russel of Killowen in Attomey General v. Carlton Bank [1899 (2) Q.B. 158] though an early pronouncement, is refreshing from its broad commonsense : I see no reason why special canons of construction should be applied to any Act of Parliament, and I know of no authority for saying that a Taxing Act is to be construed differently from any other Act. The duty of the Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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