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1984 (11) TMI 353

. For the Appellant : G. Sarangan, Adv. For the Respondents : K. Srinivasan, Adv. JUDGMENT K.S. Puttaswamy, J. 1. On a reference made by Venkataramaiah J. (as he then was), these cases have been posted before us for disposal. 2. As common questions of law arise for determination in these cases, we propose to dispose of them by a common order. 3. In order to appreciate the questions that arise for determination in these cases, it is enough to notice the facts in Writ Petition No. 1462 of 1973 as illustrative only and not as exhaustive. 4. One Sirigeri Govindappa, a resident of Gangavathi of Raichur District, who was the karta of a Mitakshara Hindu undivided joint family (HUF) consisting of himself, his wife, Smt. Sirigeri Thippamma, his son, Ranganna, and an unmarried daughter, Kumari Raghamma, died on February 8, 1969. The Hindu undivided family owned considerable movable and immovable properties. 5. On November 17, 1969, Smt. Sirigeri Thippamma, the petitioner before us, as the "accountable person" under the Estate Duty Act of 1953 (Central Act 34 of 1953) ("the Act"), filed a return before the Assistant Controller of Estate Duty, Hubli ("the Assistant Con .....

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of the Constitution, but stands deleted from June 20, 1979, by the Constitution 44th Amendment Act, 1978. 11. With the deletion of article 19(1)(f) of the Constitution from June 20, 1979, by the 44th Amendment of the Constitution, the challenge based on that provision is no longer available. Even otherwise, article 19(1)(f) did not guarantee any immunity from taxation. We see no merit in this point either. 12. What now remains to be considered is the challenge to section 34(1)(c) based on article 14 of the Constitution. This bears a serious examination, for which purpose it is necessary to notice the case pleaded in some detail. On this challenge, the petitioners have asserted thus : "Article 14 forbids class legislation though it does not forbid reasonable classification for the purposes of legislation. The distinction between a coparcener dying leaving lineal descendants and others who are divided prior to their death from their lineal descendants, in the matter of estate duty and subjecting the estate of an undivided coparcener (leaving lineal descendants) of a Mitakshara joint family to a higher duty than would have been normally levied under the charging section, it is re .....

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rumakkattayam or Aliyasantana Law [vide Part I of the Second Schedule to the Act) and the other in the case of other properties (vide Part II of the Second Schedule to the Act). In the case of properties falling under Part I, the first slab exempt from duty was ₹ 50,000 and in the case of properties falling under Part II, the first slab exempt from duty was ₹ 1,00,000. 17. In the working of the Act from October 15, 1953 to 1958, and experience gained therefrom, the Union Government introduced Bill No. 18 of 1958 proposing various amendments to the Act (vide Gazette of India Extraordinary dated February 25, 1958), appending a statement of objects and reasons as set out hereunder [See [1958] 33 ITR 105 : "The object of the Bill is to make certain amendments to the Estate Duty Act, 1953 (34 of 1953), in the light of the experience gained in the working of that Act since its coming into force on October 15, 1953. The main amendments are intended to restrict some of the concessions which in the light of subsequent experience do not appear to be justified. Other amendments have been proposed to clarify assessment procedure, to facilitate collection of duty and also to pr .....

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f this provision, a Full Bench of this court in Controller of Estate Duty v. Andal Thayaramma (T. R. C. Nos. 17 of 1974 and 85 of 1975 decided on October 26, 1984)-since reported in [1985]151ITR197(KAR) , speaking through one of us (Puttaswamy J.), has expressed thus (p. 203) : "Aggregation for rate purposes provided in the Act is nothing new or novel and is on the familiar pattern as in other taxation measures like the Income Tax Act and levy of estate duty in England, on which the Act is generally modelled, however taking care to comprehend the peculiarities prevailing in our country... (p. 206). Section 34(1)(a) of the Act sets out in detail the properties exempted from duty but are still aggregated for rate purposes. A detailed enumeration of the properties exempted under section 34(1)(a) and the extent of exemptions is not necessary for these cases. Section 34(1)(b) provides for aggregation of the value of agricultural lands that are not subject to estate duty under the Act. section 34(1)(c) of the Act provides for the aggregation of a coparcenary interest in the joint family property of a Hindu family governed by the Mitakshara, Marumakkattayam or Aliyasantana law as als .....

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reat respect to their Lordships, we are constrained to state that this construction is opposed to the provisions of the Act, as interpreted by this court in Andal Thayaramma's case [1985]151ITR197(KAR) and cannot, therefore, be followed by us. 25. The true scope and ambit of article 14 and its application to a taxation measure have been explained by our Supreme Court in a large number of cases and it is sufficient to notice three of them only in some detail. 26. In Ram Krishna Dalmia v. Justice S. R. Tendolkar, [1959]1SCR279 , reviewing all the earlier cases decided till then, the Supreme Court summed up the true scope and ambit of article 14 in these words (p. 547) : "In Budhan Choudhry v. State of Bihar 1955CriLJ374 , a Constitution Bench of seven judges of this court at pages 1048.49 (of SCR) (at p. 193 of AIR) explained the true meaning and scope of article 14 as follows : 'The provisions of article 14 of the Constitution have come up for discussion before this court in a number of cases, namely, Chiranjit Lal v. Union of India [1950]1SCR869 , State of Bombay v. F. N. Balsara [1951]2SCR682 , State of West Bengal v. Anwar Ali Sarkar 1952CriLJ510 , Kathi Raning Rawat .....

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onality, the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and (f) that while good faith and knowledge of the existing conditions on the part of a Legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the Classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. 28. The above principles will have to be constantly borne in mind by the court when it is called upon to adjudge the constitutionality of any particular law attacked as discriminatory and violative of the equal protection of the laws. 29. A close perusal of the decisions of this court in which the above principles have been enunciated and applied by this court will also show that a statute which may come up for consideration on a question of .....

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if the statute has laid down any principle or policy for the guidance of the exercise of discretion by the Government in the matter of selection or classification. After such scrutiny, the court will strike down the statute if it does not lay down any principle or policy for guiding the exercise of discretion by the Government in the matter of selection or classification on the ground that the statute provides for the delegation of arbitrary and uncontrolled power to the Government so as to enable it to discriminate between per sons or things similarly situate and that, therefore, the discrimination is inherent in the statute itself. In such a case, the court will strike down both the law as well as the executive action taken under such law, as it did in State of West Bengal v. Anwar Ali Sarkar, 1952CriLJ510 ; Dwarka Prasad v. State of Uttar Pradesh [1954]1SCR803 and Dhirendra Kumar Mandal v. Superintendent and Remembrancer of Legal Affairs [1955]1SCR224 . (iv) A statute may not make a classification of the persons or things for the purpose of applying its provisions and may leave it to the discretion of the Government to select and classify the persons or things to whom its provis .....

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egory of goods and subjects it to taxation.' 32. This indicates a wide range of selection and freedom in appraisal not only in the objects of taxation and the manner of taxation but also in the determination of the rate or rates applicable. If production must always be taken into account, there will have to be a settlement for every year and the tax would become a kind of Income Tax. 33. The next principle is that the burden of proving discrimination is always heavy and heavier still when a taxing statute is under attack. This was also observed in the same case of this court at page 411 (of SCR); (at p. 1735 of AIR) approving the dictum of the Supreme Court of the United States in Madden v. Kentucky [1940] 309 US 83; 84 Law Ed. 590 : 'In taxation even more than in other fields, Legislatures possess the greatest freedom in classification. The burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it.' 34. As Rottschaefer said in his Constitutional Law at p. 668 : "A statute providing for the assessment of one type of intangibles at its actual value while other intangibles are assessed at their face value do .....

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eated. When differential treatment is not reasonably explained and justified, the treatment is discriminatory. If different subjects are equally treated, there must be some basis on which the differences have been equalised, for otherwise discrimination will be found. To be able to succeed in the charge of discrimination, a person must establish conclusively that persons equally circumstanced have been treated unequally and vice versa. However, in Khandige Sham Bhat v. Agricultural Income Tax officer [1963]48ITR21(SC) , it was observed : 'If there is equality and uniformity within each group, the law will not be condemned as discriminative, though due to some fortuitous circumstance arising out of a peculiar situation some included in a class get an advantage over others, so long as they are not singled out for special treatment Taxation law is not an exception to this doctrine : vide Purshottam Govindji Halai v. Shree B. M. Desai 1956CriLJ129 and Kunnathat Thathunni Moopil Nair v. State of Kerala [1961]3SCR77 . But in the application of the principles, the courts, in view of the inherent complexity of fiscal adjustment of diverse elements, permit a larger discretion to the leg .....

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in Bengal; the Mitakshara school prevails in the rest of India. These schools born of diversity of doctrines mark a new stage in the evolution of Hindu law. One of the main differences between these two principal schools of Hindu law relates, as has been pointed out later on in some detail, to the law of inheritance. The meaning of the doctrine of sapinda relationship in the law of inheritance insisted upon by Vijnanesvara whereby community of blood (propinquity) is to be preferred to community in the offering of religious oblations is the governing factor whereby under the Mitakshara law the right to inherit arises. Under the Dayabhaga, the right arises from spiritual efficacy, that is, the capacity for conferring spiritual benefit on the manes of paternal and maternal ancestors. Another distinguishing feature relates to certain incidents of the joint family. According to the Mitakshara law, each son acquires at his birth an equal interest with his father, and on the death of the father, the son takes the property, not as his heir, but by survivorship. The position of the son or grandson in the Mitakshara is somewhat similar to that of sueheredes who under the Roman law are regard .....

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a [1974]97ITR97(AP) , T. R. Jayashankar v. Assistant Controller of Estate Duty [1972] 83 ITR 445, Hariram v. Assistant Controller of Estate Duty MANU/PH/0169/1974, Badri Vishal Tandon v. Assistant Controller of Estate Duty [1976]103ITR468(All) and Rameshwar Lal Agarwal v. Union of India [1982]133ITR545(Patna) have sustained the provision, as also the earlier ruling of the High Court of Madras in Ramanathan Chettiar v. Assistant Controller of Estate Duty [1970]76ITR402(Mad) , are in consonance with the principles enunciated by the Supreme Court. We are in respectful agreement with what has been expressed in all these cases. 46. In Devaki Ammal's case [1973]91ITR24(Mad) , a Division Bench of the Madras High Court consisting of Ramanujam and Ramaswamy JJ. noticing the earlier Division Bench ruling of that court in Ramanathan Chettiar's case [1970]76ITR402(Mad) , which had upheld the validity of the provision rejecting the very ground urged before them, has invalidated the same. The question is whether the principle in Devaki Ammal's case should be accepted. 47. We have stated earlier that the construction placed by their Lordships in Devaki Ammal's case [1973]91ITR24(M .....

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