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1963 (8) TMI 62

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..... Wealth-tax on lands and buildings is ultra vires of the powers of Parliament; (ii) Under any circumstance, Parliament could not have imposed wealth-tax on undivided families; and (iii) the Wealth-tax Act, 1957 (27 of 1957), (to be hereinafter referred to as the Act ) is violative of article 14 of the Constitution in so far as it provides for the levy of tax on Hindu undivided families only and as such is liable to be struck down. Before proceeding to consider the points formulated above, it is necessary to mention that according to the assessee, in the above proceedings wealth-tax has been levied on non-agricultural lands and buildings. This contention of the assessee has not been controverted by the revenue. We may now proceed to consider the validity of the contentions advanced on behalf of the assessee. This court upheld the vires of the Act as such in W.P. No. 256 of 1959 in G.M. Gopalkrishna v. Wealth-tax Officer [1964] 51 I.T.R. 575 . But in that case the court was not called upon to consider the special facts put forward now. Therefore, that decision is not relevant for our present purpose as it does not bear on the points which arise for determination in t .....

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..... efore us, that the word 'asset' includes within its fold 'land' as well. If that be so, then, 'land' other than 'agricultural land' comes within the scope of entry 86. It is trite to say that every entry found in the Seventh Schedule is a topic of legislation. The same will have to be given the widest possible connotation. Hence, we are clearly of the opinion that Parliament had competence to enact the law in question. We see no conflict between entry 86 of List I of the Seventh Schedule and entry 49 of List II of the same Schedule. Those entries will have to be construed harmoniously. If so construed, it follows that the power to impose wealth-tax on non-agricultural lands and buildings is within the legislative jurisdiction of Parliament. This is also the view taken in Mammad Keyi v. Wealth-tax Officer, Calicut [1962] 44 I.T.R. 277 ; Jugal Kishore v. Wealth- tax Officer, Special Circle, C Ward, Kanpur [1962] 44 I.T.R. 94 (F.B.) ; Mahavirprasad Badridas v. Yagnik [1959] 37 I.T.R. 191 , and Ramabhadra Raju v. Union of India [1962] 45 I.T.R. 118 . Now coming to the second point formulated, it was urged that entry 86 of List I doe .....

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..... 44 I.T.R. 277 . Therein their Lordships held that the Hindu undivided families of wealth have been singled out by the Act from other similar joint families in the country and the State has thereby denied equal protection of the law to the former. It was said that no rational difference is shown as between Marumakkathayam Tarwad, which, undoubtedly, is a Hindu undivided family and the Moplah Marumakkathayam Tarwad. The learned counsel for the revenue strenuously contended that we should not accept as correct the view taken by the Kerala High Court in Mammad Keyi v. Wealth-tax Officer, Calicut [1962] 44 I.T.R. 277 . According to him, for the purpose of taxation, an undivided family is only a collection of individuals; individual should not be equated to a human being; the word individual is only a name for an unit of taxation. That nomenclature is equally applicable to a group of individuals who have formed a voluntary association of those who are associated together because of birth. According to him, a Moplah Marumakkathayam Tarwad is assessable as an individual or as an association of individuals . The burden laid on such undivided families is heavier than that la .....

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..... axation. In the course of the judgment, this is what Addison J., who delivered the judgment of the Bench, observed: After careful consideration, I can see no difficulty in holding that a body of trustees comes within the meaning of 'other association of individuals,' as used in section 3 and elsewhere in the Act. No difficulty apparently has arisen on this score in England where the corresponding phrase used is 'body of persons.' Even if 'other association of individuals' must be ejusdem generis with the preceding words, those words are 'individual, Hindu undivided family, company, firm'. Now, firm is a shortened name for the partners constituting it. It is true that they contract together to be partners, while the trustees are constituted apparently without their consent, though as a matter of fact, they would usually be consulted. In my opinion that does not bring trustees outside the term 'other association of individuals'. Hindu undivided family also occurs in the list and that is an involuntary association brought about by the mere birth of individuals. From the trust deed itself it is apparent that the trustees are a business assoc .....

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..... #39;one in substance or essence; forming an indivisible entity; indivisible.' It is also defined as 'existing as a separate indivisible entity, numerically one, single'. If a corporate body created by a statute is an individual within the meaning of the section and I hold that it is--a cooperative society registered under the Co-operative Societies Act must fall within the same category. It is a corporate body and has perpetual succession. I consider that it is not reasonable to suppose that the legislature intended that there should be a difference in the meaning of the word 'individual' and the plural 'individuals'. If the word 'individual' includes a corporation, the words 'association of individuals' must embrace an association of corporate bodies and therefore the assessee is an 'association of individuals'. Support for the opinion that the assessee comes within section 3 is to be found in the decision of the Allahabad High Court in Ram Rattan Das Madan Gopal v. Commissioner of Income-tax [1935] 3 I.T.R. 183 and of the Lahore High Court in Mian Channu Factories Union v. Commissioner of Income-tax [1936] 4 I.T.R. 203 . .....

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