TMI Blog1999 (6) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... has gone beyond the scheme of the Act. It is submitted that the levy of tax on land and building which is exclusively within the legislative competence of the State Legislature under entry 49, List II, Schedule VII, of the Constitution of India cannot be made liable to tax under the Wealth-tax Act. Reliance is solaced on the judgment given by the apex court in the case of Sudhir Chandra Nawn v. WTO [1968] 69 ITR 897, where it was observed that the tax which is imposed by entry 86, List, I, of the Seventh Schedule is not directly a tax on lands and buildings. It is a tax imposed on the total assets of individuals and companies, on the valuation date. The tax is not imposed on the components of the assets of the assessee, it is imposed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilding which is directly a tax falling within the legislative competence of the State and thus the provisions of sections 2(ea)(i) and 2(ea)(ii) are liable to be struck down. It is also stated that tax on land and building individually and separately is violative of the fundamental right as it results in double taxation on the same asset, namely, land and building. Arguments of both learned counsel for the parties have been heard. Entry 86, List I, Seventh Schedule is in respect of the taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies. Entry 49, List II, Schedule VII is in respect of taxes on lands and buildings. The difference between the two provisions is that in the case of wealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under entry 49, List II. But the legislative authority of Parliament is not determined by visualizing the possibility of exceptional cases of taxes under two different heads operating similarly on taxpayers. Again entry 49, List II, of the Seventh Schedule contemplates the levy of tax on lands and buildings or both as units. It is normally not concerned with the division of interest or ownership in the units of lands or buildings which are brought to tax. Tax on lands and buildings is directly imposed on lands and buildings, and bears a definite relation to it. Tax on the capital value of assets bears no definable relation to lands and buildings which may form a component of the total assets of the assessee. By legislation in exercise of po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets it may be possible to break up the tax which is leviable on the total assets into components and attribute a component to lands and buildings owned by an assessee. In such a case, the component out of the total tax attributable to lands and buildings may, in the matter of computation, bear similarity to tax on lands and buildings levied on the capital or annual value under entry 49, List II. But in a normal case a tax on capital value of assets bears no definable relation to lands and buildings which may or may not form a component of the total assets of the assessee. But entry 49 of List II contemplates a levy of tax on lands and buildings or both as units. It is not concerned with the division of interest or ownership in the units ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus not a tax on lands and buildings as such (which is a tax resting upon general ownership of lands and buildings), but is levy upon a particular use, which is transmission of title by gift. The two are not the same thing and the incidence of the tax is not the same. Since entry 49 of the State List contemplates a tax directly levied by reason of the general ownership of lands and buildings, it cannot include the gift tax as levied by Parliament. There being no other entry which covers a gift-tax, the residuary powers of Parliament could be exercised to enact a law. Reliance is placed on the judgment given in the case of Union of India v. Harbhajan Singh Dhillon [1972] 83 ITR 582 (SC), wherein the Wealth-tax Act was held as not imposing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the power conferred on Parliament under entry 86, List I, as held in the case of Sudhir Chandra Nawn [1968] 69 ITR 897 (SC), referred to above. A distinction has been drawn between the levy of tax on land and building or both as a unit for which various State Legislatures have enacted Land and Building Tax Acts and that on the capital value of the assets owned. Under entry 86, List I, the principle of aggregation is made applicable and tax is imposed on the totality of the value of all the assets, By the amendment in respect of levying wealth-tax on all the assets, a few items have been selected and land and building is one of them. In a particular case, an assessee may own land and building alone while in other cases, it may be a number o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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