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TMI Blog1993 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer negatived both the contentions of the assessee and observed that the word "individual" in section 3 includes a group of persons who form a unit or association of persons relying on the decisions of the Supreme Court in CIT v. Sodra Devi [1957] 32 ITR 615 and Banarsi Dass v. WTO [1965] 56 ITR 224. Aggrieved by the assessment order, the assessee preferred appeals before the Appellate Assistant Commissioner who confirmed the Assessing Officer's orders by his consolidated order dated December 5, 1981. The assessee preferred appeals against the said appeal orders to the Tribunal. The Tribunal held that "the assessee being an association consisting of members having independent corporate status is a distinct personality and, consequently, is liable to be assessed as an individual in accordance with the provisions of section 3". As to the assessee's claim of exemption under section 5(1)(i), "the Tribunal was of the opinion that the Wealth-tax Officer, it seems, did not examine the various objects of the association as enumerated in paragraph 3, Chapter 1 of the Rules with a view to ascertain, whether the primary or dominant objective of the association was to promote the advanceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is registered under the Trade Unions Act. Section 13 of the Trade Unions Act invests it with the juristic character with the power to acquire and hold property. The Wealth-tax Officer, in the case, has held that such a juristic person would be brought to the charge of wealth-tax as an individual, because under section 2 of the Act, the assessee means a person by whom wealth-tax on any sum of money is payable under the Act. Section 3 is the charging section. It says that the tax is payable by every individual, Hindu undivided family and a company. Now, the assessee here is not a company which means a body corporate incorporated under the Companies Act, 1956, nor is it a Hindu undivided family. It has to be regarded as an individual to be brought within the charge of tax. If it is not an individual, there is no charge of tax on its wealth. The difficulty for the Revenue, in the case, is that the word "individual" in the common acceptance means a human being. Therefore, a juristic person like an association registered under the Trade Unions Act may on the first blush seem to be at odds with the common understanding of the word "individual". But, it is now a settled principle tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke, for instance, the traditional concept of income as recognised by the tax law. It has been held by this court in Navinchandra Mafatlal v. CIT [1954] 26 ITR 758, that the said traditional concept of income cannot introduce considerations of restriction or limitation in interpreting the word 'income' in entry 54 in List I of the Seventh Schedule to the Government of India Act, 1935, which corresponds to entry 82 in List I ,of the Seventh Schedule to the Constitution. In that case, the validity of the tax levied on capital gains was impeached on the ground that capital gains cannot be regarded as income, and so entry 54 did not justify the levy of the tax on capital gains. In rejecting this contention, this court held that the word 'income' occurring in entry 54 must receive the widest interpretation and could, therefore, be inter preted to include a capital gain. " Even earlier under the Income-tax Act, 1961, there arose the question whether the individual could imply an artificial person. In that context, the word "individual" fell to be considered by the Supreme Court. The Supreme Court in Banarsi Dass' case [1965] 56 ITR 224 thus observed on the said earlier decision, viz., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax law itself. A similar view has been taken by the Supreme Court in a few more other decisions, for example, in Andhra Pradesh State Road Transport Corporation, v. ITO [1964] 52 ITR 524. It has been held that a corporation constituted under a special Act is an individual within the meaning of section 3 of the Indian Income-tax Act, 1922, and as such is taxable. Eventually, many High Courts have held that the statutory corporation, which is not a company, is embraced by the word "individual" and, thus, can be the subject of taxation in terms of section 3 of the Wealth-tax Act. This view has been taken by the Kerala High Court in Kerala Financial Corporation v. WTO [1971] 82 ITR 477 [FB]. The same has been the view taken by the Gauhati High Court in Assam Financial Corporation v. CWT [1974] 94 ITR 404. In these decisions, it has been held that the import of the word "individuals" is not restricted to human beings and can include a corporation constituted under a Central or Provincial or State Act. Reference may also be made to the decision of the Madras High Court in Coimbatore Club v. WTO [1985] 153 ITR 172. There, the Madras High Court held that a club is to be treated as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee,-- (i) any property held by him under trust or other legal obligation for any public purpose of a charitable or religious nature in India." The object clauses of the assessee are contained at page 38 of the paper book. All the objects along with the provisions of the Trade Unions Act as quoted in CIT v. Indian Sugar Mills Association [1974] 97 ITR 486 by the Supreme Court will go to indicate that some of the objects are not of charitable nature. The Supreme Court and this court in Indian Sugar Mills Association's case [1974] 97 ITR 486 and Indian Sugar Mills Association v. CIT [1984] 150 ITR 593, have reconsidered the question of exemption under section 11(1) of the Income-tax Act, and under section 4(3)(i) of the Indian Income-tax Act, 1922, which are almost in pari materia to section 5(1)(i) of the Wealth-tax Act. In Indian Sugar Mills Association's case [1984] 150 ITR 593, it has been held that one of the objects was promotion and protection of trade union interest and it was held that the association was not formed primarily for the purpose of promoting good relationship between employees and employees or between employers and workmen (see page 599 of the Reports). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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