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TMI Blog1964 (12) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ejected the appellants' contention and have upheld the validity of the impugned provision. According to Jagdish Sahai J. the impugned section is intra vires, because Parliament had legislative competence to enact the said provision under entry 86, List I of the Seventh Schedule to the Constitution. Gurtu J., who agreed with the said conclusion, however, sustained the impugned provision under entry 97 in List I read with article 248 of the Constitution. Upadhya J. held that neither of the said provisions conferred legislative competence on Parliament to enact the impugned provision, and so, he came to the conclusion that the said provision was ultra vires and the charge levied against the appellants was, therefore, invalid. In accordance with the majority decision, the writ petitions filed by the respective appellants were dismissed. The appellants then applied for and obtained certificates from the said High Court, and it is with the certificates issued in their favour that they have come to this court in appeal. The Act was passed in 1957 to provide for the levy of wealth-tax. Section 3 of the Act provides that, subject to the other provisions contained in this Act, there shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation conferred on Parliament by article 248 cannot be invoked in respect of the tax imposed on the capital value of the assets of Hindu undivided families by the impugned provision. That is how the validity of the impugned provision has been challenged before us. On the other hand, the respondent, the Wealth-tax Officer, seeks to sustain the validity of the impugned provision primarily under entry 86 in List I. It is contended on his behalf that the word " individuals " used in entry 86 is wide enough to take within its sweep groups of individuals and, as such, Hindu undivided families fall within the scope of the area covered by entry 86. In the alternative, it is argued that entry 97, which is a residuary entry, would take in all matters not enumerated in List II or List III including any tax not mentioned in either of those Lists. According to the respondent, the word " matter " mentioned in entry 97 cannot take in taxes specified in entry 86, but it refers to the subject-matter in respect of which Parliament seeks to make a law under entry 97. The subject-matter of the tax imposed by the impugned provision is the capital value of the assets of a Hindu undivided family and if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrast brings out an element of limitation or restriction which should be imported in construing entry 86. Entry 82 refers to taxes on income other than agricultural income. The argument is that the power to levy taxes on income is not conditioned by reference to individuals or companies ; it is an unlimited extensive power. In contrast with this entry, it is urged that limitation is introduced by entry 86, because it seeks to confer power to levy taxes on the capital value of the assets of individuals and companies. The assessees are indicated by this entry, and that itself introduces an element of limitation. The appellants attempt to place their case alternatively by emphasising the fact that the word " individuals " in the context cannot mean companies, because companies are separately and distinctly mentioned ; that again, it is said, introduces an element of limitation on the denotation of the word " individuals. " " Individuals ", therefore, must mean individuals and cannot mean groups of individuals, that is the main contention raised by the appellants. We are not impressed by this argument. It is true that entry 82 does not refer to the assessees, and that is natural beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a fluctuating body and their shares in the capital assets of their respective families are liable to increase or decrease and cannot be definitely predicated for the accounting year as a whole, unless partition is made. Prima facie, such a position appears to be plainly inconsistent with the scheme of entry 86 and it cannot be upheld unless the word " individuals " is reasonably incapable of including groups of individuals. It is true that when tax is levied on the capital value of the assets of Hindu undivided families, in a sense the assets of individual coparceners are aggregated, and on the aggregate value a tax is levied ; but how the taxes should be levied and at what rate, is a matter for the legislature to decide ; that consideration cannot enter into the discussion of the legislative competence of Parliament to enact the law. It is hardly necessary to emphasise that groups of individuals, the capital value of whose assets would be subjected to the payment of wealth-tax, would naturally be groups of individuals who form a unit and who own the said assets together. The fact that the rights of the individuals constituting the group are liable to be decreased or increased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislation supports the distinction between individuals and Hindu undivided families, we do not see how the said consideration can have a material bearing on the construction of the word " individuals " in entry 86. The tax legislation may, for convenience or other valid reasons, have made a distinction between individuals and Hindu undivided families ; but it would not be legitimate to suggest that the word " individuals " occurring in an organic document like the Constitution must necessarily receive the same construction. Take, for instance, the traditional concept of income as recognised by the tax law. It has been held by this court in Navinchandra Mafatlal v. Commissioner of Income-tax, 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 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assets which belong to groups of individuals. If the individuals constitute themselves into a group and such group owns capital assets, it is not easy to understand why the value of such assets should not be included within the legislative field covered by entry 86. The Constitution-makers were fully aware that the Hindu citizens of this country normally form Hindu undivided families and if the object was to levy taxes on the capital value of the assets, it is inconceivable that the word " individuals" was introduced in the entry with the object of excluding from its scope such a large and extensive area which would be covered by Hindu undivided families. We are, therefore, satisfied that the impugned section is valid, because Parliament was competent to legislate in respect of Hindu undivided families under entry 86. This question has been considered by several High Courts and the reported decisions show consensus in judicial opinion in favour of the construction of entry 86 which we have adopted (vide Mahavirprasad Badridas v. M. S. Yagnik, Second Wealth-tax Officer, C-II Ward, Bombay (Bombay High Court's decision) ; N. V. Subramanian v. Wealth-tax Officer, Eluru (Andhra Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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