COMMISSIONER OF WEALTH TAX versus DR. KARAN SINGH AND OTHERS ETC.

Citation: [1993] 1 S.C.R. 569 · Decided: 04-02-1993 · Supreme Court of India · Bench: L.M. SHARMA · Disposal: Appeal(s) allowed
cites 4 · see the full citation network in Lexace
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

I 
COMMISSIONER OF WEALTH TAX 
A 
...... 
v. 
DR. KARAN SINGH AND OTHERS ETC. 
FEBRUARY 4, 1993 
[LAUT MOHAN SHARMA, CJ., S.R. PANDIAN, S. MOHAN, 
B 
B.P. JEEVAN REDDY AND S.P. BHARUCHA, JJ.] 
-~ 
Wealth Tax Ac4 1957: 
S. 1(2), 2, 3, 4, 5, 6, 7-Application of the Act (not including within its c 
purview agricultural /ands/assets) to State of Jammu and Kashmir-Held, the 
.-
Act as originally enacted is covered by Entry 86 of List I of Schedule VII to 
the Constitution of India and its extension to the State of Jammu and 
Kashmir is constitutional. 
Wealth TtIJ<-Held, is a net wealth t~The tax is not upon the assets D 
as such but is upon individuals, companies etc. with reference to 'Capital 
value of the assets' held by them-The tax is an annual levy on total value of 
all assets owned by Qll assessee after deductions of debts and liabilities. 
Constitution of India, 1957: 
E 
- ';-
Atticle 246, Seventh Schedule, List I, Entry 86-Taxes on capital value 
of assets exclusive of agricultural land, of individuals and companies-Held, 
the tax contemplated by the Entry is a tax upon the net wealth and is a net 
wealth tax and is a net wealth-t~et wealth of an assessee means 'What 
all he owns minus what all he ows"-Wealth Tax Ac4 1957 as originally F 
enacted is covered by Entry 86. 
~~.-, 
Interpretation of Statutes-
Taxing Act-Interpretation of. 
Court judgmentJ--l'rinciples of interpretation-Explained. 
G 
The respondents filed writ petitions before the High Court challeng· 
Ing the application or the Wealth Tax Act, 1957 to the State of Jammu and 
Kashmir on the ground that· the Act was relatable only and exclusively to 
Entry 97 of Ust I of Seventh Schedule to the Constitution of India and H 
569 
I 
570 
SUPREME COURT REPORTS 
[1993) 1 S.C.R. 
A 
since the said entry bad no application to the State of Jammu & Kashmir, 
the application of the Act to the said State was incompetent. The High 
Conrt allowed the 1!'fit petitions. The revenue filed the appeals by special 
leave. 
B 
The assessee-respondents contended tlmt the question as to the 
Entry to which the Wealth Tax Act is relatable was concluded by the 
decision or a seven Judge Bench or this Court* which laid down that the 
Act is covered by Entry 97. On mertts it was contended that the expression 
"capital value of the assets' in Entry 86 did uot signify the same thing as 
net weaith as defined In the Wealth Tax Act, and that for calculating the 
c 'capital value or assets' only the. incnmbrances charged on the assets 
could be deducted froru the market value orthe assets and not the general 
liabilities or the individnal owning the assets, which were to be taken into 
account ror the purpose or the Wealth Tax and that, as such, the Act was 
relatable to Entry 97 and not to Entry 86 or Ust I. 
D 
The revenue contended that the Act, so rar as it applied to non-
agricultural assets, was relatable to Entry 86 and not to Entry 97 or Ust 
I and, since the Act as applied to Jammu and Kashmir did not take In 
agricultural lands/assets, section 1(2) of the Act extending the application 
of the Act to the State of Jammu & Kashmir could not be said to be ultra 
E vires the powers or Parliament; that this Court in Dhillon 's case* did not 
finally determine which Entry covered the Wealth Tax Act as originally 
enacted as the Issue did not arise for decision in that case, and the 
controversy was confined to the validity of section 24 of the Finance Act, 
1969, amending the provisions of the Wealth Tax Act, 1957. 
F 
Allowing ~ 
appeals, this Court, 
HELD: 1.1 The Wealth Tax Act, 1957, was covered by Entry 86 or 
List I or the Constltntion, and its extension to the State of Jammu and 
G 
Kashmir was perfectly constitutional, The High Court was not right in 
holding otherwise. [5930) 
Bllllri Das v. Wealth Tax Officer, 56 l.T.R. 224; Sudhir Chandra 
Nawan v. Wealth Tax Officer, 69 l.T.R.. 897 and Assistant Commissioner of 
Urban Land Tin; Madras v. Buckingham and Camatic Co. Ltd., 75 LT.R. 
H 603, .relied on. 
.•
*-
i-
...---
COMMISSIONER v. DR. KARAN SING~ 
571 
Karan Bahadur Chowakkaram Kaloth Mammad Keyi v. Wealth Tiu A 
Officer, 44 I.T.R. 277; Vysyaraju Badri Narayanamurthy v. Commissioner of 
Income Tax, Bihar and Orissa, 56 ITR 298 and Sri Krishna Rao L. Balekai 
v. Third Wealth Tax Officer, City Circle I, Bangalore, 48 l.T.R. 472, refen-ed 
to as approved. 
*Union of India v. H.S. Dhillon, (1972) 2 SCR 33, explained and B 
distinguished. 
-~ 
V. Padmanabha v. Dy. Tah
Excerpt shown. Read the full judgment & AI analysis in Lexace.