LexSETH BANARSI DAS ETC. versus WEALTH TAX OFFICER, SPECIAL CIRCLE MEERUT, ETC.
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A B c D E F G H SETH BANARSI DAS ETC. v. WEALTH TAX OFFICER, SPECIAL CffiCLE MEERUT, ETC. December 8, 1964 [P. B. GAJENDRAGADKAR, C.J., M. HlDAYATULLAH, J. c. SHAH, S. M. SrKRI AND R. S. BACHAWAT, JJ.] Wealth-tax Act, 1957 (No. 27 of 1957). s. 3-Ilindu undivided fami- lies made chargeable to wealth tax-Section. whether ultra Vires-Consti- tution of lnd.'a, Seven!li Schedule, List I, Emry 86. The appellants who were Hindu undivided families challenged the levy of wealth tax on them on the ground that s. 3 of the Wealth-lax Act, 1957, in so far as it brought to charge l!i.Ildu undivided fan1ilies \\'as ultra vires being beyond the terms of Entry 86 in List I. Their writ peti- tion> before the High Court ha\·ing been rejected, but a certificate of fitness having been granted, they appealed to the Supreme Court. The contentions urged by the appellants were : (I) Hindu undivided families were not mentioned as possible as.sessees in Entry 86 and groups of individuals were not covered by the wor<l 'individuals' used therein. (2) Individuals constituting a Hindu undivided family could not be sub- jected to the tax because the coparceners are a fluctuating body and their shares in i:he capital assets of the family are liable to increase or decrease and cannot be definitely predicated for the accounting year as a whole unless partition is made. (3) Entry 86 had to be read in a restrictive manner because unlike Entry 82 it •pecified the a~se&1able entities, and by separately referring to companies it introduced a limitation on the deno!a- tion of the \\'Ord 'individuals'. ( 4) In income-tax legislation a distinction hatl alway3 been maintained between indiYiduals and Hindu undivided families and the same must be deemed to have been observed in framing Entry 86. HELD : The impugned section was valid because Parliament was compe- tent to legislate in respect of Hindu undi,·ided families under Entry 86. (i) The wo'd 'individuals' in Entry 86 takes in its sweep groups of individuals like Hindu undivided families. The Constitution-makers were fully aware that the Hindu citizens of the country normally form Hindu undivided famili"' and if the object was to levy ta~es on the capital value of assets it is inconceiYable that the word 'indiv[duals' 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. [364 a,cJ Case-law referred to. Commissioner of Income-tax, Madhya Pradesh & Bhopal v. Sodra Devi; Damayanti Sahni v. Commissioner of Income-lax, 32 I.T.R. 615, relied on. (ii) Groups of individuals the capital value of whose assets would be subjected to the payment of wealth tax, would naturn!ly be group• of individuals who form a unit and who own the said assets together. The fact that the rights of individuals constituting the group are liable to be decreased or increased doe• not make any difference when the question is whether the word 'individuals' is wide enough to include groups of indivi- duals. (361 F-GJ (iii) The Entries in the legislative Lists must be given the v.idest inter- 1:>retation; they must not be read in a narrow and restricted sense. [359 DJ 356 SUPREME COURT REPORTS (1965] 2 S.C.R. United Provinces v. Mst. Atiqa Begum and Ors., (1940] F.C.R. llO, relied on. There is nothing in the context of Entry 86 which can be said to intro- duce an element of restriction or limitation while interpreting the word 'individuals'. [360 A-El It is true that Entry 82 is couched in wider terms than Entry 86. This is natural because what Entry 82 purports to do is to recognise the legis- lative competence of Parliament to levy taxes on income, the only limita- tion being that the income must be other than agricultural income. Since Entry 86 refers to taxes on the capital value of assets, the Constitution- makers must have thought that it was necessary to specify whose assets should be subject to the taxes contemplated by the Entry. Each Entry has to be independently interpreted, and a restrictive interpretation of En.try 86 would not be justified because of the words of Entry 82. [360 D-E] Nor would a restrictive interpretation of the word 'individuals' be justi- fied on the ground that companies had not been included within that term in the Entry. Since it was intended to tax the capital of companies it was thought desirable to specify companies as a matter of pre
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