SH. MOHAMMAD ALI KHAN AND 9RS. versus THE COMMISSIONER OF WEALTH TAX, NEW DELHI

Citation: [1997] 2 S.C.R. 658 · Decided: 04-03-1997 · Supreme Court of India · Bench: S.C. AGRAWAL

Judgment (excerpt)

A 
SH. MOHAMMAD ALI KHAN AND 9RS. 
v. 
THE COMMISSIONER OF WEALTH TAX, NEW DELHI 
... 
MARCH 4, 1997 
~ 
B 
(S.C. AGRAWAL AND G.B. PATTANAIK, JJ.] 
Wealth Tax Act, 1957-Section S(l)(iii)-Net Wealth-Palace declared 
as official ·residence of Ruler, by Central Govemment under Merged States 
(Taxation Concessions) Order, 1949-Part of the Palace let out 011 rent-Ex-
c emption claimed in respect of whole Palace-Held, assessee would be entitled 
to exemption only in respect of portion actually occupied by him. 
--
Interpretation of Statutes--Taxi11g Statutes--Strict letter of law to be 
followed .... 
D 
Words and Pharase~'Anyone building"-Mea11i11g of in the context of 
Wealth TaiAct, 1957-:-Section 5(1)(iii). 
Khas Bagh palace owned by the appellant-assessee was declared as 
his official residence by the Central Government under paragraph· 13 of 
E the Merged States (Taxation Concessions) Order 1949. The assessee 
during the assessment year 1961-62 claimed exemption of the aforesaid 
Palace in computation of wealth under Section 5(1)(iii) of the Wealth Tax 
Act, 1957. The Wealth Tax Officer concluded that as the Palace consisted 
of many buildings, an exemption could be granted in respect of the portion 
in occupation of the Ruler. 
F 
The assessee appealed to the Assistant Commissioner. Unable to , 
succeed, he also made a second appeal before the Tribunal. The Tribunal 
confirmed the order. On an application the Tribunal referred to the High 
Court, the question, as to whether on the facts and circumstances of the 
G case the Tribunal was justified in holding that the buildings of the Khas 
I 
Bagh Palace, let out on rent by the assessee, were not in his occupation 
within the meaning of Section 5(1)(iii) of the Wealth Tax Act, 1957. 
The High Court came to the conclusion that a restrictive interpreta-
-;· 
tion would disentitle the assessee as all buildings of the said Palace were 
H not it the occupation of the Ruler, and a liberal interpretation would only 
658 
MOHD.ALIKHANv. COMMR.OFWEALTHTAX 
659 
entitle him to the extent of the occupied portions; therefore a liberal A 
interpretation should be preferred. The High Court answered the question 
»ii' 
. in favour of the Revenue. 
In appeal to this Court it was contended on behalf of the assessee 
that the expression "anyone building" in Section S(l)(iii) of the Act is not 
to .be interpreted by making a further dissection to import int!) it the B 
portion of the building or whole of the building and that while interpreting 
the taxing statute it is not permissible for the court to look to the policy 
behind the statute, but instead give a plain meaning to the words. 
Dismissing the appeal, the Court 
HELD : 1.1. The intention of the legislature is primarily to be 
gathered from the language used, which means attention should be paid 
to what has been said as also to what has not been said. (663-8) 
c 
1.2. It is a cardinal principle of construction that the words of a D 
statute are first understood in their natural, ordinary or popular sense 
and phrases and sentences are construed according to their grammatical 
meaning unless that leads to some absurdity or unless there is something 
in the context or in the object of the statute to suggest the contrary. (663-B] 
1.3. A construction which requires for its support addition or sub· E 
stitution of words or which results in rejection of words as meaningless 
has to be avoided. Similarly it is of universal application that effort should 
be made to give meaning to each and every word used by the legislature. 
(663-C] 
J.K Cotton Weaving and Spinning Company Ltd. v. The State of U.P., 
F 
(1961) 3 SCR 185, relied on. 
2.1. In a taxing statute, regard must be given to the strict letter of 
the law and if !he Revenue satisfies the Court that the case falls strictly in 
the provisions of law, the subject can be taxed. (663-F] 
2.2. A reading of Section S(l)(iii) of the Wealth Tax Act Would reveal 
that only the building or the part of the building in occupation of the Ruler, 
declared as the official residence by the Central Government will not be 
included in tlie net wealth of the assessee. (663-F] 
G 
2.3. The expression, "in the occupation of the Ruler" would become H 
660 
SUPREME COURT REPORTS 
[1997] 2 S.C.R. 
A redundant and those words in the provision would not have its play when 
a substantial portion of the building declared as the official residence is 
given on rent, even if a portion of the said building 

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