LexSUDHIR CHANDRA NAWN versus WEALTH-TAX OFFICER, CALCUTTA & ORS.
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SUDHIR CHANDRA NAWN
v.
WEALTH-TAX OH•'JCER, CALCUTTA & ORS.
April 23, 1968
[J. C. SHAH, V. RAMASWAMI, V. BHARGAYA, G. K. MITTER AND
C. A. VAIDIALINGAM, JJ.]
Wea/1h Tax. Act, 1957, s. 3-Va/idiry and scope of-Co11stitution of
India, Art. 246 Cls. (I) & (3); 1th Schedule Entry 86 List I and Entry
49 List II-scope of-If Parliament competent to legislate to levy
wt.alth-tax 011 assets including land afJd bui/dingr.
The petitioner moved under Art. 32 for a writ to quash an order of
as.essmCJJt and penalty and notices of demand for recovery of tax for
tho years 1959-60, 1960-61 and 1961~2 under the Wealth Tax Act, 1957.
lt was contended, inter alia, on his behalf that (i) Wealth tax is charge.
able only on the accretion of wealth during the financial year; (ii) Parlia-
ment could not have iMended that the same assets should continue to be
charged to lax year after year; (iii) since the expression "net wealth" in
s. 3 mcludes
non-a~ricultural lands and buildings of an asscssee
and
power to levy tax on lands and buildings is reserved to the State Legisla-
nrres by Entry 49 List II of the 7th Schedule to the Constitution, Parliament
was incompetent to Ic~i;late for the levy of wealth tax on the capital
value of a~scts which indude non-ai::ricultural lands and buildings; and
(iv) s. 7(1) of the Aot was ultra vires.
HELD : That (i) The charge imposed by s. 3 ·is clearly on the "net
wealth on the corresponding· valuation date" and not on the increase in
the wealth of the assessce, or accretion to the wealth of the assessee since
the last valuation date. [110 C-D)
(ii) There is no constitutional prohibition against Parliament levying
tax in respect of the same subject-matter or taxing event in successive
ass=mcnt periods. [110 DI
(iii) The tax· which is imposed by entry 86 List I is not directly a tax
on lands and buildings. It is a tax imposed on the capital value of the
assets of individuals and companies on the valuation date. Wealth-tax is
not imposed on the components of the assets of the
a~;essee but on the
total assets which he owns after taking hi• liabilities into account. On
the other hand, entry 49 List II of the Seventh Schedule contemplates the
levy of tax on lands and buildings or both as units.
It is normallv not
concerned with the division of interest or ownership in the units of lands
or buildings which arc brought to tax. [110 G-H; 111 C-D]
Tax on lands and buildings is directly imposed on lands and build-
ings, and bears a definite relation to ;i, while tax on the capital value of
assets bears no definable relation to lands and buildings which may form
a component of the total assets of the asscssee. [111 DJ
Ra/la Ram v. The Pr01•i11ce of East
Punjab, [1948) F.C.R. 207:
referred to.
A
B
c
D
E
F
G
Even assuming that there is some overlapping between the two entries.
H
the Parliament had power to legislate in respect of levy of wealth-tax
in respect of the lands. and buildings which may form part of the assets
of an assessee. [112 ~El
•
--
A
B
c
D
E
F
G
H
S. C. NAWN V. WEALTH-TAX OFFICER (Shah, J.)
109
In re : The Central Provinces and Berar Act No. XIV of 1938. [1939]
F.C.R. 18, 49; referred to.
Exclusive power of the State Legislature under clause { 3) of Art.
246 has to be exercised subject to cl. ( 1) i.e., the exclusive power which
the Parliament has in respect of the matters enumerated in List I.
Assuming that there is a conflict between entry 96 List I and entry 49 List
II, which is not capable of reconciliation, the l)ower of Parliament to
lei:islate in respect of a matter which is exclusively entrusted to it must
supersede pro tanto the exercise of power of the State Legislature. [113 D--
EJ
Khan Bahadur Chowakkara11 Kaloth
Mammad Kevi v. Wealth-tax
Officer, Calicut, 44 I.T.R. 277; Vyzyaraju
Badri Narayanamurt/iy . v.
Commissioner of Wealth-tax, Bihar & Orissa, 56 I.T.R. 298;· and Sri
Krishna Rao L. Balckai v. Third Wealth-tax Officer, A.I.R.
1963 Mys.
111; referred to.
Observations of Jagdish Sahai, J. in Oudh Sugar Mills Ltd., Hargaon
v. State of U.P. and another, A.I.R. 1960 All. 136; disapproved.
(iv) Section 7(1) of the Wealth-tax Act is not ultra vires. Section 7
only directs that the valuation of any asset other than cash has to be
made subject to the rules.
Jit does not contemplate that there shall be
rules before an asset can be valued. Failure to make rules for valuation ·
of a type of asset cannot therExcerpt shown. Read the full judgment & AI analysis in Lexace.