SINGHAI NATHURAM SHRINANDANLAL Vs. COMMISSIONER OF WEALTH TAX
HIGH COURT OF MADHYA PRADESH
SINGHAI NATHURAM SHRINANDANLAL
COMMISSIONER OF WEALTH TAX
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(1.) UNDER S. 27(1) of the WT Act, 1957 (XXVII of 1957), the Tribunal, Bombay, has, at the instance of
the assessee, referred to this Court for its opinion the following question of law :
"Whether the WT Act insofar as it levies tax on HUF, is ultra vires the powers of Parliament and is it discriminatory in imposing a higher burden of tax on members of the HUF and consequently void and unenforceable ?"
The question referred is a composite one.
(2.) WHEN the case was stated, the Tribunal presumably acted on the dictum laid down by the Judicial Committee of the Privy Council in Raleigh Investment Co. Ltd. vs. Governor -General in
Council (1947) 15 ITR 332 (PC) : LR 74 IA 50 namely, the Act contained effective machinery for
the review of the assessment on the grounds of law, including the question whether a provision of
the Act was ultra vires. Their Lordships of the Supreme Court have, however, departed from that
view in K.S. Venkataraman & Co. (P.) Ltd. vs. State of Madras (1966) 60 ITR 112 (SC). The law is
that a Tribunal, which is a creature of a statute, cannot question the vires of the provisions under
which it functions. We, therefore, hold the reference to be incompetent. Nevertheless, we would
like to state our answer to the question referred, as the parties may like to pursue the matter
With regard to the first aspect, the legislative competency of the Parliament to enact the measure is now unassailable, in view of the recent pronouncement of their Lordships of the
Supreme Court in Banarsi Dass vs. WTO, Special Circle (1965) 56 ITR 224 (SC) : TC65R.359. Their
Lordships have held that the expression "individual" in Entry 86 of List I of the Seventh Schedule to
the Constitution, is comprehensive enough to include the body of individuals known as the HUF and
that S. 3 of the WT Act, in so far as it levies a charge of wealth -tax in respect of the net wealth of
the HUF, is intra vires the Parliament because it was competent to legislate on the subject. We
would, accordingly, answer the question.
(3.) ON the second aspect, learned counsel appearing for the assessee contends that the charging section suffers from the vice of discrimination as it discriminates between the group of persons
constituting themselves an HUF by imposing on them a higher burden of tax by treating them as a
unit of taxation and other groups of persons inviting a lower incidence of tax, and for this
submission reliance is placed on a decision of the Kerala High Court in Khan Bahadur C.K. Mammed
Keyi vs. WTO (1962) 44 ITR 277 (Ker) : TC65R.347. We are unable to accept the contention.;
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