SINGHAI NATHURAM SHRINANDANLAL Vs. COMMISSIONER OF WEALTH TAX
LAWS(MPH)-1967-11-5
HIGH COURT OF MADHYA PRADESH
Decided on November 29,1967

SINGHAI NATHURAM SHRINANDANLAL Appellant
VERSUS
COMMISSIONER OF WEALTH TAX Respondents

JUDGEMENT

- (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 further. 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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