Decided on November 24,1967

Nathuram Srinandanlal Appellant


A.P.SEN, J. - (1.) UNDER section 27 (1) of the Wealth -tax Act, 1957, (XXVII of 1957) the Income -tax Appellate Tribunal. Bombay, has, at the instance of the assessee, referred to this Court for its opinion, the following question of law: "Whether the Wealth -tax Act in so far as it levies tax on Hindu undivided family is ultra vires the powers of Parliament and is it discriminatory in imposing a higher burden of tax on members of the Hindu undivided family 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) LR 74 IA 50, namely, the Act contained effective machinery for the review of the assessment on 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. Venkatranga Vs. State of Madras (1966) 60 ITR 112. The law now 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 questions 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. Wealth -tax Officer (1965) 56 ITR 224. 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 Hindu undivided family, and that section 3 of the Wealth -tax Act, in so far as it levies a charge of wealth tax in respect of the net wealth of a Hindu undivided family, 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 a group of persons constituting themselves a Hindu undivided family 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. Wealth tax Officer, Calicut (1962) 44 ITR 277. We are unable to accept the contention.;

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