Decided on January 12,1973



Bindra, J. - (1.) THE short though somewhat vexing question that falls for determination in this writ petition filed under Articles 226 and 227 of the Constitution of India by the Assam Financial Corporation, Shillong, hereinafter briefly referred to as the Corporation, is about the exact legal connotation of the expression "individual" used in Section 3 of the Wealth-tax Act, 1957, hereinafter called "the Act".
(2.) THE facts that have led to the making of the present petition can be briefly summarised. On January 23, 1968, the Wealth-tax Officer, Ward-A, Shillong, issued a notice under Section 17 of the Act communicating to the Corporation that the net wealth of the Corporation chargeable to tax for the assessment year 1959-60 had escaped assessment and requiring the Corporation to submit its return of wealth within 35 days of the receipt of the notice. That communication led to exchange of correspondence between the wealth-tax authorities and the officials of the Corporation wherein the former persistently contended that the Corporation was liable to pay wealth-tax while the latter vehemently maintained that the wealth-tax is payable only by an individual or a Hindu undivided family or a company and that since the Corporation did not fall within any of those categories it was immune from payment of the tax. THE wealth-tax authorities having failed to convince the Corporation officials about the correctness of their stand, they ultimately sent a demand notice on 30th of March, 1968, to the principal officer of the Corporation claiming tax of Rs. 1,87,381 for the assessment year 1959-60. It was suggested to the Corporation simultaneously that if it approached the appropriate authority for its being declared a company under the Act, the tax demand could be considerably scaled down. However, the Corporation neither paid the tax nor approached the competent authority, for declaring it as a company, and instead preferred an appeal against the assessment notified. THE Assistant Commissioner of Wealth-tax, with whom the appeal was filed, rejected the same by his order dated October 17, 1968. It is thereafter that the Corporation, having been left with no alternative, filed the instant petition claiming a writ of certiorari quashing the assessment order dated 30th of March, 1968. THE principal ground on which that relief was sought was that a statutory corporation is not liable to pay the wealth-tax since it is not covered by the expressions "individual", "Hindu undivided family" and "company", which alone, according to Section 3 of the Act, are chargeable to wealth-tax. In their counter-affidavit the respondents challenged the maintainability' of the writ petition on the score that the Corporation had not exhausted its remedies under the Act. In addition, the respondents joined issues with the Corporation on the point that it was not liable to pay wealth-tax in terms of the Act. At the time of the arguments in this court the contest between the parties' counsel centred around the point whether the Corporation is an "individual" within the meaning of such expression used in Section 3 of the Act and this is exactly the point on which they were in conflict before they entered the arena of the court Section 3 of the Act provides that, subject to the other provisions contained in the Act, there shall be charged for every assessment; year commencing on and from the 1st day of April, 1957, a tax (hereinafter referred to as "wealth-tax") in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule. It was not the contention of Shri J.P. Bhattacharjee, the learned counsel representing the respondents, that the Corporation answers the description of either "Hindu undivided family" or that of "company". He, however, asserted that the Corporation is an "individual" within the meaning of Section 3 of the Act and as such (sic) to pay the wealth-tax. Shri R.C. Choudhury, who appeared on behalf of the Corporation, submitted on the other hand that the Corporation is not an "individual" within the meaning of Section 3 of the Act and consequently not liable to pay wealth-tax. In the context of the stand of the parties' counsel, the fate of this writ petition thangs by answer to the question whether the Corporation is an "individual" contemplated by Section 3 of the Act.
(3.) TO be sure, the expression "individual" is not defined in the Act. However, it is manifest that Parliament was conversant with such an expression inasmuch as it had been used in Sections 3 and 16 of the Indian Income-tax Act, 1922, which was in force at the time the Wealth-tax Act was placed on the statute book of the country in 1957. Again, in item 86, List I, Schedule VII, of the Constitution of India, the expression "individual" had also been used. That item reads : "Taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies ; taxes on the capital of companies." Therefore, Parliament must be imputed with the knowledge of the meaning and connotation of the expression "individual" used in the Income-tax Act and the Constitution of India when it adopted the same expression in Section 3 of the Wealth-tax Act. The Supreme Court observed in the case of Commissioner of Income-tax v. Sodra Devi, 1958 SCR 1 which was decided on 17th of May, 1957, that though the word "individual" has not been defined in the Income-tax Act yet there is authority for the proposition that the word does not mean only a human being but is wide enough to include a group of persons forming a unit. The Supreme Court observed further that the word "individual" "includes a corporation created by a statute, e.g., a university or a bar council, or the trustees of a baronetcy trust incorporated by a Baronetcy Act". Shri Choudhury did not contend that the authority of this decision of the Supreme Court bearing on the interpretation of the expression "individual" used in Section 3 of the Indian Income-tax Act, 1922, has been doubted in any subsequent decision of the Supreme Court. As a matter of fact, the Supreme Court reaffirmed in Andhra Pradesh State Road Transport Corporation v. Income-tax Officer, 1964 7 SCR 17 that the State Road Transport Corporation in liable to pay income-tax as a corporation, and that could only be in its capacity as "individual", incorporations are not covered by any other "person" mentioned in charging Section 3 of the Income-tax Act. Again, the Supreme Court held in the case of Banarsi Dass v. Wealth-tax Officer, 1965 2 SCR 355 that the word "individual" in entry 86 of List I of Schedule VII to the Constitution takes within its sweep groups of individuals like Hindu undivided families. The only point which Shri Choudhury emphasised, however, in this court was that the expression "individual" used in the Wealth-tax Act must be interpreted in the context of the other provisions of that Act and that the interpretation placed on that expression as used in Section 3 of the Indian Income-tax Act, 1922, was not germane to the present case. This point raised by Shri Choudhury requires a little detailed examination.;

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