Gurtu, J. - (1.) In this petition we are concerned with the vires of the Wealth Tax Act (Act XXVII of 1957) so far as it relates to the levy of wealth tax on Hindu undivided families. The petitioner claims that Section 3 of the Wealth Tax Act is ultra vires of the Union Parliament in so far as it authorised the levy of wealth tax on the net wealth of a Hindu undivided family.
(2.) By Section 3 of the Act there is to be charged for every financial 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. The petitioner's case is that to the extent the Union Parliament has provided for the levy of wealth tax on Hindu undivided families as units the legislation is beyond its power and this contention is supported with reference to the language of entry No. 86 in List 1 of the 7th Schedule to the Constitution of India. That entry is in the following words :- "Taxes on the Capital value of the assets, exclusive of the agricultural land, of individuals and companies; tax on the caPital of companies." The contention is that this entry only empowers legislation for the imposition of wealth tax on individuals and companies but that the entry does not empower legislation imposing a tax on Hindu undivided family wealth. The contention is that a Hindu undivided family is not an individual nor a collection of indiviuals but that it stands on its own footing and that this is recognised both by Hindu law and by legislative Practice relating to taxation and that, therefore, the legislative field given to entry No. 86 does not cover Hindu undivided family wealth but covers only that of individuals and companies. It is contended that a Hindu undivided family is more in the nature of a corporation and is not in the nature of collection of individuals. It is contended that in a Hindu undivided family there is a community of interest and a unity of possession between all the members of the family and until partition takes place there is common enjoyment and common possession of the Property and that a Hindu undivided family, therefore, is not in substance a collection of individuals. It is contended that for this reason it is treated in taxation legislation as being distinguishable from either an individual or an association of individuals or persons. A reference has been invited to Section 3 of the Income-tax Act which charges to income-tax the total income of the previous year of every individual Hindu undivided family, company and local authority and of every firm and other associations of persons or the partners of the firm or the members of the association individually. It is contended that in the Finance Act of successive years this distinction between an individual, a person and a Hindu undivided family is clearly maintained and there is difference both in rates of taxation and in exemption based on the difference. It is further contended that the distinction between "individual" and a "Hindu undivided family" is also maintained in the Business Profits Tax Act, 1947 and, that therefore, there was a well established legislative practice whereunder a Hindu undivided family was placed upon a footing of its own before the coming into force of the Constitution of India. Therefore, it is contended that if entry No. 86 was meant to cover a field of taxation of the capital value of the assets so far as Hindu undivided families were concerned then the entry would have expressly contained the words "Hindu undivided family".
(3.) There can be no gainsaying that the Hindu undivided family is a Peculiar institution. The interests of the members of a Hindu undivided family in the joint property are fluctuating and the interests of one member of the family impinges upon the interest of the other. Even an unborn person "en ventre sa mere" acquires a right under Hindu law. The extent of the powers of management which vests in the head of the family is controlled and also varies with the particular relationship, of the person who is the head of the joint family, with other members. That power of alienation by the Karta extends not only to alienating the share of the karta but the power extends also subject to limitation to alienating the entire joint family Property. Though the joint Hindu family is not a corporation, it is difficult to say that it is in substance a mere collection of individuals. The individuals who compose a joint Hindu family cannot be considered to be separate juridical entities nor can a joint Hindu family be considered to be a corporate juridical entity, even though it can sue or can be sued in the joint family name and property held by it can be conveyed in its Joint character by the manager or father acting within the scope of their authority. The joint Hindu family is a peculiarity of Hindu society and it cannot be put into the framework of any of the well-known juridical concepts, namely, individual person or corporation. It seems to me, therefore, that there is substance in the contention that the field of entry 86 does not cover the Hindu undivided family because it is confined to individuals and companies. It is also, I think, correct to say that in taxation legislation Prior (and subsequent) to the Constitution of India a Hindu undivided family has been separately treated and provision has been made both in the Income-tax Act and Business Profits Tax Act and in the different Finance Acts to charge a joint Hindu family on its own footing and it has been made liable to tax as a Hindu undivided family, expressly so designated.;