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Issues:
Validity of sections 2(ea)(i) and 2(ea)(ii) and 2(m) of the Wealth-tax Act post-amendment. Levy of tax on land and building within State Legislature's competence. Constitutional validity of tax on components of assets. Potential double taxation on land and building. Conflict between legislative entries regarding taxation on assets. Analysis: 1. Validity of Amended Sections: The petition challenges the amendments to sections 2(ea)(i) and 2(ea)(ii) and 2(m) of the Wealth-tax Act post the Finance Act, 1992. It contests the change in the treatment of debts owed in relation to assets for wealth tax calculation. The argument suggests that the amendments go beyond the original scheme of the Act, impacting the computation of "net wealth." 2. Levy on Land and Building: The petition raises concerns regarding the imposition of wealth tax on land and building, asserting that it falls under the exclusive legislative competence of State Legislature as per entry 49, List II, Schedule VII of the Constitution of India. The argument relies on judicial precedents to highlight that wealth tax should be on the total value of assets, not on individual components like land and building. 3. Tax on Components of Assets: The debate centers on whether wealth tax can be imposed on specific components of an assessee's assets or should only apply to the total value of assets. The petition argues that taxing selected assets individually, with corresponding debts, may encroach upon State Legislature's powers and result in potential double taxation on specific assets like land and building. 4. Constitutional Validity Concerns: The petition also raises constitutional validity issues, arguing that taxing land and building separately may violate fundamental rights by leading to double taxation on the same asset. It questions the legality of such individualized taxation on specific components of an assessee's assets. 5. Conflict Between Legislative Entries: The judgment delves into the distinction between legislative entries under List I and List II of the Seventh Schedule concerning taxation on assets. It emphasizes the difference in taxation principles between wealth tax based on total asset value and land/building tax based on specific units. The court highlights that the power to levy tax on land and building does not encroach upon Parliament's authority to tax on the capital value of assets. In conclusion, the judgment dismisses the writ petition, asserting that the amendments to the Wealth-tax Act are not ultra vires the Constitution. It upholds the Central Legislature's power to classify assets for wealth tax purposes and concludes that the amendments do not infringe upon the State Legislature's domain. The ruling emphasizes the distinction between taxation on total asset value and specific units like land and building, affirming the legality of the amendments in question.
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