1972 (1) TMI 4 - SC - Wealth-tax

whether a Jain undivided family is included in the expression Hindu undivided family within section 3 - Held yes - question referred is answered in favour of the revenue and against the assessee

Summary

Issues Involved:
1. Whether a Jain undivided family is included in the expression "Hindu undivided family" within section 3 of the Wealth-tax Act, 1957.
2. Whether the levy of wealth-tax on Hindu undivided family or joint family governed under Mitakshara school of Hindu law was beyond the legislative competence of Parliament and ultra vires the Constitution of India.
3. Whether the Wealth-tax Act, in so far as it purports to levy wealth-tax on Hindu undivided families, is void and inoperative as it offends article 14 of the Constitution of India.

Detailed Analysis:

1. Inclusion of Jain Undivided Family within "Hindu Undivided Family" under Section 3 of the Wealth-tax Act, 1957:
The primary issue was whether a Jain undivided family falls within the definition of "Hindu undivided family" as per Section 3 of the Wealth-tax Act, 1957. The Wealth-tax Officer assessed the family assets of the assessee in the status of a Hindu undivided family. The Appellate Tribunal, however, held that Jains were not Hindus and thus the expression "Hindu undivided family" did not cover a Jain family. The High Court supported this view, stating that Jains, not being Hindus in the generally accepted sense, could not form a Hindu undivided family. The Supreme Court, however, disagreed, stating that the term "Hindu undivided family" in the Wealth-tax Act includes Jain families. The Court noted that historically, Jains have been governed by Hindu law in the absence of specific customs or usages to the contrary. The legislative practice has been to treat Jains as included in the term "Hindu" in various statutory enactments. Therefore, the expression "Hindu undivided family" includes Jain undivided families.

2. Legislative Competence and Ultra Vires Nature of Wealth-tax on Hindu Undivided Families:
The second issue was whether the imposition of wealth-tax on Hindu undivided families was beyond the legislative competence of Parliament and ultra vires the Constitution of India. This issue was not pressed before the High Court, presumably due to the precedent set in Banarsi Dass v. Wealth-tax Officer, Special Circle, Meerut, which upheld the legislative competence of Parliament to levy such a tax.

3. Violation of Article 14 of the Constitution of India:
The third issue was whether the Wealth-tax Act, in so far as it levies wealth-tax on Hindu undivided families, violates Article 14 of the Constitution of India, which guarantees equality before the law. Similar to the second issue, this contention was not pursued before the High Court, likely due to the established legal position that the classification of Hindu undivided families for tax purposes does not offend Article 14.

Conclusion:
The Supreme Court allowed the appeal, holding that the expression "Hindu undivided family" in the Wealth-tax Act includes Jain undivided families. The Court emphasized that legislative and judicial practices have consistently treated Jains as part of the broader Hindu category for legal purposes, including taxation. Consequently, the assessment made on the Jain family as a Hindu undivided family was upheld. The other issues regarding legislative competence and violation of Article 14 were not addressed, as they were not pressed before the High Court. The appeal by certificate (C.A No. 1686/68) was dismissed due to lack of reasons.