2016 (12) TMI 399 - HC - Wealth-tax

Chargeability of interest from the legal representative of the deceased assessee - deceased assessee having not filed his return within prescribed time and in his life time - Held that - It is settled law that a fiscal statute has to be strictly construed. It is the plain language of the provision, which has to be preferred and specially where the language is plain and is capable of one definite meaning, strict interpretation is to be given, there is no rule for intendment. Purposive interpretation can be given only when there is some ambiguity in the language of the statutory provision to read the statute, in any other way would lead to absurd results. Having heard learned counsel for both the sides & having perused the materials available on record and case laws cited before us, we are of the opinion that the reasoning adopted in the decisions of the Allahabad High Court in Rameshwar Prasad Versus Commissioner Of Wealth-Tax 1980 (3) TMI 78 - ALLAHABAD High Court and Ved Prakash Narang Versus Commissioner Of Wealth-Tax 1987 (11) TMI 41 - ALLAHABAD High Court insofar as they interpreted the liability of a legal representative is correct, and even otherwise, we hold that the interest liability under Section 17 B of the Act cannot be fastened on a legal representative just like that. - Decided in favour of assessee

Summary

Issues:
Interpretation of liability of legal representative for interest under Wealth Tax Act, 1957.

Analysis:
The case involved an appeal under Section 27-A of the Wealth Tax Act, 1957 against an order dated 25.8.2006 of the Income Tax Appellate Tribunal for the Assessment Year, 1996-1997. The central question addressed by the court was whether interest could be charged from the legal representative of a deceased assessee who did not file the return within the prescribed time during his lifetime. The deceased individual had passed away without filing the return for the assessment year in question. Re-assessment proceedings were initiated posthumously under the provisions of Section 17(B) of the Wealth Tax Act. The Commissioner (Appeals) and the Tribunal had held that the legal representative was liable to pay interest on the assessed amount. The appellant relied on previous court decisions to argue against the imposition of interest on the legal representative.

The court examined the relevant sections of the Wealth Tax Act, particularly Sections 17, 17B, and 19, which deal with the liabilities of legal representatives. Section 19(1) states that the legal representative shall be liable to pay the wealth tax assessed as payable by the deceased person. However, the court noted that in the present case, no return had been filed, and thus, no wealth tax had been determined. The appellant argued that under Section 19(2), the only liability on a legal representative is the payment of wealth tax, and no other sum including interest. The court agreed with this interpretation, emphasizing that the legislative intent was not to impose additional liabilities on legal representatives in cases where no return had been filed by the original taxpayer.

The court rejected the department's argument that Section 17(B) should be included in the proviso to Section 19(3) of the Act. It emphasized the need for strict interpretation of taxing statutes and cited relevant case law to support its position. Ultimately, the court held that the interest liability under Section 17(B) of the Act cannot be imposed on a legal representative without clear legislative intent to do so. Therefore, the question of law was answered in favor of the assessee, and the appeals were allowed with no costs.