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TMI Blog1965 (3) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... cature at Bombay under section 27(2) of the Wealth-tax Act, 1957. 2. Laxmidas Mulraj Khatau, (since dead), settled certain shares of the market value of ₹ 5,98,575 by a deed dated 18th January, 1948 (copy whereof is annexed hereto as annexure A and forms part of the case), with himself, his wife, Bai Jayabai, his son, Abhay, and Chandrakant Mulraj as trustees. Under this trust, Abhay and Bai Jayabai are to have life interest to the extent of 3/4th and 1/4th of the net income from the trust properties, after Abhay the whole income to his widow for the purposes of maintenance, education and other expenses of herself and her children, the rest and remainder vesting in the children of Abhay per stirpes, after the demise of the last l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent as it would be leviable upon and recoverable from the persons on whose behalf the assets are held. Section 21(4) provides the machinery for assessment where the shares of the persons on whose behalf any such assets are held are indeterminate or unknown. In such a case, the Wealth-tax Officer is authorised to levy and recover wealth-tax from the court of wards, administrator-general, official trustee, receiver, manager or any other person as if the persons on whose behalf the assets are held were an individual for the purposes of this Act. In this case the Wealth-tax Officer has resorted to the machinery provided by section 21(4) in making the assessments vis-a-vis the remainder estate. It is accepted that the shares of the persons i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of persons while section 41 which is a machinery section, provides for settling the details of the mode of assessment once the chargeability is established. In the wealth-tax legislation there is a significant and a crucial omission of the category of association of persons and, therefore, with such a clear omission, a chargeability on an association of persons cannot be established. In that light, the assessment is bad and cannot be sustained and therefore should be set aside. 6. The Tribunal dismissed these appeals in paragraph 3 of its order reproduced below: The first contention in these appeals is that the assessments on an association of persons is invalid. This contention is easily repelled. The assessments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 3, of the Wealth-tax Act provides that subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from 1st April, 1957, a tax (hereinafter referred to as the '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 is argued on behalf of the assessee that it is only an individual, Hindu undivided family or a company that can be taxed to wealth-tax, and neither a group of individuals or an association of persons. The assessee in the present case, it is contended, is not an individual, but a group of persons or an association of persons, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court after having referred to its decision in Sodra Devi's case, [1957] 32 I.T.R. 615; [1958] S.C.R. 1 have observed again that though the word individual is narrower than the word assessee , it does not mean only a human being, but is wide enough to include a group of persons forming a unit. Mr. Palkhivala, learned counsel appearing for the assessee, has sought to argue that a comparison of section 3 of the Indian Income-tax Act with section 3 of the Wealth-tax Act will show that while under section 3 of the former Act, individuals, Hindu undivided family, company, local authority and every firm and other associations of persons or partners of the firm are brought within the ambit of the charging section, only three of them, viz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded family, which is an association of persons, implies that other associations of persons are intended to be excluded. We do not think that the argument is sustainable. Although a Hindu undivided family consists of a number of persons it is not an association of persons or a firm or a company which is created by the act of parties. It consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. Its fundamental principle is the tie of sapindaship arising by birth, marriage or adoption. The Hindu undivided family with all its incidents is purely a creature of Hindu law and cannot be created by act of parties. It is because of the peculiar characteristic of the institution which distingui ..... X X X X Extracts X X X X X X X X Extracts X X X X
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