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TMI Blog1973 (1) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... y summarised. On January 23, 1968, the Wealth-tax Officer, Ward-A, Shillong, issued a notice under section 17 of the Act communicating to the Corporation that the net wealth of the Corporation chargeable to tax for the assessment year 1959-60 had escaped assessment, and requiring the Corporation to submit its return of wealth within 35 days of the receipt of the notice. That communication led to exchange of correspondence between the wealth-tax authorities and the officials of the Corporation wherein the former persistently contended that the Corporation was liable to pay wealth-tax while the latter vehemently maintained that the wealth-tax is payable only by an individual or a Hindu undivided family or a company and that since the Corporation did not fall within any of those categories it was immune from payment of the tax. The wealth-tax authorities having filled to convince the Corporation officials about the correctness of their stand, they ultimately sent a demand notice on 30th of March, 1968, to the principal officer of the Corporation claiming tax of Rs. 1,87,381, for the assessment year 1959-60. It was suggested to the Corporation simultaneously that if it approached the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Corporation is not an "individual" within the meaning of section 3 of the Act and consequently not liable to pay wealth-tax. In the context of the stand of the parties' counsel, the fate of this writ petition hangs by answer to the question whether the Corporation is an "individual" contemplated by section 3 of the Act. To be sure, the expression "individual" is not defined in the Act. However, it is manifest that Parliament was conversant with such an expression inasmuch as it had been used in sections 3 and 16 of the Indian Income-tax Act, 1922, which was in force at the time the Wealth-tax Act was placed on the statute book of the country in 1957. Again, in item 86, List I, Schedule VII, of the Constitution of India, the expression "individual" had also been used. That item reads : " Taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies ; taxes on the capital of companies." Therefore, Parliament must be imputed with the knowledge of the meaning and connotation of the expression "individual" used in the Income-tax Act and the Constitution of India when it adopted the same expression in section 3 of the Wealth-tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndirectly, otherwise than for adequate consideration or in connection with an agreement to live apart, or (ii) by a minor child, not being a married daughter of such individual, to whom such assets have been transferred by the individual, directly or indirectly otherwise than for adequate consideration, or (iii) by a person or association of persons to whom such assets have been transferred by the individual otherwise than for adequate consideration. for the immediate or deferred benefit of the individual his or her spouse or minor child (not being a married daughter) or both, or (iv) by a person or association of persons to whom such assets have been transferred by the individual otherwise than under an irrevocable transfer, whether the assets referred to in any of the sub-clauses aforesaid are held in the form in which they were transferred or otherwise : Provided that where the transfer of such assets or any part thereof is either chargeable to gift-tax under the Gift-tax Act, 1958 (18 of 1958), or is not chargeable under section 5 of that Act, for any assessment year commencing after the 31st day of March, 1964, the value of such assets or part thereof, as the case ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticulars as may be required by the notice) the net wealth of such person as on the valuation date mentioned in the notice. (3) The Wealth-tax Officer may, if he is satisfied that it is necessary so to do, extend the date for the delivery of the return under this section. " 15. Return after due date and amendment of return.- If any person has not furnished a return within the time allowed under section 14, or having furnished a return under that section discovers any omission or a wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment is made. Sections 4 and 6 form part of Chapter II which bears the heading "Charge of wealth-tax and assets subject to such charge" while sections 14 and 15 fall under Chapter IV which bears the heading "Assessment". Section 4(1) undoubtedly uses the expression "an individual" in the opening part of it and then refers to "the purpose of such individual" in clause (a)(i), to "a minor child" in clause (a)(ii), and to " the value of his interest " in respect of a partner in clause (b) of it. The point that arises for determination at this stage is whether reference in section 4(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of any person or association of persons as arises from assets transferred otherwise than for adequate consideration to the person or association by such individual for the benefit of his wife or a minor child or both." The point that was debated before the Supreme Court in Sodra Devi's case was whether the expression "any individual" used in the opening words of section 16(3) contemplated both male and female of the human species or it referred only to the male of the species. The Supreme Court held after elaborate discussion that the only intention of the legislature in enacting section 16(3) was to include the income derived by the wife or a minor child in the computation of the total income of the husband or the father, as the case, may be, for the purpose of assessment, and that the words "any individual" and "such individual" occurring in section 16(3) are restricted in their connotation to mean only the male of the species and not the female. While enunciating this interpretation of section 16(3) the Supreme Court very categorically laid down that the word "individual" used in the charging section 3 of the Income-tax Act encompasses both natural and juristic pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of any order passed under or in pursuance of this Act or any law relating to taxation of income or profits, or the Estate Duty Act, 1953 (34 of 1953), the Expenditure-tax Act, 1957 (29 of 1957), or the Gift-tax Act, 1958 (18 of 1958),-- (a) which is outstanding on the valuation date and is claimed by the assessee in appeal, revision or other proceeding as not being payable by him, or (b) which, although not claimed by the assessee as not being payable by him, is nevertheless outstanding for a period of more than twelve months on the valuation date." The word "assessee" used in clause (m) is also defined in the Act, vide clause (c) of section 2, to mean a person by whom wealth-tax or any other sum of money is payable under the Act. And clause (42) of section 3 of the General Clauses Act, 1897, states that "person" shall include a company or association or body of individuals, whether incorporated or not. It is manifest that sections 4 and 6 have relevancy for only determining the net wealth of an "individual" of the description given in the said sections. Assuming that those two sections do not cover the case of corporations in the background of their peculiar phraseology, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als" used in section 3 of the Act. If the corporations were to be excluded from the operation of the Act only for the reason of grammatical lapse noticed in the 2 sections, another two varieties of assessees may well claim exemption from the liability to pay the wealth-tax, they being Hindu undivided families and companies in respect of which the pronouns "he", "his" and "him" are never used. Therefore, the argument raised by Shri Choudhury has to be negatived. Another argument pressed into service by Shri Choudhury is founded on the definition of the expession "company" given in clause (h) of section 2 of the Act. The definition, as at present, reads as follows: "(h) 'company' means a company as defined in section 3 of the Companies Act, 1956 (1 of 1956), and includes- (i) a company within the meaning of any law in force in the State of Jammu and Kashmir relating to companies ; (ii) a company incorporated outside India which has a place of business in India ; (iia) a corporation established by or under a Central, Provincial or State Act, which is declared by the Central Government, by general or special order, to be a company for the purposes of this Act ; and (iii) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporation established by or under a Central, State or Provincial Act as a 'company' for the purposes of the Wealth-tax Act. The object of the proposed amendment is to secure that any statutory corporation which is declared by the Central Government to be a company will be subject to wealth-tax for assessment years up to and Including the assessment year 1959-60 at the lower rate of wealth-tax applicable to companies, and exempted from wealth-tax for subsequent assessment years, in the same manner as companies formed and registered under the Companies Act, 1956." This note is self explanatory and so we need not elaborate on it. Suffice it to say that the language of the note clearly indicates that Parliament had inserted sub-clause (iia) in the definition of company to confer certain benefits on corporations rather than to impose any burden on them to which they were not previously subject. Therefore, we reject the argument canvassed by Shri Choudhury on the authority of the amended definition of the expression "company". The point at issue is not res integra. We have a Full Bench decision of the Kerala High Court in the case of Kerala Financial Corporation v. Wealth-tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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