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TMI Blog1964 (12) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... h-tax in respect of the net wealth of a Hindu undivided family at the specified rate, is valid. The respective appellants in these appeals who constitute Hindu undivided families were charged under section 3 and they challenged the validity of the said charge on the ground that the said section was ultra vires. The writ petitions filed by these appellants were heard by a Special Bench of the Allahabad High Court consisting of Gurtu, Upadhya and Jagdish Sahai JJ. Gurtu and Jagdish Sahai JJ. have rejected the appellants' contention and have upheld the validity of the impugned provision. According to Jagdish Sahai J. the impugned section is intra vires, because Parliament had legislative competence to enact the said provision under entry 86, List I of the Seventh Schedule to the Constitution. Gurtu J., who agreed with the said conclusion, however, sustained the impugned provision under entry 97 in List I read with article 248 of the Constitution. Upadhya J. held that neither of the said provisions conferred legislative competence on Parliament to enact the impugned provision, and so, he came to the conclusion that the said provision was ultra vires and the charge levied against the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I as well as those enumerated in Lists II and III. Since wealth-tax is a matter which is specifically enumerated in entry 86 of List I, entry 97 cannot be held to take in the said tax in respect of Hindu undivided families. In regard to article 248, the appellants' argument is that the said article must be read together with entry 97 in List I, and if wealth-tax in respect of the capital value of the assets of Hindu undivided families is outside both entry 86 and entry 97, the residuary power of legislation conferred on Parliament by article 248 cannot be invoked in respect of the tax imposed on the capital value of the assets of Hindu undivided families by the impugned provision. That is how the validity of the impugned provision has been challenged before us. On the other hand, the respondent, the Wealth-tax Officer, seeks to sustain the validity of the impugned provision primarily under entry 86 in List I. It is contended on his behalf that the word " individuals " used in entry 86 is wide enough to take within its sweep groups of individuals and, as such, Hindu undivided families fall within the scope of the area covered by entry 86. In the alternative, it is argued that entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court is determining the scope of the area covered by a particular entry, the court must interpret the relevant words in the entry in a natural way and give the said words the widest interpretation. What the entries purport to do is to describe the area of legislative competence of the different legislative bodies, and so, it would be unreasonable to approach the task of interpretation in a narrow or restrictive manner. The appellants no doubt contrast entry 86 with entry 82 and contend that the said contrast brings out an element of limitation or restriction which should be imported in construing entry 86. Entry 82 refers to taxes on income other than agricultural income. The argument is that the power to levy taxes on income is not conditioned by reference to individuals or companies ; it is an unlimited extensive power. In contrast with this entry, it is urged that limitation is introduced by entry 86, because it seeks to confer power to levy taxes on the capital value of the assets of individuals and companies. The assessees are indicated by this entry, and that itself introduces an element of limitation. The appellants attempt to place their case alternatively by emphasisin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for making any such assumption. In this connection, it is significant that on the appellants' case, the capital value of the assets of Hindu undivided families would never become the subject-matter of wealth-tax. Hindu undivided families, it is urged, are groups of individuals and, therefore, should be outside entry 86 and individuals who constitute such Hindu undivided families could not be subjected to the levy of the tax, because the body of coparceners who constitute such Hindu undivided families is a fluctuating body and their shares in the capital assets of their respective families are liable to increase or decrease and cannot be definitely predicated for the accounting year as a whole, unless partition is made. Prima facie, such a position appears to be plainly inconsistent with the scheme of entry 86 and it cannot be upheld unless the word " individuals " is reasonably incapable of including groups of individuals. It is true that when tax is levied on the capital value of the assets of Hindu undivided families, in a sense the assets of individual coparceners are aggregated, and on the aggregate value a tax is levied ; but how the taxes should be levied and at what r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to the charging section 4, refers to any income which a person enjoys as a member of a company, or of a firm, or of a Hindu undivided family, when the company, or the firm, or the family is liable to the tax. Basing themselves on the distinction which is made by the Income-tax Acts between an individual and a Hindu undivided family, the appellants contend that the word " individuals " should not be interpreted to include Hindu undivided family. Assuming that the legislative history in the matter of tax legislation supports the distinction between individuals and Hindu undivided families, we do not see how the said consideration can have a material bearing on the construction of the word " individuals " in entry 86. The tax legislation may, for convenience or other valid reasons, have made a distinction between individuals and Hindu undivided families ; but it would not be legitimate to suggest that the word " individuals " occurring in an organic document like the Constitution must necessarily receive the same construction. Take, for instance, the traditional concept of income as recognised by the tax law. It has been held by this court in Navinchandra Mafatlal v. Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which we have to ask ourselves is whether, on a fair and reasonable construction, the word " individuals " in the context of the entry can legitimately be narrowed down to individuals as such and not to include groups of individuals. If the object of making the entry is to enable Parliament to levy taxes on the capital value of the assets, how can it be said to be reasonable to introduced limitation on the denotation of the word " individuals " and to say that taxes could not be levied on the capital value of the assets which belong to groups of individuals. If the individuals constitute themselves into a group and such group owns capital assets, it is not easy to understand why the value of such assets should not be included within the legislative field covered by entry 86. The Constitution-makers were fully aware that the Hindu citizens of this country normally form Hindu undivided families and if the object was to levy taxes on the capital value of the assets, it is inconceivable that the word " individuals" was introduced in the entry with the object of excluding from its scope such a large and extensive area which would be covered by Hindu undivided families. We are, therefor ..... 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