Law:

Section:

Section 3 of the Wealth tax Act, 1957 - Charge of tax - Whether expression 'individual' in entry No. 86 includes a HUF - Held, yes - Whether, therefore, it is within competence of Union Legislature to impose wealth-tax on HUF as a unit of taxation and legislation in section 3 affecting an HUF cannot be struck down on score of vires - Held, yes Interpretation of statute - Cardinal rule of interpretation FACTS The petitioner, who was the karta of an HUF and was being assessed to wealth tax in the status of HUF was, by notice issued in exercise of powers conferred by section 14(2) called upon by the WTO of furnish a return of the net wealth of his undivided Hindu Family. The petitioner claimed that the notice was invalid because section 3 was ultra vires the Union Parliament in so far as that section authorizes the levy of wealth tax on the net wealth of an HUF. HELD (PER SHAH, J.) An HUF in essence is an association of male Hindus lineally descended in the male line from a common ancestor and includes their wives and their unmarried daughters. The property belonging to the family is of the ownership of the coparceners in that family, and whilst the family remains undivided no individual member of the family can predicate his share in the family property. An HUF is not a corporation ; it is not a juridical entity distinct from the members who constitute it; it cannot sue or be sued in the family name and cannot convey the property held by it in its joint character. The coparceners who are member of the HUF are undoubtedly owners of the property, and there is corporate enjoyment of the property ; but an HUF has no independent existence apart from the individuals who constitute the same. In an HUF there is community of interest and unity of possession between all the members of the family, and until partition takes place there is common enjoyment and common possession of the family property. The family property is the property of the coparceners who for the time being constitute the HUF. Entry No. 86 in list I of the Seventh Schedule to the Constitution confers authority upon the Union Parliament to enact legislation for levy of taxes on the capital value of assets…

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