Law: Wealth Tax Act, 1957

Section: 3

Section 3 of the Wealth-tax Act, 1957, read with article 14 of the Constitution of India, 1950 - Charge of tax - Whether power to impose wealth-tax on non-agricultural lands and buildings is within legislative jurisdiction of Parliament - Held, yes - Whether Parliament had competence to enact a law providing for imposing wealth-tax on undivided families - Held, yes FACTS The assessee, karta of his family had been assessed to wealth-tax for the assessment years 1958-59 and 1959-50. In pursuance of the assessments, two demand notices for the relevant assessment years had been issued to him on 24-10-1962. The assessee filed writ petition and challenged the demand notices on grounds that ( i) Wealth-tax on lands and buildings is ultra vires of the powers of Parliament; (ii) Under any circumstance, Parliament could not have imposed wealth-tax on undivided families ; and (iii) the Act is violative of article 14 of the Constitution in so far as it provides for the levy of tax on Hindu undivided families only and as such is liable to be struck down. HELD There is no conflict between entry 86 of List I of the Seventh Schedule and entry 49 of List II of the same Schedule. Those entries will have to be construed harmoniously. If so construed, it follows that the power to impose wealth-tax on non-agricultural lands and buildings is within the legislative jurisdiction of Parliament. Parliament has power to legislate on the subject either under entry 86, failing that under the residuary power given to it under entry 97. It makes no difference whether the source of the power is in entry 86 or in entry 97. Therefore, it was to be held that Parliament had competence to enact a law providing for imposing wealth-tax on undivided families. In view of the various judicial pronouncements, non-Hindu undivided families are not exempt from taxation under the Act. They are liable to be assessed to tax as "individuals". The incidence of tax leviable on them is heavier than that imposed on the Hindu undivided families. Hence, the assessee could have no legitimate grievance. In the result, the petitions failed and the same were dismissed. Note : The case was decided in favour of revenue.…

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