Law: Wealth Tax Act, 1957

Section: 3,2

Law: Income Tax Act, 1922

Section: 16(3)

(a) Wealth tax--- ---- Charge of tax---Meaning of "individual"---Trade union is not an individual---Wealth tax cannot be levied on it---Wealth Tax Act, 1957, S.3. [Kerala Financial Corporation v. WTO (1971) 82 ITR 477 (Ker.); Assam Financial Corporation v. CWT (1974)94 ITR 404 (Gauhati) and Indian Jute Mills Association v. CWT (1996) 219 ITR 169 (Cal.) dissented from]. In a taxing statute before taxing any person, it must be shown that the person sought to be taxed falls within the ambit of the charging section by clear words used in the section, and none can be taxed merely by implication. The legislative history of the provisions is a useful guide for ascertaining the legislative intention in. using the words found in a statute. The charge of wealth tax is on the net wealth of three classes of persons, viz., individuals, Hindu undivided family and companies. The three categories of assessee mentioned in section 3 of the Wealth Tax Act, 1957,are clearly mutually exclusive. While the categories of persons subjected to wealth tax remained the same in section 3 of the Act, the definition of the word "company", one of the three categories of persons liable for wealth tax has been greatly expanded. The context in which the word "individual" occurs provides the clue of ascertaining the meaning to be assigned to that term in a statute. No single definition can be adopted or applied in all' contexts and to all statutes. The fact that the word "individual" in some circumstances may be wide enough to include an artificial juristic entity like a corporation created by a statute does not lead to the conclusion that the word "individual" in section 3(1) of the Act includes all juristic persons. If the intention of Parliament was always to regard all juristic entities whose existence in law is traceable to their incorporation under a statute as covered by the word "individual", the amendments effected to the definition of the word "company" would become inexplicable and a futile exercise in redundancy and no such intention can be attributed to Parliament when it brought about those changes in .the definition of the word "company". Incorporated bodies can be taxed under the…

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