H.H. LAKSHMI BAI VS COMMISSIONER OF WELTH TAX
1994 P T D 1316
[206 I T R 688]
[Supreme Court of India]
Present: B.P. Jeevan Reddy and B.L. Hansaria, JJ
H.H. LAKSHMI BAI
Versus
COMMISSIONER OF WELTH TAX (and other appeals)
Civil Appeals Nos. 2399 and 2400 of 1978 with Civil Appeals Nos. 1370, 2076 and 8002 of 1979, 2303 of 1980 and 543 to 545 of 1994, decided on 02/02/1994.
(Civil Appeals Nos. 2399 and 2400 of 1978 are from the judgment and order, dated 21st February, 1978, of the Kerala High Court in Income Tax Referred Cases Nos. 37 and 28 of 1976).
Wealth tax---
----Exemptions---Specific exemptions---Limit of Rs.1,50,000---National defence certificates and defence deposit certificates---Extension of limit---Only if value of such certificates exceeds Rs.1,50,000---"So included", meaning of---Indian Wealth Tax Act, 1957, Ss.5(1)(xv), (xvi), (1A), prov.
The appellant held National Defence Certificates and Defence Deposit Certificates of the value of Rs.70,000 from even prior to March 1, 1970, in addition to other assets specified in section 5(1A) of the Wealth Tax .act, 1957, whose value exceeded Rs.1,50,000. She claimed that, under the proviso to section 5(lA) of the Wealth Tax Act, 1957, the entire amount of . Rs.70,000 was exempt from wealth tax and the Appellate Tribunal accepted her claim. But the High Court, on a reference, rejected the claim holding that the limit of Rs.1,50,000 provided in the main part of section 5(IA) was to be extended under the proviso thereto only if the value of those assets which fell under clauses (xv) and (xvi) of section 5(1), themselves exceeded Rs.1,50,000 in value. On appeal to the Supreme Court:
Held, affirming the decision of the High Court, that the exemption limit of Rs.1,50,000 provided in the main part of section 5(1A) could be extended under the proviso only if the value of the assets falling under clauses (xv) and (xvi) of section 5(1) themselves would exceed the limit of Rs.1,50,000.
It is settled law that taxation statutes in particular have to be strictly construed and that there is no equity in a taxing provision.
Ayodhyanath (K.S.) v. CWT (1983) 141 ITR 309 (Kar.); Digvijaysinhji (K.S.) v. CWT (1983) 141 ITR (Guj.) and Saroja Ravindran v. CWT (1989) 177 ITR 302 (Mad.) approved.
CWT v. H.H. Sethu Parvathi Bayi (1979)116 ITR 135 affirmed.
Mrs. Janaki Ramachandran, Advocate for Appellants.
B.B. Ahuja, Senior Advocate (Ranbir Chandra and Miss A. Subhashini, Advocates with him) for Respondent.
JUDGMENT
B.L. HANSARIA, J: --Leave granted in the special leave petitions.
These appeals arise out of judgments of the High Court of Kerala rendered in Income Tax Reference Cases Nos. 28 and 37 of 1976 (see (1979) 116 ITR 135); 30, 60 and 63 of 1977 and 141 of 1979 by which the High Court answered the questions referred to it at the behest of the Department under the provisions of the Wealth Tax Act, 1957 (hereinafter "the Act"), in favour of the Department. On being satisfied that the questions answered by it raise a substantial question of law of general importance on which a pronouncement by this Court is necessary, it certified the cases as fit for appeal to this Court on prayer being made by counsel for the assessee.
The question referred to the High Court reads as follows:
"Whether, on the facts and in the circumstances of the case and on the interpretation of section 5(1A) of the Wealth Tax Act, 1957, the Appellate Tribunal is right in law in holding that the assessee is entitled to exemption of Rs.70,000 invested by her in National Defence Certificates and Defence Deposit Certificates in addition to the overall exemption of Rs.1,50,000 granted to her by the Wealth Tax Officer, under section 5(1) of the Act?"
The aforesaid was the question which came up for consideration of the High Court in Income Tax Reference Cases Nos. 28 and 37 of 1976. Similar questions were the subject-matter of the other cases referred to above. The High Court took the view that as investment in National Defence Certificates and Defence Deposit Certificates attracted, on the facts before it, the proviso to subsection (1A) of section 5; exemption for the amounts in question (which was tts.70,000 in the aforesaid two cases, and was below Rs.1,50,000 in all the cases), could not be granted over and above Rs.1,50,000 which was the limit prescribed by the main provision. It may be stated that investment in the aforesaid certificates would have fallen in clause (xv) of subsection (1) of section 5 of the Act.
Learned counsel for the assessee has assailed the view taken by the High Court whereas the Department's counsel supports the same.
The controversy lies within a narrow compass and the answer depends upon the interpretation of section 5(lA) of the Act. The material part of the section as it stood at the relevant time reads as follows:
"Nothing contained in subsection (1) shall operate to exclude from the net wealth of the assessee any assets referred to in clauses (xv), (xvi), (xxii), (xxiii), (xxiv), (xxv), (,xcvi), (xavii), (xxviii), (xxix), (xxxi) and (xxxii) (not being deposits under the Post Office Savings Bank (Cumulative Time Deposits) Rules, 1959), to the extent the value thereof exceeds, in the aggregate, a sum of one hundred and fifty thousand rupees:
Provided that where the assets include any assets referred to in clause (xv) or clause (xvi) (not being deposits under the Post Office Savings Bank (Cumulative Time Deposits) Rules, 1959), which have been held by the assessee continuously from a date prior to the first day of March, 1970, and the value of assets so included exceeds the limit of one hundred and fifty thousand rupees by any amount, such limit shall be raised by the said amount." (Emphasis supplied).
The Department's case is that, as the assets referred to in the main provision of subsection (1A) exceeded in the cases at hand Rs.1,50,000 in the aggregate, the exemption limit could have been raised only if the value of assets referred to in clause (xv) or (xvi) held prior to March. 1, 1970, would have exceeded Rs.1,50,000. In such a case only, the limit of exemption provided by the main provision of subsection (1A) could have been raised by the amount the assets mentioned in the proviso would have exceeded the sum, of Rs.1,50,000.
To clear the ground, it may be stated that there is no dispute before us that the net wealth of the assessee as regards the assets referred to in .the clauses specified in the main provision of subsection (1A) had exceeded Rs.1,50,000. Shri Ahuja, appearing for the Department, brings to our notice (to satisfy our mind in this regard) that even the investment in shares of joint stock companies (which would have attracted clause (xxiii) which is one of the clauses specified in respect of subsection (1A) of section 5) was to the extent of Rs.52,93,007, as would appear from the assessment order relatable to the year 1973-74. (In other assessment years also, investment by the assessees qua specified assets was in excess of Rs.1,50,000). In such a case, the proviso to subsection (1A) would come into play. We have, therefore, to find out the purport of this proviso.
Shri Ahuja refers to the expression "so included" used in the proviso and contends that where the assets to be included be one referred to in clause (xv) or (xvi), the value of the asset "so included" has to exceed the limit of Rs.1,50,000, in which case alone the limit would be raised by the amount the value of this asset exceeds Rs.1,50,000.' No effective answer to this submission has been advanced by Ms. Ramachandran. Shri Ahuja, on the other hand, submits that the Kerala High Court is not the only one to interpret section 5(lA) as above inasmuch as the. same view has been taken by other High Courts in (1) K.S. Ayodhyanath v. CWT (1983) 141 ITR 309 (Kar.) ; (2) K.S. Digvijayasinhji v. CWT (1983) 141 ITR 313 (Guj.) and (3) Saroja Ravindran v. CWT (1989) 177 ITR 302 (Mad.).
On the language of the proviso, as it is, there cannot be two answers, according to us also. It is settled law that a taxation statute in particular has to be strictly construed and that there is no equity in a taxing provision. It is because of this that the submission of Ms. Ramachandran that strict interpretation of the proviso would cause hardship to small depositors as against the richer ones, even if true, has no relevance.
In the aforesaid view of the matter, we do not read any legal infirmity in the impugned judgments of the High Court. The appeals are, therefore, dismissed. No order as to costs.
M.B.A./409/T.F. Appeals dismissed.