Wealth-tax applies only to an existing individual's net wealth on the valuation date; later estate-liability provisions are prospective.

Wealth-tax under section 3 is chargeable only on the net wealth of an existing individual on the valuation date, so the executors could not be assessed for the assessment year 1961-62 because the deceased had already died before that date. Sections 14 and 19(2) could not extend the charging provision or create liability where section 3 did not apply. Section 19A, which first imposed a charge on a deceased person's estate in the hands of the executor, was prospective only and contained no indication of retrospective operation. The executors' liability to wealth-tax for the relevant year was therefore negatived.

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Issues: (i) whether executors could be assessed to wealth-tax for the assessment year 1961-62 when the deceased had died before the relevant valuation date; (ii) whether section 19A of the Wealth-tax Act, 1957 operated retrospectively so as to sustain such assessment.

Issue (i): whether executors could be assessed to wealth-tax for the assessment year 1961-62 when the deceased had died before the relevant valuation date

Analysis: Section 3 of the Wealth-tax Act, 1957 charges wealth-tax on the net wealth of an individual on the corresponding valuation date. The incidence of tax therefore depends on the existence of an assessable individual on that date and on ownership of assets on that date. Since death extinguishes the legal personality of the person and the deceased was not alive on the valuation date, the estate could not be treated as the net wealth of the deceased for the relevant assessment year. Sections 14 and 19(2) operate subject to the charging provision and cannot create a charge where section 3 does not.

Conclusion: The executors were not liable to be assessed to wealth-tax for the assessment year 1961-62 under sections 3 and 19(2).

Issue (ii): whether section 19A of the Wealth-tax Act, 1957 operated retrospectively so as to sustain such assessment

Analysis: Section 19A was inserted by the Wealth-tax (Amendment) Act, 1964 with effect from 1 April 1965 and for the first time created a charge on the estate of a deceased person in the hands of the executor. Nothing in the provision indicated retrospective operation, and its language did not deem it to have come into force from an earlier date. It was therefore a prospective provision only.

Conclusion: Section 19A was not retrospective and could not be used to tax the executors for the year of death.

Final Conclusion: The reference was answered against the revenue, and the executors' liability to wealth-tax for the relevant year was negatived.

Ratio Decidendi: Wealth-tax is chargeable only on an existing individual's net wealth on the valuation date, and a later-enacted provision creating liability on a deceased person's estate is prospective unless the statute clearly provides otherwise.

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