Court rules statutory corporations are liable for wealth tax, term "individual" includes them.

Assam Financial Corporation Versus Commissioner Of Wealth-Tax, Assam, Nagaland, Etc. And Others.

Assam Financial Corporation Versus Commissioner Of Wealth-Tax, Assam, Nagaland, Etc. And Others. - [1974] 94 ITR 404 Issues Involved:
1. Whether the statutory corporation falls within the definition of "individual" under Section 3 of the Wealth-tax Act, 1957.
2. The applicability of Sections 4, 6, 14, and 15 of the Wealth-tax Act to statutory corporations.
3. The interpretation of the term "company" in Section 2(h) of the Wealth-tax Act and its implications for statutory corporations.

Detailed Analysis:

Issue 1: Definition of "Individual" under Section 3 of the Wealth-tax Act, 1957
The primary issue in this writ petition is whether the statutory corporation qualifies as an "individual" under Section 3 of the Wealth-tax Act, 1957. The Wealth-tax Officer issued a notice to the Corporation, asserting that it was liable to pay wealth-tax. The Corporation contended that it did not fall within the categories of "individual," "Hindu undivided family," or "company," as specified in Section 3 of the Act. The court noted that the term "individual" is not defined in the Act but has been used in other statutes like the Indian Income-tax Act, 1922, and the Constitution of India. The Supreme Court in Commissioner of Income-tax v. Sodra Devi and Andhra Pradesh State Road Transport Corporation v. Income-tax Officer had interpreted "individual" to include juristic persons like corporations. Therefore, the court concluded that the term "individual" in Section 3 of the Wealth-tax Act includes statutory corporations.

Issue 2: Applicability of Sections 4, 6, 14, and 15 of the Wealth-tax Act
The Corporation argued that the provisions of Sections 4, 6, 14, and 15 of the Act, which refer to human persons, suggest that the term "individual" in Section 3 should be limited to natural persons. Section 4(1) mentions assets held by the spouse or minor child of an individual, while Section 6 deals with the net wealth of individuals who are not residents of India. Sections 14 and 15 pertain to the filing of returns and use pronouns like "his," "he," and "him," which are applicable to natural persons. The court held that these sections do not limit the generic meaning of "individual" in Section 3. The court reasoned that while Sections 4 and 6 pertain to natural persons, they do not exclude corporations from the purview of the Act. The provisions can coexist, with Sections 4 and 6 applying to natural persons and Section 3 encompassing both natural and juristic persons.

Issue 3: Interpretation of "Company" in Section 2(h) of the Wealth-tax Act
The Corporation argued that under Section 2(h) of the Act, a corporation established by or under a Central, Provincial, or State Act is considered a "company" only if declared so by the Central Government. The court noted that sub-clause (iia) was added to Section 2(h) by the Finance (No. 2) Act of 1967 to bring corporations at par with companies regarding wealth-tax rates. The court emphasized that this amendment was intended to confer benefits on corporations, such as lower tax rates and exemptions, rather than impose new liabilities. Therefore, the absence of a declaration by the Central Government does not exempt the Corporation from wealth-tax liability.

Conclusion:
The court dismissed the writ petition, holding that the term "individual" in Section 3 of the Wealth-tax Act includes statutory corporations. The provisions of Sections 4, 6, 14, and 15 do not limit this interpretation. The court also rejected the argument based on the definition of "company" in Section 2(h), noting that the amendment aimed to benefit corporations rather than exclude them from the Act's purview. Consequently, the Corporation is liable to pay wealth-tax. The parties were ordered to bear their own costs.