TaxTMI 
TaxTMI 
1989 (1) TMI 221
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....proviso, the exemption is attracted only to such gifts as were chargeabble to tax for any assessment year commencing "after the 31st day of March, 1964," as understood by the Revenue or whether the gifts even made earlier would attract the benefit of the exemption as claimed by the assessees. 2. There appears a divergence of judicial opinion on the point in the High Courts. In C.W.T. v. Smt. Sarala Debi Birla [101 ITR 488 (Cal.)], T. SaraswathiAchi v. C.I.T. [104 ITR 185 (Mad.)], C.W.T. v. Seth Nand Lal Ganeriwala [107 ITR 758 (Pun.)], M.G. Kollankulam v. C.I.T. [115ITR 160 (Kerala)], Malti v. C.W.T. [121 ITR 676 (MP)] and C.W.T. v. Rasesh N. Mafatlal [126 ITR 173 (Bom.)] several High Courts have construed the provision in the manner suggested by the Revenue. C.W.T. v. Hashmatunnisa Begum [108 ITR 98 (AP)] has taken the opposite view extending a wider benefit of the exemption. The opinion of the Calcutta High Court in 101 ITR 488, which is representative of the view in favour of Revenue, is under appeal in CA 1226 and 1227 of 1985 and the opinion of the Andhra Pradesh High Court in 108 ITR 98 which is favourable to the assessee is under appeal No. CA 1118 of 1975 preferred by....
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....ial leave. 4. In CA 1226 and 1227 of 1975 the assessment years concerned are 1964-65 and 1965-66 corresponding to the valuation dates 31.3.1964 and 31.3.1965. On 7.10.1959 Smt. Sarla Debi Biria, the assessee, made a gift of Rs. 1,00,011/-, to her minor daughter Smt. Manju Rani Birla. The assets so transferred were included in the assessee's wealth for the two assessment years 1964-65 and 1965-66 under Sec. 4(1)(a)(ii) of the Wealth-tax Act, The claim of the assessee that the proviso to Sec. 4(1)(a) operated to exclude the asset from the net wealth of the assessee as the transfer was chargeable to gift-tax was not accepted by the Wealth-tax Officer, who completed the assessment including the transferred-asset in the assessee's net-wealth. The assessee's appeal before the Appellate Asstt. Commissioner was unsuccessful. However, the Appellate Tribunal accepted the contention of the assessee and by its appellate order dated 11.5.1970 allowed the assessee's appeal holding that on a true construction of the proviso, so long as the gift was chargeable to or exempt under Sec. 5 from gift-tax to that extent Sec. 4(1)(a) ceased to have operation and the statutory fiction embodied in it....
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....the minor child of the individual by requiring the inclusion of such transferred assets in computing the net wealth of the individual. However, the proviso makes the provision inoperative where and in so far as the transferred asset is either chargeable to gift-tax under or is exempt under Sec. 5 of the Gift-Tax Act. The controversy surrounds the question whether the expression "for any assessment year commencing after 31st day of March, 1964", occurring in the proviso should be read with the first part and as referring to the eligibility of the gifts for exemption with reference to the point of time at which the gifts were made or whether that expression does not condition the identity of the eligible gifts but only signifies the starting point for the exemption from wealth tax. Assessees contend that the date of the gift is immaterial and as long as the transfer is chargeable to gift-tax or is exempt under Sec. 5, - whatever may be the year in which the gift was made - the exemption from gift-tax must commences "for any assessment year commencing after the 31st day of March, 1964". . If the expression "for any assessment year commencing after the 31st day of March, 1964" is....
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....n was specified as 1.4.1965. Shri Ahuja submitted that the proviso was intended to effectuate the legislative policy that in respect of certain gifts made in favour of a spouse or a minor child, during a specified period, the assets transferred under the Gifts would have the benefit of exemption from the operation of Section 4(1)(a). This was because the legislature took into consideration that from 1.4.1964 onwards there was a sharp ascent in the rates of gift-tax and that the assets which constituted the subject-matter of such gifts attractive such high rates of gift-tax should not also be included in the net-wealth of the donor for wealth-tax purposes which would otherwise be the consequence under Section 4(1)(a) of the Act. As the proviso originally stood, gifts chargeable to gift-tax for any assessment year commencing after 31st March, 1964, attracted the benefit of exemption. The outer limit for the period of such eligible gifts was later fixed by the amendment made by Finance [No. 2] Act, 1971, w.e.f. 1.4.1972 which introduced the words 'but before the 1st day of April, 1972'. Accordingly, Shri Ahuja contends that only that class of gifts that were chargeable to gift-tax ....
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....tax assessments but as part of the second part denoting the commencement of the operation of exemption from wealth-tax. 9. This, we are afraid, will imboggle itself in the quagmire of irreconcilable constructional contradictions. The amendment introducing the proviso was brought about by an amending Act of 1964; but the date of the commencement of its operation was left to be fixed by a Notification. The effect of the Notification issued bringing the proviso into effect from 1.4.1965 would be wholly ignored by the construction suggested by Shri Salve. Secondly, the introduction of the words "but before the 1st day of April, 1972" would, if the construction suggested by Shri Salve is accepted, operate to take away the benefit of the exemption after 1.4.1972 and the exemption confined only to the assessment years between 1964-65 and 1972-73. On a reading of the plain words of the proviso, the clause "for any assessment year commencing after 31st day of March, 1964" can only be read as relating to gift-tax assessments and not to the wealth-tax assessments. 10. But, Shri Salve contends that this literal construction would expose the provision to an attack on its constitutionality....
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.... from the language employed, having regard to the context in connection with which it is employed......Courts have to give effect to what the Legislature has said." The rule of construction that if the statutory provision is susceptible or admits of two reasonably possible view then the one which would promote its constitutionality should be*preferred on the ground that the legislature is presumed not to have intended an excess of its own jurisdiction, is subject to the further rule that it applies only where two views are reasonably possible on the statutory language. If the words of the statute, on a proper construction, can be read only in a particular way, then it cannot be read in another way by a court of construction anxious to avoid its unconstitutionality. In a case, as here, a reference arises under 'Act', the question of the constitutionality of the 'Act' cannot be examined and pronounced upon. In State of Punjab v. Prem Sukhdas [1977 (3) SCR 408] this Court made the point clear : "...This amounts to nothing short of legislation. We think that the view is an impossible one. The principle that, where a provision is capable of one of two interpretations, the interpre....