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1971 (6) TMI 55
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....ned at Rs. 1,65,407. For the purpose of determining the rate of estate duty, the Assistant Controller of Estate Duty aggregated the same with the value of the interest of the lineal descendant, Krishna Prasad, so as to form one estate and on the value of the estate so determined at (Rs. 1,65,407 plus Rs. 1,66,407), i.e., Rs. 3,31,814. levied estate duty after allowing rebate on the lineal descendant's share under section 34(2) of the Act. The estate duty that was payable was determined at Rs. 8,442.59 after deduction of the provisional duty already paid. Krishna Prasad, the accountable person, challenged the legality and the validity of the assessment so made by the Assistant Controller of Estate Duty, on the following two grounds : (1) section 34(1)(c) is beyond the competence of the legislative power of the Central Legislature, and (2) section 34(1)(c) prescribing a different and unique procedure for imposing tax on the share of the deceased in the coparcenary of the Mitakshara joint family is discriminatory and repugnant to article 14 of the Constitution of India. In support of the above contentions, the learned counsel appearing for the petitioner invited our attentio....
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.... to legislate on estate duty. For the imposition of estate duty, rates have to be prescribed and for that purpose there must be a provision of law in the Act. That is provided in the instant case under section 34(1)(c) of the Act. The aggregation is only for the purpose of fixing the rate and it does not levy estate duty on the property of a person, other than the person whose property passed on the death. The section does not make an inroad into the property of another. The power to make law with regard to estate duty carried with it the power to legislate the manner in which the rates of estate duty are fixed for the purpose of computation of such estate duty imposable on a taxpayer. Section 34(1)(c) of the Act is not discriminatory and violative of article 14 of the Constitution. In support of this argument, the learned counsel relied upon the decision of the Madras High Court in Ramanathan Chettiar v. Assistant Controller of Estate Duty [1970] 76 I.T.R. 402 (Mad.). A Hindu undivided family governed by Mitakshara Law, Marumakkattayam or Aliyasantana law is distinct and a different class from the Hindu undivided family governed by Dayabhaga school of law. The impugned section can....
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.... the taxpayer. Thus, a power given to Parliament to make law with regard to estate duty necessarily, in our opinion, includes power to fix the rates of estate duty. Section 34(1)(c) of the Act is a section which fixes the rates of estate duty payable in a given case where the property passing on death consists of a coparcenary interest in the joint family property of a Hindu family governed by Mitakshara, Marumakkattayam or Aliyasantana law. There is no force in the argument of the learned counsel appearing for the petitioner that the power to make law in regard to estate duty did not include the power to fix the rate. When Parliament is competent to make law on estate duty, it can and should make the law regarding the rate of tax and the manner in which such tax is to be computed. Section 34(1)(c) of the Act does not make an inroad into the property of the lineal descendant, but only takes it into consideration for the purpose of fixing the rate of estate duty, on the value of the property passing on the death of the coparcener by aggregating it with the value of the property of the share of the lineal descendant. There is also equally no force in the argument of the learned co....
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....n the same situation and under like circumstances. " According to the learned counsel appearing for the petitioner section 34(1)(c) prescribes a unique procedure for imposing tax on the share of the deceased in the coparcenary of the joint family governed by Mitakshara law, Marumakkattayam law or Aliyasantana law, different from the procedure prescribed for one governed by Dayabhaga school of law. This different treatment accorded to the members of a Hindu undivided family of different schools of Hindu law is, according to him, discriminatory and offends article 14 of the Constitution. According to him, this discrimination is not based upon reasonable classification and that such discrimination has no nexus or relation to the object sought to be achieved. There is no doubt that " equal protection of laws " means right to equal treatment in similar circumstances both in the privileges conferred and liabilities imposed by the law. No one can be subjected to any burden or charge than such as are imposed upon all others under the like circumstances. In other words, there should be no discrimination between one person and another if, as regards the subject-matter of the legislatio....
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....ntia which distinguishes those that are grouped together from others and that the differentia must have a rational relation to the object sought to be achieved by the Act. The doctrine of equal protection of laws in the field of taxation has been considered by the Supreme Court in Venugopala Ravi Varma Rajah v. Union of India [1969] 74 I.T.R. 49, 54, 55, 56 (S. C.). That case arose under the Expenditure-tax Act. The contention raised in that case was that the law which enables the Expenditure-tax Officer to assess tax on the expenditure of all members of a Hindu undivided family governed by the Marumakkattayam law discriminates on the ground of religion between the Hindu undivided family and a Mappilla undivided family governed by Marumakkattayam law, resident in North Malabar. Under the Expenditure-tax Act, the charging section imposes tax on individuals as well as Hindu undivided families. An undivided family, which consisted of Hindus, was treated as a unit of assessment, whereas an undivided family, whose members are not Hindus, was assessed to tax as an individual. In a Hindu family governed by Marumakkattayam law, the total expenditure incurred by all the members of the un....
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.... persons, transactions, occupations or objects. It is for the legislature to determine the objects on which tax shall be levied, and the rates thereof. The courts will not strike down an Act as denying the equal protection of laws merely because other objects could have been, but are not, taxed by the legislature : (Raja Jagannath Baksh Singh v. State of Uttar Pradesh [1962] 46 I.T.R. 169; [1963] 1 S. C. R. 220 (S. C.). ' . . . . . A classification must not be arbitrary, artificial or evasive and there must be a reasonable, natural and substantial distinction in the nature of the class or classes upon which the law operates. In respect to such distinction, a legislative body has a wide discretion and an Act will not be held invalid unless the classification is clearly unreasonable and arbitrary ' . . . . . But the mere fact that the law could have been extended to another class of persons, who have certain characteristics similar to a section of the Hindus but have not been so included, is not a ground for striking down the law. In treating a Hindu undivided family as a un....
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.... according to the Dayabhaga law as regards the ancestral property. Sons under the Dayabhaga law have no right of ownership in the wealth of their living parents, but only in the estate of both when deceased. The vital distinction between Dayabhaga and Mitakshara schools of Hindu law, in the rights possessed by the fathers in the ancestral property, establishes that the fathers in one school of law belong to a class different from the fathers in the other school of law. Section 34(1)(c) of the Act applies to one and not to the other. Is it discriminatory and violative of article 14 of the Constitution, is the question that arises for consideration. The classification is not arbitrary, but based on a rational and substantial basis depending upon the incidents attached to the joint families in the respective schools of law. The principle of aggregation provided in section 34(1)(c) cannot be applied to the property passing on the death of a father of a Hindu undivided family governed by Dayabhaga school of law. An illustration will make it clear. A joint Hindu family consists of a father and son. The family possesses ancestral properties of the value of rupees one lakh. In Mitakshar....