TaxTMI 
TaxTMI 
1968 (4) TMI 1
X X X X Extracts X X X X
X X X X Extracts X X X X
....his court for a writ quashing the order of assessment and penalty and notices of demand for recovery of tax. The petition was sought to be supported on numerous grounds, none of which has, in our judgment, any substance. The plea that wealth-tax is chargeable only on the accretion of wealth during the financial year is contrary to the plain words of the charging section. Section 3 of the Wealth-tax Act, as it stood in the relevant years, declared that there shall be charged for every financial year a tax in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule. The expression " net wealth " is defined in section 2(m) as meaning " t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of this court in Banarsi Dass v. Wealth-tax Officer, Special Circle, Meerut and counsel for the petitioner accepts that the subject of Wealth-tax Act, falls within the terms of entry 86, List I, of the Seventh Schedule. He says, however, that since the expression " net wealth " includes non-agricultural lands and buildings of an assessee, and power to levy tax on lands and buildings is reserved to the State legislatures by entry 49, List II, of the Seventh Schedule, Parliament is incompetent to legislate for the levy of wealth-tax on the capital value of assets which include non-agricultural lands and buildings. The argument advanced by counsel for the petitioner is wholly misconceived. The tax which is imposed by entry 86, List I, of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... brought to tax. Tax on lands and buildings is directly imposed on lands and buildings, and bears a definite relation to it. Tax on the capital value of assets bears no definable relation to lands and buildings which may form a component of the total assets of the assessee. By legislation in exercise of power under entry 86, List I, tax is contemplated to be levied on the value of the assets. For the purpose of levying tax under entry 49, List II, the State legislature may adopt for determining the incidence of tax the annual or the capital value of the lands and buildings. But the adoption of the annual or capital value of lands and buildings for determining tax liability will not, in our judgment, make the fields of legislation under the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....apital or annual, would be determined by taking the land or building or both as a unit and subjecting the value to a percentage of tax. In the case of wealth-tax the charge is on the valuation of the total assets (inclusive of lands and buildings) less the value of debts and other obligations which the assessee has to discharge. Merely because in determining the taxable quantum under taxing statutes made in exercise of power under entries 86, List I, and 49, List II, the basis of valuation of assets is adopted, trespass on the field of one legislative power over another may not be assumed. Assuming that there is some overlapping between the two entries, it cannot, on that account, be said that Parliament had no power to legislate in resp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule. " Exclusive power to legislate conferred upon Parliament is exercisable, notwithstanding anything contained in clauses (2) and (3), that is made more emphatic by providing in clause (3) that the legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule, but subject to clauses (1) and (2). Exclusive power of the State legislature has, therefore, to be exercised subject to clause (1), i.e., the exclusive power which Parliament has in respect of the matters enumerated in List I. Assuming t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wever, placed by counsel for the petitioner upon certain observations made by Jagdish Sahai J. in Oudh Sugar Mills Ltd. v. State of U. P. In that case the validity of the U. P. Large Land Holdings Act, 1957 (31 of 1957), was challenged on the ground that the power to tax covered by the Act was not conferred upon the State legislature by List II, entry 49. The court in that case held that the tax under the Act was a tax on the holding and not on the annual value or the capitalised value of the land and the annual value was only the measure of the tax. Jagdish Sahai J. proceded, however, to observe that the meaning of the word " assets " in entry 86 of List I should exclude land, both agricultural as well as non-agricultural, from its ambit i....