WEALTH TAX OFFICER, CALICUT vs. C. K. MAMMED KAYI (SINCE DECEASED) THROUGH HIS L.RS. T.M. POCKER & ORS.

CIVIL APPEAL No. 1543/1971Supreme Court[1981] 3 S.C.R. 35807 April 1981Bench: 2 JudgesAuthor: V.D. TULZAPURKAR, E.S. VENKATARAMIAH9 pages
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What did the Supreme Court hold?

The Supreme Court held that the term 'individual' in Section 3 of the Wealth Tax Act, 1957, is wide enough to include a group of individuals forming a natural unit, such as a Mapilla Marumakkathayam Tarawad. The Court reasoned that the General Clauses Act, 1897, permits reading 'individual' in the plural. It also noted that the Act imposes a general tax on the community's wealth, presuming equality of incidence. The specific mention of 'Hindu Undivided Family' in Section 3 does not exclude other groups forming a unit by birth. The Court referred to previous judgments and legislative practice, which consistently treated Mapilla Tarawads as 'individuals' for tax purposes. Therefore, Mapilla Marumakkathayam Tarawads fall within the purview of the taxing provisions. The Court allowed the appeal, setting aside the High Court's decision.

What were the facts?

The assessee, the Karnavan of a Mapilla Marumakkathayam Tarawad, was assessed to wealth tax under Section 3 of the Wealth Tax Act, 1957, on the net wealth of his Tarawad, treating it as an 'individual'. The assessee challenged the constitutional validity of Section 3, alleging it violated Article 14 of the Constitution. The High Court rejected the constitutional challenge but held, by majority, that non-Hindu undivided families like Mapilla Marumakkathayam Tarawads were outside the purview of the charging section, quashing the assessment. The Revenue appealed this decision.

What were the issues?

1. Whether the term 'individual' in Section 3 of the Wealth Tax Act, 1957, includes a Mapilla Marumakkathayam Tarawad (a Muslim undivided family governed by the Marumakkathayam Act)? Assessee's Contention (as understood from the High Court's decision and the Revenue's appeal): The High Court held that non-Hindu undivided families were outside the purview of the charging section. This implies the assessee argued that 'individual' should not be interpreted to include such Tarawads. Revenue's Contention: The expression 'individual' in Section 3 encompasses a body or group of individuals like a Mapilla Marumakkathayam Tarawad for wealth tax assessment. Long legislative practice in taxing schemes has treated and assessed Mapilla Marumakkathayam Tarawads in the status of 'individual'.

Which sections of the Income-tax Act were involved?

Section 3,Section 4,Section 20(1)

AI-generated summary — verify with the full judgment below

A B c D E F G H 358 WEALTH TAX OFFICER, CALICUT v. C. K. MAMMED KA YI (SINCE DECEASED) THROUGH HIS L.RS. T.M. POCKER & ORS.

April 7, 1981 [V.D. TULZAPURKAR AND E.S. VENKATARAMJAH, JJ.)

Wealth Tax Act, 1957-Section 3-"lndividual"-Whether includes Mapi/la -'! Marumakkathayam Tarawad (Muslim undivided family) governed by Marumak- ukathayam Act.

The assessee who was the Karnavan of Mapilla Marumakkathayam Tarawad registered as impartible within the meaning of section 20(1) of the Mapilla Marumakkathayam Act, 1939 was assessed to wealth tax on the net wealth of his Tarawad in the capacity of an individual under section 3 oft he Wealth Tax Act.

The assessee's challenge as to the constitutional validity of section 3 as being violative of Article 14 of the Constitution was rejected by the High Court.

The High Court, however, held by majority, that non-Hindu Undivided Families like Mapilla Marumakkathayam Tarawads were altogether outside the purview of the charging section of the Act. The assessment was, therefore, quashed.

In appeal to this Court it was contended on behalf of the Revenue that the expression "individual" in section 3 took in a body or group of

The order continues below.

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