Commissioner
of Wealth-Tax Vs. Smt. Hashmatunnisa Begum [1989] INSC 14 (17 January 1989)
Venkatachalliah,
M.N. (J) Venkatachalliah, M.N. (J) Pathak, R.S. (Cj)
CITATION:
1989 AIR 1024 1989 SCR (1) 155 1989 SCC Supl. (2) 43 JT 1989 (1) 92 1989 SCALE
(1)85
ACT:
Wealth
Tax Act, 1957: Section 4(1)(a) Proviso-Wealth tax-Assets transferred by way of
gift--Exemption--Whether gifts made before assessment year commencing after
March 31, 1964 entitled to benefit of exemption--For any assessment year
commencing after March 31, 1964 Interpretation of.
Statutory
Interpretation: Literal rule--Meaning of statute is plain--Court must apply
regardless of result--Court not entitled to read statute in another way anxious
to avoid its unconstitutionality.
Words
and Phrases: 'Interpretation'--'Construction"--Meaning of.
HEAD NOTE:
In
Civil Appeal No. 1118 of 1975 the respondent--asses- see's husband gifted
certain lands and buildings to his two spouses by three gift deeds dated
26.4.1962, 26.5.1962 and 17.8.1962. The gifts were chargeable to gift-tax and
were accordingly assessed to gift-tax In the assessment year 1963-64.
In the
proceedings-for assessment to wealth for the assessment year 1967-68, it was
claimed on behalf of the estate of the assessee's husband, who had later died
on 16.12.1968 that as the gifts were chargeable to gift-tax, the proviso to s.
4(1)(a) was attracted and the assets so transferred were not includible in the
net wealth of the deceased for any assessment year commencing after the 31st
day of March, 1964. The Wealth Tax Officer rejected this claim. On appeal, the
Appellate Assistant Commissioner confirmed the assessment. Allowing the assessee's
further appeal, the Appellate Tribunal, on a particular construction of the
proviso, held that the assets transferred, which had attracted gift-tax, were
not includible in the net wealth of the deceased for the assessment year
1964-65 onwards.
On a
reference made at the Instant of the Revenue, the High Court agreed with the
construction placed on the provi- so by the Tribunal. The Revenue filed an
appeal, by Special leave In this Court.
156
The appellant-assessee in Civil Appeal Nos. 1226 and 1227 of 1975, made a gift
of certain amount to her minor daughter on 7.10.1959. The assets so transferred
were in- cluded in the assessee's wealth for the two assessment years 1964-65
and 1965-66 under s. 4(1)(a)(ii) of the Wealth-tax Act. The claim of the assessee
that the proviso to s.
4(I)(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. The
Appellate As- sistant Commissioner rejected the assessee's appeal.
However,
the Appellate Tribunal, accepting the conten- tion of the assessee, allowed the
assessee's appeal and held that, on a true construction of the proviso, so long
as the gift was chargeable to or exempt under s. 5 from gift-tax, to that
extent s. 4(1)(a) ceased to have operation and the statutory fiction embodied
in it was not attracted and that since, the gift was chargeable to gift-tax, at
the relevant time, the exemption was to operate from the assessment year
commencing after 31-3-1964.
The
High Court, on a reference made at the instance of the Revenue reversed the
Tribunal's view. Hence, the asses- see filed the appeal, by certificate, in
this Court.
In the
appeals before this Court, it was submitted on behalf of the Revenue that the
words "for any assessment year commencing after the 31st day of March,
1964" could, in the context only refer to the gift and gift-tax
assessments, that only that class of gifts which were chargeable to gift tax
for any assessment year 1964-65 or thereafter (hut subject to the time limit
fixed by the 1971 amendment) which would otherwise fail under s. 4(1)(a) were
eligible for the benefit of exemption, and that where the enactment was clear
and admitted of only one meaning, and did not admit of two or more meanings, it
would be the plain meaning that should be given effect to and no resort could
be had to any rules of construction which would denude the provision of its
plain and ordinary meaning.
On
behalf of the assessees, it was contended that the date of the' gift was
immaterial and as long as the transfer was chargeable to gift tax or was
exempted under s. 5 what- ever may be the year in which the gift was made, the exemp-
tion from a gift-tax must commence for any assessment year commencing after the
31st day of March 1964", that these words should not be read as part of
the first part of the proviso relating to gift-tax assessments but as part of
the second part denoting the commencement of the operation from Wealth-tax, and
that a construction which promoted its constitutionality has to be preferred to
the 157 one which, if accepted, would expose the proviso to the vice of
discrimination and unconstitutionality.
Allowing
the appeal of the Revenue and dismissing the appeal of the assessee.
HELD:
1. On a reading of the plain words of the proviso to s. 4(1)(a) of the
Wealth-tax Act, 1957, the clause "for any assessment year commencing after
31st day of March, 1964" can only be read as relating to gift-tax assesssments
and not to the wealth-tax assessments. [165E] 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. If the construction
that the clause should be read as part of the second part, denoting the
commencement of the operation of exemption from Wealth tax is accepted, effect
of the Notification issued bringing the proviso into effect from 1.4.1965 would
be wholly ignored, and the introduction of the words "but before the 1st
day of April, 1972", by a later amendment would 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. [165C- D] Therefore, the gifts in
question though chargeable to gift-tax would not attract the benefit of
exemption and would be liable to be included in the net wealth of the assessees.
[163A] T. Saraswathi Achi v. C.I.T., 104 ITR 195 (Mad); C.W.T. v. Seth Nand Lal
Ganeriwala, 107 ITR 758 (Pun.); M.G. Kol- lankulam v. C.I.T., ITR 160 (Kerala),
Malti Harseey v. C.W.T., 12 ITR 676 (MP) and C.W.T. v. Rasesh N. Mafatlal, 126
ITR 173 (Bom) approved.
2.1
One of the pillars of statutory interpretation viz., the literalrule, demands
that if the meaning of the Statuto- ry Interpretation is plain, the Courts must
apply regardless of the result. [165G]
2.2
The very concept of interpretation connotes the introduction of elements which
are necessarily extrinsic to the words in the statute. Though the words
"Interpretation" and "construction" are used
interchangeably, the idea is somewhat different. [165H]
2.3
The rule of construction that if the statutory provision is susceptible or
admits of two reasonably possi- ble views, then the one 158 which would promote
its constitutionality should be pre- ferred 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 unconstitu- tionality.
[166G-H]
2.4 In
a case, as here, where a reference arises under 'Act', the question of the
constitutionality of the Act cannot be examined and pronounced upon by this
Court. That is the task of the Court in judicial-review. However, the rule of
preference of a particular construction amongst the alternatives, in order to
avoid unconstitutionality, is unavailable in the instant case. [166H; 167A, F]
3. In
a taxing measure, the legislature enjoys a wider latitude and its dispensations
are based on an interaction of diverse economic, social and policy
considerations.
Further,
if the proviso is bad for discrimination, it would follow that the converse
situation brought about by the later amendment, a discrimination as between
gifts made as between the
31st of March, 1972
and on 1st April, 1972 might also become bad. This Court
is required to notice the provi- sion as it stood at the relevant time. [167D-E]
State of Punjab v. Prem Sukhdas, [1977] 3 SCR 408
and Attorney General v. Carlton Bank, [1899] 2 Q.B. 158, re- ferred to.
Dr.
Patrick Devlin: Samples of Law Making--Oxford Uni- versity Press, p. 70-71 and
Max Radin "Statutory Interpreta- tion" 43 Hat. L.R. 863 (868),
referred to.
CIVIL
APPELLATE JURISDICTION: Civil Appeal No. 11 IS(NT) of 1975.
WITH Civil
Appeal Nos, 1226 & 1227(NT) of 1975.
From
the Judgment and Order dated 18.9.1974 and 11.10.74 of the Andhra Pradesh and
Calcutta High Court. In case referred No. 15 of 1973 and matter No. 7 10 of
1970 respec- tively B.B. Ahuja, Ms. A. Subhashini, K.C. Dua for the Appel- lant
in C.A. No. 1118 of 1975.
159 Harish
N. Salve, Vivek Gambhir and Preveen Kumar for the Appellant in C.A. No. 1226-27 of 1975.
A. Subba
Rao for the Respondent in C.A. No. 1118
of 1975.
B.B. Ahuja,
K.C. Dua and Miss. A. Subhashini for the Re- spondent in C.A. Nos. 1226-27 of
1975.
The
Judgment of the Court was delivered by VENKATACHALIAH, J- Civil Appeal No.
1118/NT/1975, by special leave, by the Commissioner of Wealth-tax, Andhra
Pradesh, and CA Nos. 1226 & 1227/NT/1975, on a certificate, under Sec.
29(1) of the Wealth-tax Act, 1957, (Act) by the assessee raise a question as to
the proper construction of the proviso to Sec. 4(1)(a) of the Act, which
provides for exemption respecting transferred assets which would other- wise be
includible in the wealth of the assessee under sec. 4(1)(a) of the Act.
The
condition for the grant of the exemption under the proviso is that the transfer
of the asset is either charge- able to gift-tax or is not chargeable under sec.
5 of the Gift-tax Act, 1958. The particular point for consideration is whether,
on the language of the proviso, the exemption is attracted only to such gifts
as were chargeable 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. Saraswathi Achi 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., 115 ITR 160 (Kerala) Malti Harseey v.
C.W.T., 12 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 1011TR 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 favour-
able to the assessee is under appeal 160 No. CA 1118 of 1975 preferred by the
Revenue.
3. In
CA 1118 of 1975 the assessee Smt. Hashmatunnisa Begam, the legal representative
of the late Nawab Zabeer Yar Jung Bahadur, claimed in respect of the assessment
year 1967-68, that the value of the immovable properties gifted by the late Nawab
to his wives before 1.4. 1964 should not be included in the net wealth of the Nawab
as on the valua- tion dated 31.9.1966. The Nawab under three deeds of gift one
dated 25.5.1962, in favour of Smt. Hashmatunnisa Begum, his first wife, and two
other deeds dated 17.8.1962 and 26.4.1962, in favour of Smt. Fareed Jehan Begum
his second- wife, gifted in their favour certain lands and buildings of a total
value of Rs. 1,96,950. The gifts were chargeable to gift-tax and were
accordingly assessed to gift-tax in the assessment year 1963-64. On behalf of
the estate of the Nawab--who later dies on 16.12.1968--it was claimed in the
proceedings for assessment to wealth for the Assessment Year 1967-68. That
though the gifts were otherwise includible as belonging to the Nawab under sec.
4(I)(a)(i), as the trans- fers made to the spouses otherwise than for adequate consid-
eration, however, as the gifts were chargeable to gifttax, the proviso to sec.
4(I)(a) was attracted and that the assets so transferred were not includible in
the net wealth of the Nawab "for any assessment year commencing after the
3 1st day of March 1964". The Wealth-tax Officer rejected this claim. The
Appellate Asst. Commissioner, in the assessee's appeal, confirmed the
assessment. In the assessee's further appeal before the Appellate Tribunal, the
Tribunal, on a particular construction of the proviso, allowed the appeal and
held that the assets transferred, which had attracted gift-tax, were not
includible in the net wealth of the Nawab for the assessment year 1964-65
onwards. At the instance of the Revenue, the following question of law was
referred to the High Court for its opinion:
"Whether,
on the facts and in the circum- stances of the case, the assessee was entitled
to exclude, under the proviso to section 4(1)(a) of Wealth-Tax Act, 1957, the
value of the assets gifted to his wives in the Wealth- tax assessment for the
assessment year 1967- 68?" The High Court agreed with the construction
placed on the proviso by the Tribunal and answered the question in the
affirmative and against the revenue. The revenue has come up in appeal by
special leave.
4. In
CA 1226 and 1227 of 1975 the assessment years concerned are 1964-65 and 1965-66
corresponding to the valuation dates 161 31.3. 1964 and 31.3.1965. On 7.10.1959
Smt. Sarladevi Birla, the assessee, made a gift of Rs.l,O0,011, to her minor
daughter Smt. Manju Rani Birla. The assets so transferred were included in the assessee's
wealth for the two assess- ment years 1964-65 and 1965-66 under sec. 4(I)(a)(ii)
of the Wealth-tax Act. The claim of the assessee that the proviso to sec.
4(I)(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 Asst. 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 con- struction of the proviso, so long as the gift was chargeable to or
exempt under sec. 5 from gift-tax to that extent sec. 4(I)(a) ceased to have
operation and the statutory fiction embodied in it was not attracted and that
as at the relevant time the gift was chargeable to gift-tax. The exemption was
to operate from the assessment year commencing after 31.3.1964. At the instance
of the revenue, the Appellate Tribunal referred the following question of law
for the opinion of the High court:
"Whether
on the facts and in the circumstances of the case and on a proper
interpretation of section 4(1)(a) of the Wealth-tax Act as amended by the
Wealth-tax (Amendment) Act, (Act 46) of 1964, the sum of Rs. 1,00,011 gifted by
the assessee to her minor daughter could be included in computing her net
wealth"? The High Court of Calcutta in reversal of the view taken by the
Tribunal answered the question in the affirmative and against the assessee. The
assessee has come up in appeal by certificate.
5. We
have heard Shri B.B. Ahuja, learned counsel for the revenue and Shri Harish
Salve and Shri Subba Rao, for the assessees.
The
controversy generated on the point leading to the divergence of the judicial
opinion on the point is at- tributable to the somewhat inelegant and
inappropriate phraseology of the provision. To appreciate the relevant
contentions it is necessary to notice the words of the proviso:
162
"Provided that where the transfer of such assets or any part thereof is
either charge- able to gift-tax under the Gift-tax Act 1958 (18 of 1958), or is
not chargeable under Section 5 of that Act, for any assessment year commencing
after the 3 1st day of March, 1964, (but before the 1st day of April, 1972),
the value of such assets or part thereof, as the case may be, shall not be
included in comput- ing the net wealth of the individual;" The words
"but before the 1st day April 1972" was later introduced by the Financee
(No. 2) Act 1971 with effect from 1.4. 1972.
This
was introduced by the amending Act of 1964, but given effect to from 1.4.1965
by the notification. Under the various clauses of Sec. 4(1)(a) certain transfers
of assets made by an individual in favour or for the benefit of the spouse or a
minor child, not being a married daughter, of such individual, are required to
be ignored and the trans- ferred-assets included in the wealth of the assessee,
as belonging to him. Section 4(1)(a) aims at foiling an indi- vidual's attempt
to avoid or reducing the incidence to wealth tax by transferring the assets to
or for the benefit of the spouse or the minor child of the individual by re- quiring
the inclusion of such transferred assets in comput- ing 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 exemp- tion from wealth tax. Assessees contend that the date of
the gift is immaterial and as long as the transfer is chargeable to gifttax 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 intended to qualify and determine the gifts, the
subject-matters of which are eligible for exemption, then the literal
construction, would be that the gifts made earlier to that period, 163 though
chargeable to gift-tax would not attract the benefit of exemption. But the assessees
say that the clause must be read as part of the second part of the proviso
which contem- plates the exemption. So read, the clause would qualify the
commencement of the benefit of the exemption and not the point of time when the
Gift is required to be made to be eligible for the exemption from wealth-tax.
The learned Judges of the High Court of Andhra Pradesh in the course of the
Judgment under appeal in CA 1118 of 1975 observed:
"
..... The words 'for any assess- ment year commencing after the 31st day of
March, 1964' are referrable to the assessment to be made under the Wealth-tax
Act. They render the provisions of section 4(1)(a) inoperative irrespective of
the fact whether the transferred asset was chargeable to gift- tax or not
chargeable to gift-tax. The proviso specifies the period of exemption upto 31st
March, 1964. Irrespective of the year of the gifts when the assets were gifted,
they will not be included in the computation of the net wealth of the
individual till the assessment year 1964-65. We are, therefore, of the view
that the intention of Parliament was to exempt transfers made under clauses (i)
to (iv) of section 4(1)(a) from being computed in the net wealth of the
individual upto the wealth-tax assessment year commencing after 3 1st day of
March, 1964 ..... "
7. Sri
Ahuja submitted that the words "for any assess- ment year commencing after
the 31st day of 1964" could, in the context, only refer to the gift and
gift-tax assess- ments. The proviso, he said, which was introduced by way of an
amendment, was brought into force with effect from 1.4.1965 by a notification
which specified the commencement of the operation of the proviso and that,
quite obviously, it would be redundant to read the clause under consideration
as again referring to the commencement of the operation of the proviso. While
the clause under consideration related to and qualified the Gift tax
assessments, the commencement of the exemption of the subject matter of the
Gifts for purposes of wealth-tax was controlled and determined by the commence-
ment of the operation of the proviso, which, by notification was specified as
1.4.1965.
Sri 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 164 operation of Section 4(1)(a). This was
because the legisla- ture 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 attracting 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 com- mencing after 3 1st 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, Sri Ahuja
contends that only that class of gifts that were chargeable to gift-tax for any
assessment year 1964-65 or thereafter (but subject to the limit fixed by the
1971 amendment) which would otherwise fall under Section 4(1)(a) were eligible
for the benefit of the exemption. According to Sri Ahuja the plain words of the
proviso leave no room for doubt and where the enactment is clear and admits of
only one meaning and does not admit of two or more meanings, it would be the
plain meaning that should be given effect to.
When
the meaning is plain, says counsel, no resort could be had to any rules of
construction which would denude the provision of its plain and ordinary
meaning.
8. Sri
Harish Salve presenting the case of the assessees sought to point out the
intrinsic anomaly of the cases between a gift made, say, on 3 1st of March 1963
and one made the very next-day i.e. 1st of April, 1963 on the other, to show
that while in the first case even for the assessment year 1965-66 the
transferred asset is includible in the wealth of the assessee, in the latter
case it is exempt for all time to come thereafter. Learned counsel pointed out
that the criterion of higher rates of Gift-tax as a justifi- cation supporting
the classification also fails in view of the fact that under the proviso it is
not only the gifts chargeable to tax but also those exempt under sec. 5 that
attract the exemption with the result that between two gifts which are both
exempt under sec. 5 of the Gift-tax Act, one is for ever exempt from wealth-tax
in the hands of the donor while the other is includible in his wealth for
purposes of wealth-tax depending solely on the criterion of the date of
gift--whether the gift was made prior to 31st March 1963 or thereafter. Here
the criterion of classification of gifts on the basis of the exigibility for
higher rates of tax, says Sri Salve, collapses and the cut-off date determining
the difference in consequences in the two different class of cases become wholly
arbitrary. Shri Salve submitted that a construction which promotes its
constitutionality has to be pre- 165 ferred to the one which, if accepted,
would expose the provision to the vice of discrimination and unconstitution- ality.
The
essential basis of Sri Salve's suggested construc- tion rests on the
requirement that the words "for any as- sessment year commencing after the
31st day of March 1964" should not be read as part of the first part of
the proviso relating to gift-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 con- struction suggested by
Sri Salve. Secondly, the introduction of the words "but before the 1st day
of April, 1972" would, if the construction suggested by Sri 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, Sri Salve contends that this literal construc- tion would expose the
provision to an attack on its consti- tutionality on the ground that it brings
about a discrimina- tion between two classes of assessees on nothing more than
an arbitrary cut off date. The cases of gifts exempted under sec. 5, he says,
illustrate the point as according to Sri Salve there could be no rational basis
for discriminating between a gift exempted under sec. 5 made on 31.3.1963 on
the one hand and 1.4.1963 on the other.
11.
One of the pillars of statutory interpretation viz., the literalrule, demands
that if the meaning of the Statuto- ry Interpretation is plain and the Courts
must apply regard- less of the result.
12.
The very concept of interpretation connotes the introduction of elements which
are necessarily extrinsic to the words in the statue. Though the words
"interpretation" and "construction" are used
interchangeably, the idea is somewhat different. Dr. Patrick Devlin says:
166
" ..... A better word, I think, would be construction, because
construction, although one often used it alternatively with interpre- tation,
suggests that something more is being got out in the elucidation of the subject
matter than can be got by strict interpreta- tion of the words used. In the
very full sense of the word 'construction' the judges have set themselves in
this branch of the law to try to frame the law as they would like to have it
..... ".
[See:
Samples of Law Making--Oxford University Press--p.70-71] "A statute"
says Max Radin "is neither a literary text nor a divine revelation. Its
effect is, therefore, neither an expression laid on immutable emotional
over-tones nor a permanent creation of infallible wisdom. It is a statement of
situation or rather a group of possible events within a situation and as such
it is essentially ambiguous." [See "Statutory
Interpretation"--43 Har. L.R. 863 (868)].
The
observations of Lord Russel of Killowen in Attorney General v. Carlton Bank,
[1899] 2 Q.B. 158 though an early pronouncement, is refreshing from its broad
common-sense:
"I
see no reason why special canons of construction should be applied to any Act
of Parliament, and I know of no authority for saying that a Taxing Act is to be
construed differently from any other Act. The duty of the Court is, in my
opinion, in all cases the same, whether the Act to be construed relates to
taxation or to any other subject, namely to give effect to the intention of the
Legisla- ture, as that intention is to be gathered from the language employed,
having regard to the context in connection with which it is em- ployed .....
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 views 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 jurisdic- tion, 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 construc-
tion, 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, 167 a reference arises under 'Act', the question of the consti- tutionality
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 interpretation which validates rather than one which
may invalidate a provision applies only where two views are possible. It cannot
be pushed so far as to alter the meanings of the clear words used in an
enactment and to, in effect, repeal statu- tory provisions by making them
useless without holding them to be void." [p. 410] (Emphasis Supplied)
Even in regard to constitutionality of the classifica- tion, it is not possible
to rule out arguments as to the validity of classification as wholly unstateable.
In a taxing measure the legislature enjoys a wider latitude and its
dispensations are based on an interaction of diverse economic, social, and
policy considerations. Further, if the proviso is bad for discrimination, it
would follow that the converse situation brought about by the later amendment, a
discrimination as between gifts made as between the 31st of March 1972 and on
1st April, 1972 might also become bad. It is true that we are required to
notice the provision as it stood at the relevant time.
We,
however, should not be understood to have pronounced on the question of
constitutionality. That is the task of the Court in judicial-review but the
rule of preference of a particular construction amongst the alternatives, in
order to avoid unconstitutionality is unavailable here.
Accordingly,
while Civil Appeal No. 1226 and 1227 of 1975 preferred by the assessee are
dismissed, CA No. 1118 of 1975 of the revenue is allowed and in reversal of the
order dated 18.9.1974 of the Andhra Pradesh High Court the ques- tion referred
is answered in the negative and in favour of the revenue.
In the
circumstances, the parties are left to bear and pay their own costs in these
appeals.
N.P.V.
C.A. Nos. 1226 & 1227/75 are dismissed C.A. No. 1118/75 is allowed.
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