Shri
Mohammad Ali Khan & Ors Vs. The Commissioner of Wealth Tax, New Delhi [1997] INSC 242 (4 March 1997)
S.C.
AGRAWAL, G.B. PATTANAIK
ACT:
HEADNOTE:
PATTANAIK.
J.
In
this appeal by grant of certificate by Delhi High Court interpretation of
Section 5(1)(iii) of the Wealth Tax Act. 1957 (hereinafter referred to as `The
Act') is involved. On an application being filed under Section 27(1) of the Act
the Tribunal referred the following question to the High Court for being
answered:- "Whether on the facts and in the circumstances of the case the
Tribunal was justified in holding that the buildings of the Khas Bagh Palace
which were let out to different persons from whom a rental income was received
by the assessee were not in the occupation of the assessee within the meaning
of Section 5(1)(iii) of the Wealth Tax Act 1957 and hence the value thereof was
includible in the net wealth of the assessee?" The assessee Late H.H Nawab
Sir Syed Raza Ali Khan. Newab of Rampur is the owner of Khan Bagh Palace. The said Palace was declared by
the Central Government in exercise of power under paragraph 13 of the Merged
States (Taxation Concessions) Order 1949. to be the official residence of the
Ruler. During the assessment year 1961-62 the assessee claimed exemption of the
aforesaid Palace in computation of the wealth under the Wealth Tax Act under
Section 5(1)(iii) of the Act. The Wealth Tax officer on consideration of the
materials before him came to the conclusion that the Palace having consisted of
number of buildings the assessee would be entitled to exemption only in respect
of the building or the portions of the building which is in the occupation of
the Ruler and on the said conclusion he found that the estimated market value
of several buildings which had been let out to be Rs. 3,55,000/-. This
valuation obviously he found out on the basis of the rental income derived by
the assessee. He accordingly took that into consideration in computation and
levying wealth tax on the same. Being aggrieved by the order of the Officer the
assessee moved an appeal and the Asstt. Commissioner in appeal as well as the
Tribunal in Second Appeal confirmed the assessment made. But on an application
being filed under Section 27 of the Act Tribunal made the reference on the
question. as already stated. The High Court in the impugned decision came to
the conclusion that a restrictive interpretation of Section 5(1) of the Act
would disentitle the assessee of any exemption since the building in question
is not under the occupation of the Ruler fully. It also came to the conclusion
that liberal interpretation of the said provision would entitle the assessee to
exemption to the extent the assessee occupies the building or the portion of
the building and therefore. the liberal interpretation should be preferred.
with
this finding the High Court answered the question referred to in favour of the
revenue and against the assessee.
Mr.
Sharma, the learned counsel appearing for the appellant contended that the expession
"anyone building" in Section 5(1)(iii) is not susceptible of an
interpretation by making a further disection to import into it the portion of
the building or whole of the builing as that would tantamount to a fresh
legislation which the Court is not empowered to do. According to the learned
counsel the Central Government having declared the Ram Bagh palace to be the
official residence of the assessee in exercise of power under paragraph 13 of
the Merged Stated (Taxation Concessions) Order 1949, the said building would be
excluded from the purview of the Act by virtue of Section 5(1)(iii) of the Act.
This
being the position. the High Court committed an error in answering the question
posed in favour of the Revenue.
The
learned counsel urged that in interpreting the taxing statute it is not permissible
for the Court to look to the policy behind the statute and the court would be
entitled to give a plain meaning to the words used in the Statute. In support
of this contention reliance was placed on the decisions of this Court in JUPUDI
KESAVA RAO VS. PULAVARATHI VENKATA SUBBARAO AND OTHERS- 1971(1) Supreme Court
Cases 545 and M/S BAIDYANATH AYURVED BHAWAN (PVT) LTD. vs. THE EXCISE
COMMISSIONER, U.P. & ORS. 1971 (1) Supreme Court Cases 4. It is, therefore,
urged that a plain literal meaning being given to each part of Section 5(1)(iii).
the said provision is susceptible of only one construction, namely, that
building which has been declared by the Central Government to be the official
residence of the Ruler cannot be included in the assets of the assessee for the
purpose of determining the wealth tax payable by an assessee.
Dr. Gauri
Shankar. the learned senior counsel appearing for the Revenue, on the other
hand, contended that in interpreting Section 5(1)(iii) of the Act the
expression "in the occupation of a Ruler" has to be borne in mind and
if each and every word used in Section 5(1)(iii) of the Act is given its
literal grammatical meaning then the only conclusion possible is the building
or the part of the building in occupation of the Ruler and which has been
declared by the Central Government as the official residence of the Ruler would
be exempted under the said provision.
In
order to appreciate the rival contention it would be appropriate to notice
Section 5(1)(iii) of the Act:
"5(1)
Wealth Tax shall not be payable by an assessee in respect of the following
assets shall not be included in the net wealth of the assessee.
(i).................
(ii).................
(iii) any
one building in the occupation of a Ruler declared by the Central Government. as
his official residence under paragraph 13 of the merged States (Taxation
Concessions) order 1949, or paragraph 15 of the part B States (Taxation
Concessions) order 1950".
It is
a cardinal principle of construction that the words of a statute are first
understood in their natural.
ordinary
or popular sense and phrases and sentences are construed according to their
grammatical meaning unless that leads to some absurdity or unless there is
something in the context or in the object of the statute to suggest the
contrary. It has been often held that the intention of the legislature is
primarily to be gathered from the language used, which means that attention
should be paid to what has been said as also to what has not been said. As a
consequence a construction which requires for its support addition or
substitution of words or which results in rejection of words as meaningless has
to be avoided.
Obviously
the aforesaid rules of construction is subject to exceptions. Just as it is not
permissible to add words or to fill in a gap or lacuna, similarly it is of
universal application that effort should be made to give meaning to each and
every word used by the legislature. In J.K. COTTTON WEAVING AND SPINNING
COMPANY LTD. vs. STATE OF U.P. (1961) 3 S.C.R. 185 it was observed by this
Court:- "The Courts always presume that the legislature inserted every
part thereof for a purpose and the legislative intention is that every part of
statute should have effect." In case of taxing statute it has been held by
this Court in several cases that one must have regard to the strict letter of
the law and if the revenue satisfies the Court that the case fall strictly in
the provisions of law, the subject can be taxed. This being the position, a
fair reading of Section 5(1)(iii) of the Act would reveal that only the
building or the part of the building in occupation of the Ruler which has been
declared by the Central Government to be the official residence under the
merged States (Taxation Concessions) Order 1949. will not be included in the
net wealth of the assessee. The contention advanced by the learned counsel for
the appellant that once a building has been declared as the official residence
and a portion of the said building is under occupation of the assessee then the
said building should come under the purview of Section 5(1)(iii) of the Act
even if the substantial portion of the same has been rented out by the assessee
to the tenant or for any other purpose would make the expression in the
occupation of a Ruler" redundant and those words in the provision would
not have its play.
We
have carefully considered the principles of construction of statute enunciated
by this Court in the decisions cited by the learned counsel for the appellant
and we do not find any principle stated therein. which is contrary to the
principle we have adopted in this Case in interpreting Section 5(1)(iii) of the
Act. In the aforesaid premises. We are of the considered opinion that the High
Court rightly answered the question posed in favour of Revenue and against the assessee
and the said judgment of the High Court does not require any interference by
this Court.
This
appeal is accordingly dismissed. But in the circumstances, there will by no
order as to costs.
Back
Pages: 1 2